SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 17, 1996
(Date of earliest event reported)
FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
1-7806 71-0427007
(Commission File Number) (IRS Employer Identification No.)
2005 Corporate Avenue, Memphis, Tennessee 38132
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (901) 369-3600
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following documents relating to the 1996 Pass Through
Certificates, Series B1 and Series B2 are being filed in connection with,
and incorporated by reference in, the Registrant's Registration Statement
on Form S-3 No. 333-07691, which was declared effective on July 10, 1996.
Exhibit Description of Exhibit
1 Underwriting Agreement relating to Federal Express
Corporation 1996 Pass Through Certificates Series B1 and
B2
4.a.1 Pass Through Trust Agreement dated as of June 1, 1996,
between Federal Express Corporation and State Street Bank
and Trust Company (Filed as Exhibit 4(a)(1) to
Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by
reference.)
4.a.2 Revised form of Pass Through Certificates
(included in Exhibit 4.a.3)
4.a.3 Forms of Series Supplements 1996-B1 and 1996-B2 to the
Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee relating to the
Pass Through Certificates
4.b.1 Forms of Trust Indenture and Security Agreements (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) between the Owner Trustee and the Indenture
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) in connection with the offering of Pass
Through Certificates
4.b.2 Forms of Equipment Trust Certificates
(included in Exhibit 4.b.1)
4.c Forms of Participation Agreements (Federal Express
Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) among Federal Express Corporation, as
Lessee, the applicable Owner Participant, the Original
Loan Participants, the Indenture Trustee, the Owner
Trustee and the Pass Through Trustee relating to
Equipment Trust Certificates (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
4.d Forms of Trust Agreements (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
between the applicable Owner Participant and the Owner
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively)
4.e Forms of Lease Agreements (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
between the Owner Trustee, as Lessor, and Federal Express
Corporation, as Lessee, relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N586FE, N662FE and N667FE, respectively)
4.f Forms of Ancillary Agreement I (Federal Express
Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) among the Federal Express Corporation, as
Lessee, the applicable Owner Participant, the Indenture
Trustee and the Owner Trustee relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N586FE, N662FE and N667FE, respectively)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FEDERAL EXPRESS CORPORATION
By: /s/ JAMES S. HUDSON
-----------------------------------
James S. Hudson
Vice President and Controller
(principal accounting officer)
Dated: October 21, 1996
EXHIBIT INDEX
Exhibit Description of Exhibit
1 Underwriting Agreement relating to Federal Express
Corporation 1996 Pass Through Certificates Series B1 and
B2
4.a.1 Pass Through Trust Agreement dated as of June 1, 1996,
between Federal Express Corporation and State Street Bank
and Trust Company (Filed as Exhibit 4(a)(1) to
Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by
reference.)
4.a.2 Revised form of Pass Through Certificates
(included in Exhibit 4.a.3)
4.a.3 Forms of Series Supplements 1996-B1 and 1996-B2 to the
Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee relating to the
Pass Through Certificates
4.b.1 Forms of Trust Indenture and Security Agreements (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) between the Owner Trustee and the Indenture
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) in connection with the offering of Pass
Through Certificates
4.b.2 Forms of Equipment Trust Certificates
(included in Exhibit 4.b.1)
4.c Forms of Participation Agreements (Federal Express
Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) among Federal Express Corporation, as
Lessee, the applicable Owner Participant, the Original
Loan Participants, the Indenture Trustee, the Owner
Trustee and the Pass Through Trustee relating to
Equipment Trust Certificates (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
4.d Forms of Trust Agreements (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
between the applicable Owner Participant and the Owner
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively)
4.e Forms of Lease Agreements (Federal Express Corporation
Trust Nos. N586FE, N662FE and N667FE, respectively)
between the Owner Trustee, as Lessor, and Federal Express
Corporation, as Lessee, relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N586FE, N662FE and N667FE, respectively)
4.f Forms of Ancillary Agreement I (Federal Express
Corporation Trust Nos. N586FE, N662FE and N667FE,
respectively) among the Federal Express Corporation, as
Lessee, the applicable Owner Participant, the Indenture
Trustee and the Owner Trustee relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N586FE, N662FE and N667FE, respectively)
EXHIBIT 1
EXECUTION DOCUMENT
UNDERWRITING AGREEMENT
Dated as of
October 17, 1996
between
FEDERAL EXPRESS CORPORATION
and
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties of the Company............... 3
SECTION 2. Purchase and Sale........................................... 7
SECTION 3. Covenants of the Company.................................... 8
SECTION 4. Payment of Expenses......................................... 10
SECTION 5. Conditions of Underwriters' Obligations..................... 11
SECTION 6. Indemnification............................................. 14
SECTION 7. Contribution................................................ 16
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.................................................... 16
SECTION 9. Termination of Agreement.................................... 16
SECTION 10. Default by One of the Underwriters.......................... 17
SECTION 11. Notices..................................................... 17
SECTION 12. Parties..................................................... 18
SECTION 13. Governing Law............................................... 18
Exhibit A Pricing Information
Exhibit B Opinion of Davis Polk & Wardwell -- Securities Matters
Exhibit C Opinion of Davis Polk & Wardwell -- Participation Agreement
Exhibit D Opinion of the Company
Schedule I Underwriters' Commitments
Schedule II Terms and Conditions
FEDERAL EXPRESS CORPORATION
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
UNDERWRITING AGREEMENT
October 17, 1996
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
c/o GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Federal Express Corporation, a Delaware corporation (the "Company"),
proposes that State Street Bank and Trust Company, acting not in its
individual capacity but solely as pass through trustee (the "Trustee") under
the Pass Through Trust Agreement dated as of June 1, 1996 (the "Basic
Agreement"), as supplemented for each series of pass through certificates (the
"Pass Through Certificates") to be purchased hereunder (each, a "Series") by a
Series Supplement (each, a "Series Supplement"), in each case between the
Company and the Trustee (for each Series, the Basic Agreement, as supplemented
by the related Series Supplement, being referred to herein as the "Pass
Through Agreement"), issue and sell to the underwriters named in Schedule I
hereto its Pass Through Certificates in the aggregate amounts and with the
applicable interest rates and final distribution dates set forth on Exhibit A
hereto (the "Offered Certificates") on the terms and conditions stated herein
and in Schedule II.
Each Series of Pass Through Certificates will represent interests in
a separate trust (each, a "Pass Through Trust") established pursuant to the
related Pass Through Agreement to fund the purchase of equipment
certificates (the "Equipment Certificates") which are to be issued as
nonrecourse obligations by certain owner trustees, each acting not in its
individual capacity but solely as owner trustee (each, an "Owner Trustee"),
in connection with separate leveraged lease transactions relating to one
McDonnell Douglas MD-11F aircraft and two Airbus A300F4-605R aircraft
(each, an "Aircraft" and, collectively, the "Aircraft"). The proceeds from
the sale of the Equipment Certificates will be used to refinance the
aggregate outstanding principal amount of the Original Loan Certificates of
the related Owner Trust issued in connection with transactions relating to
the Aircraft bearing U.S. Registration Marks N586FE, N667FE and N662FE,
respectively. Each series of Equipment Certificates will be issued under a
separate Trust Indenture and Security Agreement between State Street Bank
and Trust Company, acting not in its individual capacity, but solely as
Indenture Trustee (the "Indenture Trustee"), and the related Owner Trustee
(each, an "Indenture" and, collectively, the "Indentures").
As used herein, unless the context otherwise requires, the term
"Underwriters" shall mean the firm or firms named as Underwriter or
Underwriters in Schedule I and the term "you" shall mean the Underwriter or
Underwriters, if no underwriting syndicate is purchasing the Offered
Certificates, or the representative or representatives of the Underwriters,
if an underwriting syndicate is purchasing the Offered Certificates, as
indicated in Schedule I.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-07691) for
the registration of certain equipment trust certificates, pass through
certificates and other securities, including the Offered Certificates,
under the Securities Act of 1933, as amended (the "1933 Act"), and the
offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by
the Commission and the Basic Agreement has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
The Company has, pursuant to Rule 424 under the 1933 Act, filed with,
or transmitted for filing to, or shall within the required period of time
hereafter file with or transmit for filing to, the Commission a prospectus
supplement (the "Prospectus Supplement") specifically relating to the
Offered Certificates, together with a revised and restated prospectus
relating to pass through certificates covered by the above-referenced
registration statement.
The term "Registration Statement" refers to such registration
statement in the form in which it became effective, including the exhibits
thereto and the documents incorporated by reference therein, as amended to
the date hereof. The term "Basic Prospectus" means the above-referenced
revised and restated prospectus relating to pass through certificates. The
term "Prospectus" means the Basic Prospectus supplemented by the Prospectus
Supplement. The term "Preliminary Prospectus" means a preliminary
prospectus supplement specifically relating to the Offered Certificates
together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in
each case the documents, if any, incorporated by reference therein. The
terms "supplement" and "amendment" or "amend" as used herein shall include
all documents deemed to be incorporated by reference in the Prospectus that
have been filed subsequent to the date of the Basic Prospectus by the
Company with the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act").
If the Company has filed an abbreviated registration statement to
register additional Pass Through Certificates pursuant to Rule 462(b) under
the 1933 Act, then any reference herein to the term "Registration
Statement" shall include such Rule 462(b) registration statement.
Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings specified in or pursuant to the Pass Through
Agreement or the Indenture relating to each related series of Equipment
Certificates.
SECTION 1. Representations and Warranties of the Company.
(a) The Company represents and warrants to you and to each
Underwriter named in Schedule I, as of the date hereof, as follows:
(i) Due Incorporation and Qualification. The Company has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, is a "citizen of the United
States" within the meaning of Title 49 of the United States Code, as
amended (the "Transportation Code"), holding an air operating certificate
issued by the Secretary of Transportation pursuant to Chapter 447 of the
Transportation Code for aircraft capable of carrying 10 or more individuals
or 6,000 or more pounds of cargo, has the corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; and is duly qualified to do business and is in
good standing in each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
or prospects of the Company and its subsidiaries considered as one
enterprise.
(ii) Subsidiaries. Each subsidiary of the Company which is a
significant subsidiary as defined in Rule 405 of Regulation C of the 1933
Act Regulations (each a "Significant Subsidiary") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified to do
business and is in good standing in each jurisdiction in which such
qualification is required, except where the failure to so qualify would not
have a material adverse effect on the condition, financial or otherwise, or
the earnings, business or prospects of the Company and its subsidiaries
considered as one enterprise; and all of the issued and outstanding capital
stock of each Significant Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, except for directors'
qualifying shares (except as otherwise stated in the Registration
Statement), is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(iii) Registration Statement and Prospectus. At the time the
Registration Statement became effective, the Registration Statement
complied, and as of the date hereof does comply, in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and the
1939 Act and the rules and regulations of the Commission promulgated
thereunder.
The Registration Statement, at the time it became effective and
at the time the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996, was filed with the Commission, did not, and at each
time thereafter at which any amendment to the Registration Statement
becomes effective, will not, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
The Prospectus, as of the date hereof, does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by an Underwriter expressly for use in
the Registration Statement or Prospectus or to those parts of the
Registration Statement which constitute Statements of Eligibility and
Qualification of Trustees (Form T-1) under the 1939 Act.
No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
(iv) Incorporated Documents. The documents incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations promulgated
thereunder (the "1934 Act Regulations"), and, when read together and with
the other information in the Prospectus, did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were or are made,
not misleading.
(v) Accountants. The accountants who certified the financial
statements included or incorporated by reference in the Prospectus are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(vi) Financial Statements. The financial statements of the
Company included or incorporated by reference in the Prospectus and the
Registration Statement present fairly the financial position of the Company as
of the dates thereof and the results of operations, changes in common
stockholders' investment and cash flows of the Company, for the respective
periods covered thereby, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the entire period
involved; and the financial schedules included or incorporated by reference in
the Registration Statement meet the requirements of the 1933 Act Regulations
or the 1934 Act Regulations, as applicable.
(vii) Material Changes or Material Transactions. Except as
stated in the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not incurred any liabilities or obligations, direct or
contingent, or entered into any transactions which are material to the
Company, and there has not been any material change in the capital stock,
other than a two-for-one stock split of the Company's common stock to be
effected as a stock dividend payable on November 4, 1996, or short-term
debt, or any material increase in long-term debt of the Company, or any
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise), or the
earnings, business or prospects of the Company.
(viii) No Defaults; Regulatory Approvals. Neither the Company
nor any of its subsidiaries is in violation of its charter or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it or any of them or their properties may be bound.
The execution and delivery of this Agreement, each Pass Through
Agreement and the other Operative Agreements to which the Company is or is
to be a party and the consummation of the transactions contemplated herein
and therein have been duly authorized by all necessary corporate action.
This Agreement, the Pass Through Agreement and such other Operative
Agreements have been duly executed by the Company and will not conflict
with or constitute a breach of, or default under, or result in the creation
or imposition of any lien (other than as permitted under the Leases),
charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any such
subsidiary is a party or by which it or any of them may be bound or to
which any of the property or assets of the Company or any such subsidiary
is subject, which conflict, breach or default would have, individually or
in the aggregate with any other such instances, a material adverse effect
on the condition (financial or otherwise), or the earnings, business or
prospects of the Company and its subsidiaries considered as one entity, nor
will such action result in any violation of the provisions of the charter
or by-laws of the Company or any law, administrative regulation or
administrative or court order or decree currently in effect or in effect at
the time of execution and delivery of this Agreement, each Pass Through
Agreement and the other Operative Agreements and applicable to the Company
or any of its subsidiaries.
No consent, approval, authorization, order or decree of any
court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, any Pass
Through Agreement or any other Operative Agreement to which the Company is
or is to be a party, except such as may be required under the 1933 Act, the
1939 Act, the 1933 Act Regulations or state securities or Blue Sky laws,
the Transportation Code, and the Uniform Commercial Code as in effect in
Delaware and Tennessee.
(ix) Legal Proceedings. Except for matters described in the
Prospectus (as to which the Company can express no opinion at this time
concerning the Company's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of the Company), there is no pending, or to the best knowledge
of any financial officer of the Company, threatened action or proceeding
before any court or administrative agency which individually (or in the
aggregate in the case of any group of related lawsuits) is expected to have
a material adverse effect on the financial condition of the Company or the
ability of the Company to perform its obligations under the Pass Through
Agreements and the other Operative Agreements to which the Company is a
party.
(x) Compliance with Laws. The Company's business and
operations comply in all material respects with all laws and regulations
applicable thereto and there are no known, proposed or threatened changes
in any laws or regulations which would have a material adverse effect on
the Company or the manner in which it conducts its business. The Company
possesses all valid and effective certificates, licenses and permits
required to conduct its business as now conducted, except for instances
which individually or in the aggregate do not, or will not, have a material
adverse effect on the condition (financial or otherwise), or the earnings,
business or prospects of the Company.
(xi) Enforceability of Operative Agreements. Each of the Pass
Through Agreements and the other Operative Agreements to which the Company
is or is to be a party have been duly authorized by the Company, will each
be substantially in the form heretofore supplied to you and, when duly
executed and delivered by the Company and the other parties thereto, will
each constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Basic Agreement as
executed is substantially in the form filed as an exhibit to the
Registration Statement and has been duly qualified under the 1939 Act.
(xii) Validity of the Offered Certificates. When executed,
issued, authenticated and delivered pursuant to the provisions of the
applicable Pass Through Agreement and sold and paid for as provided in this
Agreement, each Series of Offered Certificates will constitute valid and
legally binding obligations of the Trustee enforceable in accordance with
their terms; and the Certificateholders of such Offered Certificates will
be entitled to the benefits provided by such Pass Through Agreement.
(xiii) Equipment Certificates. The Equipment Certificates to be
issued under each applicable Indenture, when duly executed and delivered by
the related Owner Trustee and duly authenticated by the Indenture Trustee in
accordance with the terms of such Indenture, will be duly issued under such
Indenture and will constitute the valid and binding obligations of such Owner
Trustee, and the Holders thereof will be entitled to the benefits of such
Indenture.
The representations and warranties made by the Company as to the
enforceability of the Pass Through Agreements, the Indentures, the Offered
Certificates, the Equipment Certificates and the other Operative Agreements
set forth in subparagraphs (xi), (xii) and (xiii) above are limited by
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting enforcement of creditors' rights or
by general equity principles, and the enforceability of any Pass Through
Agreement, Lease and Indenture is also limited by applicable laws which may
affect the remedies provided therein but which do not affect the validity
of such Pass Through Agreement, Lease or Indenture or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
(b) Additional Certifications. Any certificate signed by any officer
of the Company and delivered to you or your counsel in connection with an
offering of the Offered Certificates shall be deemed a representation and
warranty by the Company to each Underwriter participating in such offering as
to the matters covered thereby on the date of such certificate unless
subsequently amended or supplemented subsequent thereto.
SECTION 2. Purchase and Sale.
(a) Subject to the terms and conditions set forth herein and in
Schedule II, if any, the Company agrees to cause the Trustee to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Trustee, at the purchase price specified in Exhibit A
hereto, the respective amounts of each Series of Offered Certificates set
forth opposite the name of such Underwriter in Schedule I. It is understood
that you propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
(b) Payment of the purchase price for any Offered Certificates to be
purchased by the Underwriters shall be made at either the Company's offices
in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York 10017, or at such other place as shall be agreed
upon by you and the Company, at 9:00 A.M., New York City time, on the
fourth business day (unless postponed in accordance with the provisions of
Section 10) following the date hereof or at such other date, time or
location specified in Schedule II, or as otherwise shall be agreed upon by
you and the Company (such time and date being referred to as a "Closing
Time").
Delivery of the Offered Certificates shall be made for your account as
specified in Schedule II against payment by you of the purchase price
thereof to, or upon the order of, the Trustee (or such other person as the
Company may direct) by wire transfer of immediately available funds.
Unless otherwise indicated on Schedule II, such Offered Certificates shall
be registered in the name of Cede & Co., as nominee for The Depository
Trust Company, and in such denominations as you may request in writing at
least two business days prior to the Closing Time. Such Offered
Certificates, which may be in temporary form, will be made available for
examination and packaging by you in New York, New York, on or before the
first business day prior to the Closing Time or at such other time and
place specified in Schedule II.
(c) As compensation to you for your commitments and obligations
hereunder in respect of the Offered Certificates, including your
undertakings to distribute Offered Certificates, the Company will pay (or
cause to be paid) to you an amount equal to that percentage of the
aggregate amount of each series of Offered Certificates purchased by you as
set forth in Exhibit A as the underwriting discounts and commissions. Such
payment shall be made simultaneously with the payment by you to the Trustee
of the purchase price of the Offered Certificates as specified in Section
2(b) hereof. Payment of such compensation shall be made by wire transfer
of immediately available funds.
SECTION 3. Covenants of the Company.
The Company covenants with each of you, and with each Underwriter
participating in the offering as follows:
(a) Prospectus Supplement. The Company has prepared a Preliminary
Prospectus and, immediately following the execution of this Agreement, the
Company will prepare a Prospectus Supplement relating to the offering of the
Offered Certificates. The Company will promptly transmit copies of the
Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the
1933 Act Regulations.
(b) Notice of Certain Events. The Company will notify you promptly
(i) of the effectiveness of any amendment to the Registration Statement, (ii)
of the transmittal to the Commission for filing of any supplement to the
Prospectus or any document to be filed pursuant to the 1934 Act which will be
incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement, the
Prospectus or the Prospectus Supplement relating in any way to the offer and
sale of the Offered Certificates, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose.
(c) Notice of Certain Proposed Filings. The Company will give you
notice of its intention to file or prepare any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, whether by the
filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and
will furnish you with copies of any such amendment or supplement or other
documents proposed to be filed or prepared a reasonable time in advance of such
proposed filing or preparation, as the case may be.
(d) Copies of the Registration Statement and the Prospectus. The
Company will deliver to you as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein
and documents incorporated by reference in the Prospectus) as you may
reasonably request. The Company will furnish to you as many copies of the
Prospectus (as amended or supplemented) as you shall reasonably request so
long as you are required to deliver a Prospectus in connection with sales
or solicitations of offers to purchase the Offered Certificates.
(e) Revisions of Prospectus -- Material Changes. If at any time
when the Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Offered Certificates any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriters or counsel for the Company, to
further amend or supplement the Prospectus in order that the Prospectus
will not include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of such counsel, at any such time to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations the Company will
promptly prepare and file with the Commission such amendment or supplement,
whether by filing documents pursuant to the 1934 Act, the 1933 Act or
otherwise, as may be necessary to correct such untrue statement or omission
or to make the Registration Statement and Prospectus comply with such
requirements.
(f) Earnings Statements. The Company will make generally available
to its security holders as soon as practicable after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering each twelve-month
period beginning, in each case, not later than the first day of the
Company's fiscal quarter next following the "effective date" (as defined in
such Rule 158) of the Registration Statement with respect to each sale of
Offered Certificates.
(g) Blue Sky Qualifications. The Company will endeavor, in
cooperation with you, to qualify the Offered Certificates for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriters may designate, and
will maintain such qualifications in effect for so long as may be required
for the distribution of the Offered Certificates; provided, however, that
the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or to subject itself to
taxation as doing business in any jurisdiction in which it is not otherwise
required to be so qualified. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Offered Certificates have been qualified as provided above.
(h) 1934 Act Filings. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file
promptly all documents required to be filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act.
(i) Stand-Off Agreement. The Company will not, between the date of
this Agreement and the Closing Time, offer or sell, or enter into any
agreement to sell, any equipment notes, pass through certificates,
equipment trust certificates or equipment purchase certificates secured by
aircraft owned or leased by the Company (or rights relating thereto) unless
the Company has provided the Underwriters at least three business days'
notice thereof.
SECTION 4. Payment of Expenses.
The Company will pay (or cause to be paid) all expenses incident to the
performance of its obligations under this Agreement, including:
(i) the preparation and filing of the Registration Statement
and all amendments thereto, the Preliminary Prospectus and the Prospectus
and any amendments or supplements thereto;
(ii) the filing of this Agreement;
(iii) the preparation, issuance and delivery of the Offered
Certificates;
(iv) the reasonable fees and disbursements of the Company's
accountants and counsel, of the Trustee, the Owner Trustees and the Indenture
Trustees and their respective counsel, and of any registrar, paying agent and
authenticating agent;
(v) the qualification of the Offered Certificates under
securities laws in accordance with the provisions of Section 3(g), including
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters in connection therewith and in connection with the preparation of
any Blue Sky Survey and any Legal Investment Survey;
(vi) the printing and delivery to the Underwriters in quantities
as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or supplements
thereto, and the delivery by the Underwriters of the Prospectus and any
amendments or supplements thereto in connection with solicitations or
confirmations of sales of the Offered Certificates;
(vii) the preparation and delivery to the Underwriters of copies
of the Pass Through Agreements and the other Operative Agreements, including
all expenses incident to the performance of the Company's obligations under
the Pass Through Agreements, Participation Agreements, Indentures, Leases and
each of the other agreements and instruments referred to in the Indentures and
Participation Agreements;
(viii) any fees charged by rating agencies for the rating of the
Offered Certificates; and
(ix) certain fees and disbursements of your counsel, as
heretofore agreed.
If this Agreement is terminated by you in accordance with the provisions
of Section 5 or clause (i) of Section 9 hereof, the Company shall reimburse
upon demand the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriters that shall have been incurred by you in connection with the
proposed purchase and sale of the Offered Certificates.
SECTION 5. Conditions of Underwriters' Obligations.
The several obligations of the Underwriters to purchase the Offered
Certificates pursuant to this Agreement will be subject at all times to the
accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the statements of the Company's officers made in
any certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all covenants and agreements
contained herein, or in Schedule II hereto, on its part to be performed and
observed and to the following additional conditions precedent:
(a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, (ii) the rating assigned as of the date of
this Agreement by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g) under
the 1933 Act Regulations, to any debt securities of the Company (including
for purposes of this Section 5(a)(ii) any rating indicated by the Company
as of the date of this Agreement as the rating orally confirmed to the
Company by any such rating organization as the rating to be assigned to the
Offered Certificates) shall not have been lowered since the execution of
this Agreement nor shall any such rating organization have publicly
announced that it has placed any debt securities of the Company on what is
commonly termed a "watch list" for possible downgrading, and (iii) there
shall not have come to your attention any facts that would cause you to
believe that the Prospectus, including the Prospectus Supplement, at the
time it was required to be delivered to a purchaser of the Offered
Certificates, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein,
in light of the circumstances existing at such time, not misleading.
(b) Legal Opinions. At the Closing Time, you shall have received
the following documents:
(1) Opinion of Special Counsel to the Company. The opinion of
Davis Polk & Wardwell, special counsel to the Company, dated as of such
date, in form and substance satisfactory to you, to the effect set forth in
Exhibit B and the opinions of such counsel required to be delivered
pursuant to each Participation Agreement, dated as of such date, in form
and substance reasonably satisfactory to you, to the effect set forth in
Exhibit C.
(2) Opinion of Company Counsel. The opinion of the Executive
Vice President, General Counsel and Secretary of the Company or any Vice
President in the Legal and Regulatory Division of the Company, dated as of
such date, in form and substance reasonably satisfactory to you, to the
effect as set forth in Exhibit D.
(3) Opinion of Counsel to the Underwriters. The opinion of
Vedder, Price, Kaufman & Kammholz, counsel to the Underwriters, with
respect to such matters as you may reasonably request.
(c) Officers' Certificate. At the Closing Time, there shall not
have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
in the condition (financial or otherwise), or the earnings, business or
prospects of the Company; and you shall have received a certificate of the
Vice President and Treasurer, or any other finance area Vice President, of
the Company, and the Managing Director, Structured Finance of the Company,
dated as of the Closing Time, to the effect (i) that there has been no such
material adverse change, (ii) that the other representations and warranties
of the Company contained in Section 1 are true and correct with the same
force and effect as though expressly made at and as of the date of such
certificate, except to the extent that such representations and warranties
expressly relate to an earlier date or later date (in which case such
representations and warranties are true and correct on and as of such
earlier date or will be true and correct on and as of such later date, as
the case may be), (iii) that the Company has made or caused to be made any
required filing of the Prospectus pursuant to Rule 424(b) in the manner and
within the time period required by Rule 424(b), and (iv) that the Company
has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the date of such certificate.
The officers signing and delivering this certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(d) Comfort Letter. At the time of the execution of this Agreement
and at the Closing Time, you shall have received a letter from Arthur
Andersen LLP or their successors as the Company's independent accountants
(the "Independent Accountants"), dated as of the date hereof and of the
Closing Time, as the case may be, in form and substance satisfactory to you
to the effect that:
(i) they are independent public accountants within the meaning
of the 1933 Act and the 1933 Act Regulations;
(ii) in their opinion the Company's financial statements and
schedules included or incorporated by reference in the Registration Statement
and Prospectus and covered by their reports included or incorporated therein
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and
the 1934 Act Regulations, as the case may be;
(iii) they have conducted reviews of the unaudited interim
consolidated financial information of the Company included in the Company's
Quarterly Report on Form 10-Q incorporated in the Registration Statement and
Prospectus in compliance with the standards for such reviews promulgated by
the American Institute of Certified Public Accountants;
(iv) on the basis of a reading of the financial statements and
schedules of the Company included or incorporated in the Prospectus and the
Registration Statement, and the latest available unaudited interim financial
statements of the Company, inquiries of officials of the Company responsible
for financial and accounting matters, a reading of the minute books of the
Company, and other specified procedures and inquiries, nothing has come to
their attention that caused them to believe that:
(A) the unaudited financial statements of the Company
included or incorporated in the Prospectus and the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as
the case may be, or that such unaudited financial statements are not
presented fairly in conformity with generally accepted accounting
principles;
(B) with respect to the period subsequent to the date of
the most recent financial statements incorporated in the Registration
Statement and the Prospectus, as of a specified date not more than
five business days prior to the date of delivery of such letter,
there has been any change in the common or preferred stock or long-
term debt of the Company or, as of such date, there has been any
decrease in assets or common stockholders' investment, in each case
as compared with amounts shown in the most recent consolidated
balance sheet of the Company included or incorporated in the
Registration Statement and the Prospectus, except in each case for
changes or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; or
(C) for the period from the date of the most recent
financial statements incorporated in the Registration Statement and the
Prospectus to such specified date, there was any decrease in operating
revenues, operating income, income before taxes or net income of the
Company in each case as compared with the comparable period of the
preceding year, except in each case for decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(v) in addition to their audit referred to in their reports
included or incorporated by reference in the Registration Statement and the
Prospectus and the reviews, inquiries and procedures referred to in clauses
(iii) and (iv) above, such letter shall state that Arthur Andersen LLP has
performed other specified procedures, with respect to certain numerical data
and information included or incorporated in the Registration Statement and the
Prospectus, as are requested by an Underwriter and specified in such letter
and have found such data and information to be in agreement with the
accounting records of or analyses prepared by the Company.
(e) Satisfaction of Conditions Precedent in Participation Agreements.
At the Closing Time, all conditions precedent specified in each
Participation Agreement with respect to the refunding or funding of the
related Equipment Certificates, as the case may be, shall have been
satisfied; the representations and warranties of the Company, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee contained in
each of the Participation Agreements shall be accurate as of the Closing
Time (except to the extent that they relate solely to an earlier date in
which case they shall be accurate as of such earlier date) and you shall
have received certificates of the Chief Financial Officer or the Treasurer
of the Company and appropriate officers of the respective Owner Trustees,
Pass Through Trustees and Indenture Trustees, dated as of the Closing Time,
to such effect; and you shall have received a copy of each opinion required
to be delivered under each of the Participation Agreements dated as of the
Closing Time, and addressed to you, and of such other documents furnished
in connection with the fulfillment of such conditions as you may reasonably
request.
(f) Other Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as
such counsel may reasonably require for the purpose of enabling such
counsel to pass upon the issuance and sale of Offered Certificates as
herein contemplated and related proceedings, or in order to evidence the
accuracy and completeness of any of the representations and warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and sale
of Offered Certificates as herein contemplated shall be satisfactory in
form and substance to you.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by you by notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any party
to any other party except as provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of or based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by you), as incurred, reasonably
incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever arising out of or based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission made or alleged untrue statement or omission
in reliance upon and in conformity with written information furnished to
the Company by any Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto), or made in reliance upon the Statements of Eligibility
and Qualification of Trustees (Form T-1) under the 1939 Act filed as
exhibits to the Registration Statement; and provided, further, that the
foregoing indemnity agreement, with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased Offered
Certificates, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of
the Offered Certificates to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriters through you expressly for use
in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of
such action. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 is
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Underwriters
of each offering of Offered Certificates shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and one or
more of the Underwriters in respect of such offering, as incurred, in such
proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on
the cover page of the Prospectus in respect of such offering bears to the
initial public offering price appearing thereon and the Company is
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as
the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
each delivery of and payment for any of the Offered Certificates.
SECTION 9. Termination of Agreement.
You may terminate this Agreement, immediately upon notice to the
Company, at any time prior to the Closing Time (i) if there has been, since
the date hereof or since the respective dates as of which information is
given in the Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business, or
prospects of the Company, or (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities or other national or international
calamity or crisis, the effect of which shall be such as to make it, in
your judgment, impracticable to market the Offered Certificates or enforce
contracts for the sale of the Offered Certificates, or (iii) if trading in
any securities of the Company shall have been suspended by the Commission
or a national securities exchange, or if trading generally on either the
American Stock Exchange or the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading shall have been fixed,
or maximum ranges for prices for securities shall have been required, by
either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium shall have been declared
by either federal or New York authorities.
In the event of any termination of this Agreement, the covenant set
forth in Section 3(f) hereof, the provisions of Section 4 hereof, the
indemnity and contribution agreements set forth in Sections 6 and 7 hereof,
and the provisions of Sections 8 and 13 hereof shall remain in effect.
SECTION 10. Default by One of the Underwriters.
If any Underwriter shall fail at the Closing Time to purchase the
Offered Certificates which it is obligated to purchase hereunder (the
"Defaulted Certificates"), and the aggregate amount of Defaulted
Certificates is not more than one-tenth of the aggregate amount of the
Offered Certificates to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the amount of the
Offered Certificates set forth opposite their respective names in Schedule
I hereto bears to the aggregate amount of Offered Certificates set forth
opposite the names of all such non-defaulting underwriters to purchase the
Defaulted Certificates; provided that in no event shall the amount of
Defaulted Certificates that any Underwriter has agreed to purchase pursuant
to this Agreement be increased by an amount in excess of one-ninth of such
amount of Offered Certificates without the written consent of such
Underwriter. If the aggregate amount of Defaulted Certificates is more
than one-tenth of the aggregate amount of the Offered Certificates to be
purchased on the Closing Date, and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Defaulted
Certificates are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-
defaulting Underwriters or the Company.
No action taken pursuant to this Section shall relieve a defaulting
Underwriter from liability in respect of its default under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Underwriters or
the Company shall have the right to postpone the Closing Time for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or
arrangements.
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed, delivered by Federal
Express service or transmitted by any facsimile communication. Notices to
the Underwriters shall be directed, on behalf of all of the Underwriters,
to Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004,
Attention: Marcus Colwell, with copies thereof directed to Vedder, Price,
Kaufman & Kammholz, 222 North LaSalle Street, Chicago, Illinois 60601,
Attention: Jennifer R. Evans. Notices to the Company shall be directed
to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal
Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail),
Attention: Vice President and Treasurer, with copies thereof directed to
the Legal Department of the Company at 1980 Nonconnah Drive, Memphis,
Tennessee 38132 (if by Federal Express Service) or P.O. Box 727, Memphis,
Tennessee 38194 (if by mail), Attention: Managing Director -- Securities
and Corporate Law.
SECTION 12. Parties.
This Agreement shall inure to the benefit of and be binding upon you and
the Company and any Underwriter who becomes a party hereto and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and
their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto,
their respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Offered Certificates
from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. Governing Law.
This Agreement and the rights and obligations of the parties created
hereby and thereby shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in such state. Any suit, action or proceeding brought by the
Company against an Underwriter in connection with or arising under this
Agreement shall be brought solely in the state or federal court of
appropriate jurisdiction located in the Borough of Manhattan, The City of
New York.
* * *
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between you and the Company in accordance with its terms.
Very truly yours,
FEDERAL EXPRESS CORPORATION
By:/s/ ROBERT D. HENNING
----------------------
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director,
Structured Finance
CONFIRMED AND ACCEPTED, as of
the date first above written:
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
By: Goldman, Sachs & Co.
By:/s/ GOLDMAN, SACHS & CO.
-------------------------
Name: Marcus Colwell
Title: Vice President
Acting on behalf of themselves and the
other named Underwriters
Exhibit A
FEDERAL EXPRESS CORPORATION
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
<TABLE>
1996 Pass Underwriting
Through Final Discounts
Certificates Purchase Interest Distribution Aggregate and
Designation Price Rate Date Amounts Commissions
- ----------------- -------------- ---------- ------------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Series B1 $137,917,000 7.39% January 30, 2013 $137,917,000 .650%
Series B2 $ 48,211,000 7.84% January 30, 2018 $ 48,211,000 .650%
TOTAL $186,128,000 $186,128,000
</TABLE>
Exhibit B
Opinion of Davis Polk & Wardwell,
Special Counsel for the Company
The opinion of Davis Polk & Wardwell, special counsel for the Company,
to be delivered pursuant to Section 5(b)(1) of the Underwriting Agreement
shall be to the effect that:
1. The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
2. The Registration Statement has become effective under the
1933 Act and the Basic Agreement has been duly qualified under the 1939
Act.
3. Although we are not aware of any judicial authority, none of
the Pass Through Trusts is required to be registered under the
Investment Company Act of 1940, as amended.
4. The Pass Through Trusts will not be classified as
associations taxable as corporations, but, rather, will be classified as
grantor trusts under subpart E, Part I of Subchapter J of the Internal
Revenue Code of 1986, as amended, and each person having a beneficial
interest in a Pass Through Certificate will be treated as the owner of a
pro rata undivided interest in each of the Equipment Trust Certificates
and any other property held in the related Pass Through Trust. With
respect to all other matters addressed in the Basic Prospectus under the
caption "Federal Income Tax Consequences," we are also of the opinions
ascribed to us therein.
We have considered the matters required to be included in the
Registration Statement and the Prospectus and the information contained
therein. In our opinion (i) the statements in the Basic Prospectus under
the captions "Description of the Pass Through Certificates" and
"Description of the Equipment Certificates" and in the Prospectus
Supplement under the captions "Description of the Pass Through
Certificates" and "Description of the Equipment Trust Certificates,"
insofar as such statements constitute a summary of the Pass Through
Agreement, the Leases, the Participation Agreements and the Indentures,
fairly present the information called for by the 1933 Act and the rules and
regulations of the SEC under the 1933 Act (the "1933 Act Regulations") with
respect thereto and fairly summarize the material provisions thereof and
(ii) the statements in the Basic Prospectus in the fourth paragraph under
the caption "Description of the Equipment Certificates - Security" and in
the Prospectus Supplement in the ninth paragraph under the caption
"Description of the Equipment Trust Certificates - Remedies," insofar as
such statements constitute a description of Section 1110 of the Bankruptcy
Code as such Section would be applicable to the Equipment Trust
Certificates, fairly summarize the material provisions of such Section as
such Section would be applicable to the Equipment Trust Certificates. The
Pass Through Certificates conform in all material respects to the summary
descriptions thereof contained in the Prospectus. We have not ourselves
checked the accuracy or completeness of, or otherwise verified, the
information furnished with respect to other matters in the Registration
Statement or the Prospectus. We have generally reviewed and discussed with
certain officers and employees of the Company, its independent public
accountants and your representatives and counsel the information furnished,
whether or not subject to our check and verification. On the basis of such
consideration, review and discussion, but without independent check or
verification, except as stated, (i) we are of the opinion that the
Registration Statement and the Prospectus (except for the financial
statements and other financial information set forth or incorporated by
reference therein, as to which we are not called upon to express any
opinion) comply as to form in all material respects with the 1933 Act and
the applicable 1933 Act Regulations and (ii) we have no reason to believe
that the Registration Statement and the prospectus included therein (except
for the financial statements and other financial information set forth or
incorporated by reference therein and the Statement of Eligibility and
Qualification (Form T-1) under the 1939 Act of State Street Bank and Trust
Company, as to all of which we are not called upon to express a belief) at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that, as of the Closing Time, either the Registration
Statement or the Prospectus (except for the financial statements and other
financial information set forth or incorporated by reference therein, as to
which we are not called upon to express a belief), contains an untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading.
The foregoing opinions are subject to the following
qualifications:
(a) We are members of the Bar of the State of New York and the
foregoing opinions are limited to the laws of the State of New York, the
federal laws of the United States of America and the General Corporation Law
of the State of Delaware.
(b) We express no opinion as to the scope, effect or other
matters arising under the Transportation Code, or the rules and regulations
thereunder or as to matters involving filing and recording with the Federal
Aviation Administration.
(c) This opinion is issued solely to you in connection with the
above matter and may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Exhibit C
[Letterhead of Davis Polk & Wardwell]
October __, 1996
To each of the Parties
named on the Schedule hereto
Re: Federal Express Corporation Trust No. [N586FE] [N667FE] [N662FE]
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation ("Federal Express"), in connection with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. [N586FE] [N667FE] [N662FE], dated as of [April 1,
1996, as amended and restated as of September 1, 1996 and as further]
[August 1, 1996 as] [September 1, 1996 as], amended and restated as of
October 15, 1996) (the "Participation Agreement") among Morgan Guaranty
Trust Company of New York, Federal Express, as Lessee, [Ameritech Credit
Corporation] [PMCC Leasing Corporation], as Owner Participant, Morgan
Guaranty Trust Company of New York, Bank of America National Trust &
Savings Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta
Agency and NationsBank, N.A. (South), as the Original Loan Participants,
First Security Bank, National Association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement, State Street Bank
and Trust Company, not in its individual capacity, except as otherwise
stated, but solely as Indenture Trustee under the Indenture, and State
Street Bank and Trust Company, as Pass Through Trustee, relating to the
Aircraft. This opinion is being delivered pursuant to Section
4.01(l)(viii) of the Participation Agreement. Capitalized terms not
otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment
of the Purchase Price of one [McDonnell Douglas MD-11F] [Airbus A300F4-
605R] Aircraft which was purchased by the Owner Trustee pursuant to [the
Bills of Sale] [AVSA's FAA Bill of Sale and AVSA's Warranty Bill of Sale],
subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides,
among other things, for the refinancing of the Original Loan Certificates
using the proceeds from the public offering of the Pass Through
Certificates. Two Series of Pass Through Certificates will be issued by
separate Pass Through Trusts, each formed to acquire, among other
securities, the Certificates bearing a particular interest rate and having
a particular Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such
opinions. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted
to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established
by us, relied, to the extent we deemed such reliance proper, upon
certificates of public officials and certificates, telegrams and other
written or telephoned statements of officers of the parties referred to
herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by
the recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the
Owner Trustee in its trust capacity do not violate, and fully comply with,
any laws and governmental rules and regulations of the State of New York
that may be applicable to the Owner Trustee in its individual or trust
capacity, as the case may be. The opinion set forth in this paragraph 5 is
rendered without regard to the effect, if any, on such issuance (in the
case of the Certificates), execution, delivery or performance, of the
taking of any action, the conduct of any business or the exercise of any
other powers by First Security Bank, National Association in its individual
or trust capacity in the State of New York not related to the transactions
contemplated by the Transaction Agreements. We have assumed that First
Security Bank, National Association has made the filings necessary to
comply with Section 131.3 of the Banking Law of the State of New York,
however we express no opinion as to whether First Security Bank, National
Association is required to comply with said Section 131.3.
4. (a) Each of the Transaction Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do
not, or did not on the date of execution thereof, violate, and fully
comply, or did fully comply on the date of execution thereof, with, any
laws and governmental rules and regulations of the State of New York that
may be applicable to Federal Express. The opinion set forth in this
paragraph 4(b) is rendered without regard to the taking of any action or
the conduct of any other business by Federal Express in the State of New
York other than the transactions contemplated by the Transaction
Agreements.
5. Assuming (i) the due authorization, execution and delivery
of the Transaction Agreements by each of the parties to each such document
(other than Federal Express), (ii) each such party has full power and legal
right to enter into and perform its respective obligations under the
Transaction Agreements, (iii) that the execution, delivery and performance
by each of the Transaction Agreements by each of the parties thereto will
not violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and
the due authentication by the Indenture Trustee, of the Certificates to be
issued under the Indenture in accordance with the terms of the Indenture,
(v) that the Original Loan Certificates are delivered by the Original Loan
Participants to the Indenture Trustee for cancellation and are cancelled,
(vi) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates
to be issued under the Pass Through Agreement and the Series Supplement
relating to such Pass Through Certificates, in each case in accordance with
the terms of the Pass Through Agreement and such Series Supplement, and
(vii) that the form of each Transaction Agreement is in compliance with all
applicable laws and governmental rules and regulations (other than the laws
of the United States and the State of New York), then:
(A) to the extent governed by New York law, each Transaction
Agreement in form constitutes a legal, valid and binding agreement of
each party thereto enforceable against each such party in accordance
with its terms;
(B) the Original Indenture created, and the Indenture
creates, for the benefit of the Holders, the security interest in the
Trust Indenture Estate that they purport to create;
(C) the Certificates, when issued to and acquired by the
Pass Through Trustee, will be legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance
with their terms and the terms of the Indenture and will be entitled to
the benefits of the Indenture, including the benefit of the security
interest created thereby;
(D) the Pass Through Certificates, when issued to and
acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass
Through Trustee enforceable against the Pass Through Trustee in
accordance with their terms and will be entitled to the benefits of the
Pass Through Agreement and the Series Supplement relating thereto; and
(E) the beneficial interest of the Owner Participant under the
Trust Agreement in and to the properties which are part of the Trust
Indenture Estate is subject, to the extent provided in the Indenture, to
the Lien of the Indenture in favor of the Holders.
The opinions set forth in this paragraph 3 are subject to the due filing and,
where appropriate, recording with the FAA of the documents referred to in
paragraph 2 above.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part
of the Trust Indenture Estate (subject to the due filing and, where
appropriate, recording of those documents referred to in paragraph 2 above
and the financing statements referred to in Section 4.01(f) of the
Participation Agreement), and the beneficial interest of the Owner
Participant under the Trust Agreement in and to such properties are
subject, to the extent provided in the Indenture, to the Lien of the
Indenture in favor of the Holders of the Certificates issued and to be
issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in
the name of the Owner Trustee and the due filing and, where appropriate,
recording in accordance with the Transportation Code of the documents
referred to in paragraph 2 above. We express no opinion with respect to
the status of any security interest in any portion of the Aircraft which
does not constitute an "aircraft" or "aircraft engine", as defined in
paragraphs (6) and (7) of Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute
a violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in
paragraph 2 above, neither the execution and delivery by Federal Express of
the Participation Agreement or any other Operative Agreement to which it is
a party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, the Securities and
Exchange Commission or any other Federal or New York State governmental
authority.
10. It is not necessary, in connection with the creation of the
beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as
lessor under and by reason of the Lease. The Lease, including the rights
under Section 1110 of the United States Bankruptcy Code, has been assigned to
the Indenture Trustee pursuant to the Indenture as part of the collateral for
the Certificates and, as assignee, the Indenture Trustee has the benefit of
Section 1110.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty, Fowler
& Peregrin and George W. Hearn, Vice President - Law of Federal Express
to be delivered to you and dated the date hereof, for purposes of the
matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the
laws of the United States and the General Corporation Law of the State
of Delaware. We express no opinion as to any matters involving aviation
law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which
may affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided
thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
(e) We rendered an opinion dated [April 22, 1996] [August 28,
1996] [September 23, 1996] (the "Delivery Date Opinion"), a copy of
which is attached hereto, in connection with the financing and
acquisition of the Aircraft on such date. We hereby consent and agree
that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same
force and effect as if such addressees were originally named therein on
the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE
Owner Trustee
First Security Bank, National Association
Indenture Trustee
State Street Bank and Trust Company
Owner Participant
[Ameritech Credit Corporation]
[PMCC Leasing Corporation]
Original Loan Participants
The Entities listed on Schedule I to the Participation Agreement as Original
Loan Participants
Lessee
Federal Express Corporation
Pass Through Trustee
State Street Bank and Trust Company
Underwriters
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
BA Securities,Inc.
First Chicago Capital Markets, Inc.
Exhibit D
Form of Opinion of Company Counsel
October __, 1996
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: Federal Express Corporation
1996 Pass Through Certificates, Series B1 and B2 (the "Offered
Certificates")
Ladies and Gentlemen:
This opinion is directed to the Underwriters pursuant to Section 5(b)(2)
of the Underwriting Agreement dated October __, 1996 (the "Underwriting
Agreement"), among the Company and you, with respect to the offer and sale
of the Offered Certificates. All terms defined or used in the Underwriting
Agreement have the same meaning when used herein, unless otherwise noted.
I am Vice President-Law of the Company and have acted as such in
connection with the Offered Certificates and the Underwriting Agreement. I or
attorneys under my supervision have made such examination and investigation as
we have deemed necessary in order to give the following opinion.
Based on the foregoing, it is my opinion that:
(i) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority under such laws to own its properties and to
conduct its business as described in the Prospectus; the Company is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of Title 49
of the United States Code, as amended, holding an air operating certificate
issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49
of the United States Code, as amended, for aircraft capable of carrying 10 or
more individuals or 6,000 or more pounds of cargo; the Company is duly
qualified to do business and is in good standing in each jurisdiction in which
it owns or leases real property or in which the conduct of its business
requires such qualification, except for such instances which in the aggregate
will not have a material adverse effect on the Company;
(ii) Each subsidiary of the Company which is a significant subsidiary
as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a
"Significant Subsidiary") has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement, and, to the best of my knowledge, is duly qualified to do business
and is in good standing in each jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business or prospects of the Company and its subsidiaries considered as one
enterprise; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued and is
fully paid and non-assessable, and all of such capital stock, except for
directors' qualifying shares, is owned by the Company, directly or through
subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim
or equity;
(iii) Except for matters described in the Prospectus (as to which I can
express no opinion at this time concerning the Company's liability (if any) or
the effect of any adverse determination upon the business, condition
(financial or otherwise) or operations of the Company), there is no pending,
or to my knowledge, threatened action or proceeding before any court or
administrative agency which individually (or in the aggregate in the case of
any group of related lawsuits) is expected to have a material adverse effect
on the financial condition of the Company or the ability of the Company to
perform its obligations under the Pass Through Agreements and the other
Operative Agreements to which the Company is a party;
(iv) The Pass Through Agreements and the other Operative Agreements to
which the Company is a party have been duly and validly authorized, executed
and delivered by the Company;
(v) The Equipment Certificates are in due and proper form and have
been duly and validly authorized by all necessary corporate action;
(vi) The Company possesses all permits, approvals, franchises and other
rights from federal aviation, aeronautical, communications, transportation and
shipping authorities which are requisite for the conduct of its business as
described in the Prospectus or for the actions contemplated by the
Underwriting Agreement and the offering contemplated by the Prospectus; and
the actions contemplated by the Underwriting Agreement, the Pass Through
Agreements, the Participation Agreements and the other Operative Agreements,
and the offering contemplated by the Prospectus, are not in violation of any
federal statute or regulation relating to aviation, aeronautics,
communications, transportation or shipping;
(vii) The Basic Agreement is qualified under the 1939 Act; I have
reviewed or caused to be reviewed by attorneys under my supervision the
Registration Statement, the Prospectus and each amendment and supplement
thereto (including the documents incorporated by reference) and have no reason
to believe that, as of their respective effective or issue dates, or as of the
Closing Time, either the Registration Statement or the Prospectus or any such
amendment or supplement (or any such documents incorporated by reference)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(viii)I do not know of any statute or regulation or legal or
governmental proceeding required to be described in the Prospectus which is
not described as required, nor of any contract or document of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement which is not described and
filed as required; and the descriptions in the Registration Statement and the
Prospectus of the contracts and other documents therein described are accurate
and fairly present the information required to be shown;
(ix) The execution and delivery by the Company of the Underwriting
Agreement, the Pass Through Agreements and the Operative Agreements to which
the Company is a party, the consummation by the Company of the transactions
herein and therein contemplated and compliance with the terms of the
Underwriting Agreement, the Pass Through Agreements and such Operative
Agreements do not and will not conflict with or result in a breach of any of
the terms of the Certificate of Incorporation or By-laws of the Company, and
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan, credit or note agreement, lease or other agreement or instrument
material to the Company to which the Company is a party or by which it or any
or its properties are bound, or any existing applicable law, rule, regulation,
judgment, order or decree of any government, governmental instrumentality or
court, having jurisdiction over the Company or any of its properties;
(x) No authorization, approval, consent or license of any regulatory
body or authority (other than under the 1933 Act, the 1939 Act and the
securities or Blue Sky laws of the various states) is required for the valid
authorization, issuance, sale and delivery of the Offered Certificates as
herein contemplated or the valid authorization, execution, delivery and
performance by the Company of the Underwriting Agreement, the Pass Through
Agreements and the other Operative Agreements to which the Company is a party
or the consummation by the Company of the transactions contemplated herein or
therein, or, if so required, all such authorizations, approvals, consents and
licenses, specifying the sale, have been obtained and are in full force and
effect;
(xi) The Registration Statement has become effective under the 1933 Act
and, to the best of my knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the 1933
Act; the Registration Statement and the Prospectus, and each amendment or
supplement thereto (except for the financial statements and schedules included
therein, as to which I express no opinion), comply as to form in all material
respects to the requirements of the 1933 Act and the 1933 Act Regulations and,
as to documents incorporated therein, to the requirements of the 1934 Act and
the 1934 Act Regulations in effect at the time such documents were filed with
the Commission; and
(xii) The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
enforcement thereof is limited by bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting enforcement of
creditors' rights or by general equity principles and subject to any
principles of public policy limiting the right to enforce the indemnification
and contribution provisions contained in Sections 6 and 7 of the Underwriting
Agreement.
In rendering the foregoing opinion, we have assumed that (i) all
signatures on all documents examined by us are genuine and that where any such
signature (other than a signature purporting to have been made on behalf of
the Company) purports to have been made in a corporate, governmental,
fiduciary or other capacity, the person who affixed such signature had the due
authority to do so, (ii) certain factual matters contained in certificates of
public officials are accurate, true and correct, and (iii) photostatic copies
of such documents, records and certificates conform to the originals.
This opinion is intended solely for the benefit of the Underwriters and
is not to be relied on by, and no copies of it are to be delivered to, any
other person without my prior written consent, except that Underwriters'
counsel may rely upon this opinion as to all matters of Tennessee law or
Delaware corporate law in rendering its opinion of even date herewith. I am
not assuming any professional responsibility to any other person by rendering
this opinion. It is understood that this opinion speaks as of the date given,
notwithstanding any delivery as contemplated above on any other date.
Very truly yours,
George W. Hearn
Vice President-Law
Schedule I
to
Underwriting
Agreement
Dated: October 17, 1996
FEDERAL EXPRESS CORPORATION
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
<TABLE>
<S> <C> <C> <C>
Aggregate Aggregate
Amount of Amount of Total
Series B1 Series B2 Aggregate
Pass Through Pass Through Amount to be
Underwriters Certificates Certificates Purchased
- ---------------------------------------------- --------------- --------------- --------------
GOLDMAN, SACHS & CO. $41,375,000 $14,463,000 $55,838,000
J.P. MORGAN SECURITIES INC. 41,375,000 14,463,000 55,838,000
MORGAN STANLEY & CO. INCORPORATED 41,375,000 14,463,000 55,838,000
BA SECURITIES, INC. 6,896,000 2,411,000 9,307,000
FIRST CHICAGO CAPITAL MARKETS, INC. 6,896,000 2,411,000 9,307,000
</TABLE>
Schedule II
to
Underwriting
Agreement
Dated: October 17, 1996
FEDERAL EXPRESS CORPORATION
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
To: Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Re: Underwriting Agreement dated October 17, 1996
Title of Offered Certificates:
1996 Pass Through Certificates, Series B1
1996 Pass Through Certificates, Series B2
Current ratings:
BBB+/A3
Interest rate:
Series B1 ........7.39%
Series B2 ........7.84%
Interest payable:
each January 30 and July 30 commencing on January 30, 1997
Public offering price:
100%, plus accrued interest from October 23, 1996
Closing date, time and location:
October 23, 1996, 9:00 A.M., New York City time
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Location for checking Offered Certificates:
New York, New York
Listing requirement:
None
Other terms and conditions:
The Offered Certificates will be issued in fully registered, book-entry
only form through the facilities of The Depository Trust Company, and
each Series of the Offered Certificates shall be represented by a
separate global certificate.
Exceptions, if any, to Section 3(i) of the Underwriting Agreement:
None
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
BA SECURITIES, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
By: Goldman, Sachs & Co.
By:/s/ GOLDMAN, SACHS & CO.
-------------------------
Name: Marcus Colwell
Title: Vice President
Acting on behalf of themselves and the
other named Underwriters
Accepted:
FEDERAL EXPRESS CORPORATION
By:/s/ ROBERT D. HENNING
----------------------
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director, Structured Finance
EXHIBIT 4.a.3
==============================================================================
SERIES SUPPLEMENT 1996-B1
Dated October 23, 1996
Between
STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
to
PASS THROUGH TRUST AGREEMENT
Dated as of June 1, 1996
$137,917,000
Federal Express Corporation
Pass Through Trust, 1996-B1
Federal Express Corporation
1996 Pass Through Certificates,
Series B1
==============================================================================
TABLE OF CONTENTS
-----------------
Page
----
RECITALS............................................................... 1
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount.................. 4
SECTION 2.02. Declaration of Trust; Authorization............. 4
SECTION 2.03. Issuance of Pass Through Certificates........... 5
SECTION 2.04. Purchase of Equipment Certificates.............. 5
SECTION 2.05. Representations and Warranties of the Company... 5
SECTION 2.06. Conditions Precedent............................ 5
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR
AND THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates.............................. 6
SECTION 3.02. Record Dates.................................... 6
SECTION 3.03. Certificate Account and Special Payments
Account........................................ 6
SECTION 3.04. Form of Pass Through Certificates............... 6
SECTION 3.05. Indenture Documents............................. 7
SECTION 3.06. Appointment of Authenticating Agent; Paying
Agent and Registrar............................ 7
SECTION 3.07. Intentionally Left Blank........................ 7
SECTION 3.08. ERISA........................................... 7
SECTION 3.09. Registered Global Certificate................... 8
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form................. 8
SECTION 4.02. Reports by the Company.......................... 8
SECTION 4.03. Modification and Ratification of Pass Through
Agreement...................................... 8
SECTION 4.04. Termination..................................... 8
EXHIBIT A Form of Pass Through Certificate
SCHEDULE I Equipment Certificates; Related Indenture Documents
SERIES SUPPLEMENT 1996-B1
SERIES SUPPLEMENT 1996-B1, dated October 23, 1996 (this
"Series Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware
corporation (the "Company") and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as Pass Through Trustee (the "Pass Through
Trustee"), to the Pass Through Trust Agreement, dated as of June 1, 1996
(the "Pass Through Agreement"), between the Company and the Pass Through
Trustee.
RECITALS
WHEREAS, capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agreement provides,
among other things, that the Company and the Pass Through Trustee may execute
and deliver one or more series supplements, each for the purpose of forming a
separate pass through trust for the benefit of the certificateholders of the
series of pass through certificates to be issued pursuant to such pass through
trust, appointing an institution to act as Pass Through Trustee if different
from the institution executing the Pass Through Agreement, establishing
certain terms of such pass through certificates, and pursuant to which the
pass through certificates of such series shall be executed and authenticated
by the Pass Through Trustee and delivered as directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company
has agreed to cause the Equipment Certificates to be issued and sold to the
Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the
Equipment Certificates, which will be held in trust as Trust Property for the
benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has
agreed, pursuant to the Underwriting Agreement, to cause the Pass Through
Trustee to issue and sell the Pass Through Certificates to the Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms
of this Series Supplement, the Pass Through Trustee will execute, authenticate
and deliver the Pass Through Certificates to the Underwriters upon receipt by
the Pass Through Trustee of the purchase price therefor, which will be applied
in accordance with this Series Supplement to purchase the Equipment
Certificates;
WHEREAS, the Pass Through Trustee hereby declares the creation
of this Pass Through Trust for the benefit of the Certificateholders, and the
initial Certificateholders of such Pass Through Certificates, as the grantors
of such Pass Through Trust, by their respective acceptances of such Pass
Through Certificates, join in the creation of such Pass Through Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates
to, and the purchase of the Equipment Certificates by, the Pass Through
Trustee on behalf of this Pass Through Trust, the Company has duly authorized
the execution and delivery of this Series Supplement as the "issuer," as such
term is defined in and solely for purposes of the Securities Act, of the Pass
Through Certificates and as the "obligor," as such term is defined in and
solely for purposes of the Trust Indenture Act, with respect to all such Pass
Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in
the Pass Through Agreement, either directly or by reference therein, have
the meanings assigned to them therein as supplemented by this Article I, if
applicable, except to the extent the context requires otherwise. Any such
defined term that is defined in the Pass Through Agreement as relating to a
particular Pass Through Trust or Series rather than to any Pass Through
Trust or Series generally shall, when used in this Series Supplement,
relate solely to the Federal Express Corporation Pass Through Trust, 1996-
B1, or the Federal Express Corporation 1996 Pass Through Certificates,
Series B1, as the case may be, whether or not expressly so stated herein.
"Authenticating Agent" has the meaning set forth in Section
3.06 hereof.
"Certificate Account" means the Certificate Account
specified in Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series
of Pass Through Certificates designated in Section 2.01 hereof.
"Cut-off Date for Pass Through Trust" is inapplicable.
"Delivery Date" means, for any Equipment Certificates, the
Refunding Date (as such term is defined in the related Participation
Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Certificates
listed in Schedule I hereto.
"Issuance Date" means the date defined as the Closing Time
in the Underwriting Agreement.
"Participation Agreements" means those Participation
Agreements listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through
Certificates designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other
like words means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section
3.06 hereof.
"Record Date" means any Record Date specified in Section
3.02 hereof.
"Registrar" means the Person specified as such in Section
3.06 hereof.
"Regular Distribution Date" means any Regular Distribution
Date specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment,
the Special Distribution Date for such Special Payment specified in Section
3.01 hereof.
"Special Payments Account" means the Special Payments
Account specified in Section 3.03 hereof.
"Trust Property" means all money, instruments, including the
Equipment Certificates that have been issued by the related Owner Trustee and
delivered to and accepted by the Pass Through Trustee for the benefit of the
Certificateholders, and other property held as the property of this Pass
Through Trust, including all distributions thereon and proceeds thereof.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
October 17, 1996 among the Company and Goldman, Sachs & Co., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated, BA Securities, Inc. and
First Chicago Capital Markets, Inc.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. The Pass
Through Trust created hereby shall be designated Federal Express Corporation
Pass Through Trust, 1996-B1 (herein sometimes called this "Pass Through
Trust"). The Pass Through Certificates evidencing Fractional Undivided
Interests in such Pass Through Trust shall be designated as the Federal
Express Corporation 1996 Pass Through Certificates, Series B1 (herein
sometimes called the "Series B1 Pass Through Certificates"). The Series B1
Pass Through Certificates shall be the only instruments evidencing a
Fractional Undivided Interest in such Pass Through Trust.
Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass
Through Agreement, the aggregate amount of Series B1 Pass Through Certificates
that may be authenticated, delivered and outstanding under this Series
Supplement is limited to $137,917,000.
SECTION 2.02. Declaration of Trust; Authorization. Each
initial Certificateholder, by its acceptance of any Series B1 Pass Through
Certificate is hereby deemed (1) as grantor, to join in the creation and
declaration of this Pass Through Trust and (2) as beneficiary of such Pass
Through Trust, to authorize and direct the Pass Through Trustee to execute and
deliver all documents to which the Pass Through Trustee is a party that may be
necessary or desirable to consummate the transactions contemplated hereby and
to exercise its rights and perform its duties under the Participation
Agreements, the Indentures, the Pass Through Agreement and this Series
Supplement.
The Pass Through Trustee hereby acknowledges and accepts this
grant of trust and declares that it will hold the Trust Property as Pass
Through Trustee of this Pass Through Trust for the use and benefit of the
Certificateholders.
SECTION 2.03. Issuance of Pass Through Certificates. Subject
to the terms set forth herein, on the Issuance Date (i) the Company shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Series
B1 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver
the Series B1 Pass Through Certificates to the Underwriters as provided in the
Underwriting Agreement upon receipt by the Pass Through Trustee of such
proceeds.
SECTION 2.04. Purchase of Equipment Certificates. On the
Issuance Date, the Pass Through Trustee shall purchase, in accordance with
Section 2.02 of the Pass Through Agreement, each of the Equipment Certificates
upon the satisfaction or waiver of the conditions for such purchase by the
Pass Through Trustee set forth in the related Participation Agreement.
SECTION 2.05. Representations and Warranties of the Company.
All of the representations and warranties of the Company set forth or
incorporated by reference in Section 1 of the Underwriting Agreement are
incorporated by reference in this Series Supplement as if set forth herein and
the Company represents and warrants that such representations and warranties
are true and correct on the date hereof, except to the extent that such
representations and warranties expressly relate solely to an earlier date or
later date (in which case such representations and warranties were correct on
and as of such earlier date or will be correct on and as of such later date,
as the case may be).
SECTION 2.06. Conditions Precedent. The obligations of the
Pass Through Trustee to participate in the transactions described in Sections
2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of
a certificate of the Company to the same effect as the certificate of the
Company delivered to the Underwriters pursuant to Section 5(c) of the
Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for
the purchase by the Underwriters of the Pass Through Certificates set forth in
Section 5 of the Underwriting Agreement, which satisfaction or waiver for the
purposes hereof shall be conclusively demonstrated by the receipt by the Pass
Through Trustee of the total proceeds payable by such Underwriters pursuant to
the Underwriting Agreement with respect to the Series B1 Pass Through
Certificates.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR
AND THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates. The Regular Distribution
Dates are each January 30 and July 30, commencing on January 30, 1997. The
Special Distribution Date for any month in which a Special Payment is to be
distributed will be the thirtieth day of such month, except that the Special
Distribution Date for any Special Payment received by the Pass Through Trustee
in connection with a prepayment of any Equipment Certificate pursuant to
Section 6.02(a)(i) or 6.02(a)(v) of the related Indenture will correspond to
the date of the receipt of such Special Payment by the Pass Through Trustee.
Notice of such Special Payment shall be mailed as soon as practicable after
receipt by the Pass Through Trustee of the notice of such prepayment.
SECTION 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are January 15 and July 15, respectively, and the Record
Date for any Special Distribution Date is the fifteenth day preceding such
Special Distribution Date, in any event, whether or not such date is a
Business Day.
SECTION 3.03. Certificate Account and Special Payments
Account. In accordance with Section 5.01(a) of the Pass Through Agreement and
upon receipt of any Scheduled Payment, the Pass Through Trustee shall
immediately deposit such Scheduled Payment into the Certificate Account, a
separate and non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose. In accordance with Section 5.01(b) of
the Pass Through Agreement and upon receipt of any Special Payment, the
Pass Through Trustee shall immediately deposit such Special Payment into
the Special Payments Account, a separate and, except as provided in Section
5.04 of the Pass Through Agreement, non-interest bearing account designated
by the Pass Through Trustee to be used for such purpose.
SECTION 3.04. Form of Pass Through Certificates. Subject to
Section 2.07 of the Pass Through Agreement, each of the Series B1 Pass Through
Certificates will be substantially in the form of Exhibit A hereto. The
Series B1 Pass Through Certificates will be issued pursuant to a book-entry
system in the form of one Registered Global Certificate and subject to the
conditions set forth in the Letter of Representations among the Company, the
Pass Through Trustee and The Depository Trust Company.
SECTION 3.05. Indenture Documents. The related Indenture
Documents are listed in Schedule I hereto.
SECTION 3.06. Appointment of Authenticating Agent; Paying
Agent and Registrar. (a) The Pass Through Trustee may appoint an
authenticating agent (the "Authenticating Agent") with respect to the Pass
Through Certificates which shall be authorized to act on behalf of the Pass
Through Trustee to authenticate the Pass Through Certificates issued upon
original issue and upon exchange or registration of transfer thereof or
pursuant to Section 2.09 of the Pass Through Agreement. Pass Through
Certificates so authenticated shall be entitled to the benefits of the Pass
Through Agreement and this Series Supplement and shall be valid and obligatory
for all purposes as if authenticated by the Pass Through Trustee. Whenever
reference is made in the Pass Through Agreement or this Series Supplement to
the authentication and delivery of Pass Through Certificates by the Pass
Through Trustee or the Pass Through Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on
behalf of the Pass Through Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Pass Through Trustee
by an Authenticating Agent.
(b) The Paying Agent, Registrar and Authenticating Agent for
the Series B1 Pass Through Certificates initially shall be State Street Bank
and Trust Company ("State Street Bank and Trust Company"), Two International
Place, 4th Floor, Boston, Massachusetts 02110. State Street Bank and Trust
Company hereby represents and warrants to the Company that it is qualified to
serve as Paying Agent, Registrar and Authenticating Agent under the provisions
of, and subject to all of the terms and conditions set forth in, the Pass
Through Agreement and this related Series Supplement.
SECTION 3.07. Intentionally Left Blank.
SECTION 3.08. ERISA. Any Person who is, or who in
acquiring a Pass Through Certificate is or may be using the assets of, an
employee benefit plan subject to Title I of The Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or an individual retirement
account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account, may acquire or hold any of the
Pass Through Certificates, if such Person determines either that an
administrative or a statutory exemption from the prohibited transaction
rules under Section 406 of ERISA and Section 4975 of the Code is applicable
to its purchase and holding of a Pass Through Certificate or that its
purchase and holding of a Pass Through Certificate will not result in a
prohibited transaction under Section 406 of ERISA and Section 4975 of the
Code.
SECTION 3.09. Registered Global Certificate. The Series B1
Pass Through Certificates are to be issued in whole in the form of a
Registered Global Certificate, and Section 2.12 of the Pass Through Agreement
shall, accordingly, be applicable. The Depository for the Registered Global
Certificate and the Letter of Representations is The Depository Trust Company.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. THE PASS
THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES B1 PASS THROUGH
CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 4.02. Reports by the Company. In addition to the
reports required to be provided by the Company pursuant to Section 4.03 of the
Pass Through Agreement, the Company agrees to furnish to the Pass Through
Trustee from time to time, such other financial information as the Pass
Through Trustee may reasonably request.
SECTION 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Series Supplement as if
set forth in full herein, and is in all respects ratified and confirmed, as
supplemented and modified by this Series Supplement.
SECTION 4.04. Termination. In no event shall this Pass
Through Trust continue beyond the expiration of 21 years after the death of
the last survivor of George Pataki, Governor of New York State, living on
the date of this Series Supplement.
IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all on
the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee
By: _________________________________________
Name:
Title:
Exhibit A
to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
Unless this pass through certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Pass Through Trustee or its agent for registration
or transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1996-B1
1996 Pass Through Certificate, Series B1
CUSIP 31331FAS0
Final Regular Distribution Date: January 30, 2013
evidencing a fractional undivided interest in a pass through trust,
the property of which includes certain Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 1996-B1: 7.39%.
$___________ Fractional Undivided Interest representing _______ of the Pass
Through Trust per $1,000 face amount.
THIS CERTIFIES THAT CEDE & CO., for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional Undivided
Interest in the Federal Express Corporation Pass Through Trust, 1996-B1 (the
"Pass Through Trust") created and declared by State Street Bank and Trust
Company, as pass through trustee (the "Pass Through Trustee"), pursuant to the
Pass Through Trust Agreement dated as of June 1, 1996 (the "Pass Through
Agreement"), as supplemented by Series Supplement 1996-B1 thereto dated
October 23, 1996 (the "Series Supplement") between the Pass Through Trustee
and Federal Express Corporation, a Delaware corporation (the "Company"), a
summary of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in the Pass Through Agreement and the
Series Supplement.
This Pass Through Certificate is one of the duly authorized
Pass Through Certificates designated as "Federal Express Corporation 1996
Pass Through Certificates, Series B1." This Pass Through Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Pass Through Agreement and the Series Supplement, to which the
Certificateholder of this Pass Through Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound.
The property of the Pass Through Trust (the "Trust Property") includes
certain Equipment Certificates (the "Equipment Certificates"). Each series
of Equipment Certificates is secured by a security interest in an aircraft
leased to or owned by the Company and, in the case of a leased aircraft, an
assignment of the rights of the related Owner Trustee with respect to such
aircraft, including the right to receive rent and other amounts payable
under the related Lease or Indenture with respect to such aircraft. The
Certificateholders have no rights, benefits or interests in respect of any
other separate trust established pursuant to the terms of the Pass Through
Agreement for any other series of Pass Through Certificates issued pursuant
thereto.
Subject to and in accordance with the terms of the Pass
Through Agreement and the Series Supplement, from funds then available to
the Pass Through Trustee, there will be distributed on each January 30 and
July 30 (a "Regular Distribution Date"), commencing on January 30, 1997, to
the Person in whose name this Pass Through Certificate is registered at the
close of business on the 15th day preceding the applicable Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Certificates due on such Regular Distribution Date, equal to the
product of the percentage interest in the Pass Through Trust evidenced by
this Pass Through Certificate and an amount equal to the sum of such
Scheduled Payments. Subject to and in accordance with the terms of the
Pass Through Agreement and the Series Supplement, if Special Payments on
the Equipment Certificates are received by the Pass Through Trustee, from
funds then available to the Pass Through Trustee, there shall be
distributed on the applicable Special Distribution Date, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding such Special Distribution Date, an
amount in respect of such Special Payments on the Equipment Certificates,
equal to the product of the percentage interest in the Pass Through Trust
evidenced by this Pass Through Certificate and an amount equal to the sum
of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution
shall be made on the immediately following Business Day with the same force
and effect as if made on such Distribution Date and no interest shall accrue
during the intervening period. The Special Distribution Date shall be the
thirtieth day of the month determined as provided in the Pass Through
Agreement and the Series Supplement, except in certain circumstances, in which
case it will be the date of receipt of proceeds by the Pass Through Trustee as
provided in the Series Supplement. The Pass Through Trustee shall mail notice
of each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by
the Pass Through Trustee to the Person entitled thereto, without the
presentation or surrender of this Pass Through Certificate or the making of
any notation hereon. Except as otherwise provided in the Pass Through
Agreement and notwithstanding the above, the final distribution on this Pass
Through Certificate will be made after notice is mailed by the Pass Through
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Pass Through Certificate at the office or agency of the Pass
Through Trustee specified in such notice.
Any Person who is, or who in acquiring this Pass Through
Certificate is or may be using the assets of, an employee benefit plan
subject to Title I of The Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or an individual retirement account or plan subject
to Section 4975 of the Code, or any trust established under any such plan
or account, may acquire or hold any of the Pass Through Certificates, if
such Person determines either that an administrative or a statutory
exemption from the prohibited transaction rules under Section 406 of ERISA
and Section 4975 of the Code is applicable to its purchase and holding of
this Pass Through Certificate or that its purchase and holding of this Pass
Through Certificate will not result in a prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
This Pass Through Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Pass Through Trustee, by manual signature, this Pass Through
Certificate shall not be entitled to any benefit under the Pass Through Trust
or be valid for any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Pass Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, 1996-B1
By: STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated: October 23, 1996
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and the Series Supplement.
STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct obligation
of, or an obligation guaranteed by, or an interest in, the Company or the Pass
Through Trustee or any affiliate thereof. The Pass Through Certificates are
limited in right of payment, all as more specifically set forth on the face
hereof and in the Pass Through Agreement and the Series Supplement. All
payments or distributions made to Certificateholders under the Pass Through
Agreement shall be made only from the Trust Property and only to the extent
that the Pass Through Trustee shall have sufficient income or proceeds from
the Trust Property to make such payments in accordance with the terms of the
Pass Through Agreement and the Series Supplement. Each Certificateholder of
this Pass Through Certificate, by its acceptance hereof, agrees that it will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution to such Certificateholder as provided in the Pass
Through Agreement and the Series Supplement.
In connection with withholding taxes, under certain circumstances
the Pass Through Trustee may retain certain amounts otherwise distributable
to a Certificateholder. The purchase by any Certificateholder of any Pass
Through Certificate constitutes the consent of such Certificateholder to
such retention in accordance with the terms of the Pass Through Agreement.
This Pass Through Certificate does not purport to summarize the
Pass Through Agreement and the Series Supplement and reference is made to
the Pass Through Agreement and the Series Supplement for information with
respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby. A copy of the Pass Through Agreement may be
examined by any Certificateholder upon request during normal business hours
at the principal office of the Pass Through Trustee, and at such other
places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment or default in respect of payment on the Equipment
Certificates shall occur, the aggregate scheduled repayments of principal on
the Equipment Certificates for the Pass Through Trust and the resulting Pool
Factors for the Pass Through Trust after taking into account each such
repayment are set forth below:
Pass Through Trust, 1996-B1
Scheduled
Principal
Payments on
Regular Equipment Trust
Distribution Dates Certificates Pool Factor
------------------ --------------- -----------
January 30, 1997 1,141,072 0.9917264
July 30, 1997 1,844,800 0.9783502
January 30, 1998 1,914,759 0.9644668
July 30, 1998 1,667,554 0.9523758
January 30, 1999 2,246,794 0.9360849
July 30, 1999 1,584,130 0.9245988
January 30, 2000 2,621,859 0.9055884
July 30, 2000 1,521,915 0.8945534
January 30, 2001 2,989,546 0.8728770
July 30, 2001 4,719,512 0.8386570
January 30, 2002 5,462,365 0.7990508
July 30, 2002 0 0.7990508
January 30, 2003 11,919,421 0.7126262
July 30, 2003 0 0.7126262
January 30, 2004 3,332,723 0.6884615
July 30, 2004 0 0.6884615
January 30, 2005 8,890,983 0.6239954
July 30, 2005 0 0.6239954
January 30, 2006 7,581,852 0.5690213
July 30, 2006 0 0.5690213
January 30, 2007 8,527,560 0.5071902
July 30, 2007 0 0.5071902
January 30, 2008 10,224,250 0.4330569
July 30, 2008 0 0.4330569
January 30, 2009 12,631,145 0.3414718
July 30, 2009 0 0.3414718
January 30, 2010 12,875,004 0.2481185
July 30, 2010 0 0.2481185
January 30, 2011 13,993,883 0.1466525
July 30, 2011 0 0.1466525
January 30, 2012 15,913,108 0.0312707
July 30, 2012 0 0.0312707
January 30, 2013 4,312,765 0.0000000
The Pass Through Agreement and the Series Supplement permit, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificateholders under the Pass Through Trust at any time by the Company
and the Pass Through Trustee with the consent of the Majority In Interest of
Certificateholders in the Pass Through Trust. Any such consent by the
Certificateholder of this Pass Through Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders of
this Pass Through Certificate and of any Pass Through Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Pass Through Certificate. The Pass
Through Agreement and the Series Supplement also permit the amendment thereof,
in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of this
Pass Through Certificate for registration of transfer to the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
Fractional Undivided Interests and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement and
the Series Supplement and the disposition of all property held as part of the
Trust Property.
Schedule I
to
Series Supplement
Federal Express Corporation
Pass Through Trust, 1996-B1
Equipment Certificates;
Related Indenture Documents
1. Equipment Trust Certificates (Federal Express Corporation Trust No.
N586FE):
Interest Rate: 7.39%
Maturity: January 30, 2013
Principal Amount: $51,049,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N586FE) dated as of September 1, 1996, amended and restated as of
October 15, 1996, between First Security Bank, National Association, as
Owner Trustee, and State Street Bank and Trust Company, as Indenture
Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N586FE) dated September 23, 1996, between First
Security Bank, National Association, as Owner Trustee, and State Street
Bank and Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N586FE)
dated as of April 1, 1996, amended and restated as of September 1, 1996 and
as further amended and restated as of October 15, 1996, among Federal
Express Corporation, as Lessee, Ameritech Credit Corporation, as Owner
Participant, First Security Bank, National Association, as Owner Trustee,
State Street Bank and Trust Company, as Indenture Trustee, State Street
Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty Trust
Company of New York, Bank of America National Trust & Savings Association,
The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank,
N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N586FE) dated as of
April 1, 1996, amended and restated as of September 1, 1996 and as further
amended and restated as of October 15, 1996, between Ameritech Credit
Corporation, as Owner Participant and First Security Bank, National
Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N586FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
First Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N586FE) dated
September 23, 1996, between First Security Bank, National Association, as
Owner Trustee and Lessor, and Federal Express Corporation, as Lessee.
2. Equipment Trust Certificates (Federal Express Corporation Trust No.
N662FE):
Interest Rate: 7.39%
Maturity: January 30, 2012
Principal Amount: $43,271,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N662FE) dated as of September 1, 1996, amended and restated as of
October 15, 1996, between First Security Bank, National Association, as
Owner Trustee, and State Street Bank and Trust Company, as Indenture
Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, between First
Security Bank, National Association, as Owner Trustee, and State Street
Bank and Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N662FE)
dated as of September 1, 1996, amended and restated as of October 15, 1996,
among Federal Express Corporation, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank, National Association, as Owner
Trustee, State Street Bank and Trust Company, as Indenture Trustee, State
Street Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty
Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N662FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
PMCC Leasing Corporation, as Owner Participant and First Security Bank,
National Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N662FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
First Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N662FE) dated
September 23, 1996, between First Security Bank, National Association, as
Owner Trustee and Lessor, and Federal Express Corporation, as Lessee.
3. Equipment Trust Certificates (Federal Express Corporation Trust No.
N667FE):
Interest Rate: 7.39%
Maturity: January 30, 2012
Principal Amount: $43,597,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N667FE) dated as of August 1, 1996, amended and restated as of October
15, 1996, between First Security Bank, National Association, as Owner
Trustee, and State Street Bank and Trust Company, as Indenture Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, between First Security
Bank, National Association, as Owner Trustee, and State Street Bank and
Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N667FE)
dated as of August 1, 1996, amended and restated as of October 15, 1996,
among Federal Express Corporation, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank, National Association, as Owner
Trustee, State Street Bank and Trust Company, as Indenture Trustee, State
Street Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty
Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N667FE) dated as of
August 1, 1996, amended and restated as of October 15, 1996, between PMCC
Leasing Corporation, as Owner Participant and First Security Bank, National
Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N667FE) dated as of
August 1, 1996, amended and restated as of October 15, 1996, between First
Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N667FE)
dated August 28, 1996, between First Security Bank, National
Association, as Owner Trustee and Lessor, and Federal Express
Corporation, as Lessee.
==============================================================================
SERIES SUPPLEMENT 1996-B2
Dated October 23, 1996
Between
STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
to
PASS THROUGH TRUST AGREEMENT
Dated as of June 1, 1996
$48,211,000
Federal Express Corporation
Pass Through Trust, 1996-B2
Federal Express Corporation
1996 Pass Through Certificates,
Series B2
==============================================================================
TABLE OF CONTENTS
Page
----
RECITALS............................................................. 1
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount........................... 4
SECTION 2.02. Declaration of Trust; Authorization...................... 4
SECTION 2.03. Issuance of Pass Through Certificates.................... 5
SECTION 2.04. Purchase of Equipment Certificates....................... 5
SECTION 2.05. Representations and Warranties of the Company............ 5
SECTION 2.06. Conditions Precedent..................................... 5
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND
THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates....................................... 6
SECTION 3.02. Record Dates............................................. 6
SECTION 3.03. Certificate Account and Special Payments Account......... 6
SECTION 3.04. Form of Pass Through Certificates........................ 6
SECTION 3.05. Indenture Documents...................................... 7
SECTION 3.06. Appointment of Authenticating Agent; Paying Agent and
Registrar............................................... 7
SECTION 3.07. Intentionally Left Blank................................. 7
SECTION 3.08. ERISA.................................................... 7
SECTION 3.09. Registered Global Certificate............................ 8
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form.......................... 8
SECTION 4.02. Reports by the Company................................... 8
SECTION 4.03. Modification and Ratification of Pass Through
Agreement................................................ 8
SECTION 4.04. Termination.............................................. 8
EXHIBIT A Form of Pass Through Certificate
SCHEDULE I Equipment Certificates; Related Indenture Documents
SERIES SUPPLEMENT 1996-B2
SERIES SUPPLEMENT 1996-B2, dated October 23, 1996 (this "Series
Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Company") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, as Pass Through Trustee (the "Pass Through Trustee"), to the Pass
Through Trust Agreement, dated as of June 1, 1996 (the "Pass Through
Agreement"), between the Company and the Pass Through Trustee.
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agreement provides, among
other things, that the Company and the Pass Through Trustee may execute and
deliver one or more series supplements, each for the purpose of forming a
separate pass through trust for the benefit of the certificateholders of the
series of pass through certificates to be issued pursuant to such pass through
trust, appointing an institution to act as Pass Through Trustee if different
from the institution executing the Pass Through Agreement, establishing
certain terms of such pass through certificates, and pursuant to which the
pass through certificates of such series shall be executed and authenticated
by the Pass Through Trustee and delivered as directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company has
agreed to cause the Equipment Certificates to be issued and sold to the Pass
Through Trustee, and the Pass Through Trustee has agreed to purchase the
Equipment Certificates, which will be held in trust as Trust Property for the
benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has agreed,
pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to
issue and sell the Pass Through Certificates to the Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms of this
Series Supplement, the Pass Through Trustee will execute, authenticate and
deliver the Pass Through Certificates to the Underwriters upon receipt by the
Pass Through Trustee of the purchase price therefor, which will be applied in
accordance with this Series Supplement to purchase the Equipment Certificates;
WHEREAS, the Pass Through Trustee hereby declares the creation of
this Pass Through Trust for the benefit of the Certificateholders, and the
initial Certificateholders of such Pass Through Certificates, as the
grantors of such Pass Through Trust, by their respective acceptances of
such Pass Through Certificates, join in the creation of such Pass Through
Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates to, and
the purchase of the Equipment Certificates by, the Pass Through Trustee on
behalf of this Pass Through Trust, the Company has duly authorized the
execution and delivery of this Series Supplement as the "issuer," as such term
is defined in and solely for purposes of the Securities Act, of the Pass
Through Certificates and as the "obligor," as such term is defined in and
solely for purposes of the Trust Indenture Act, with respect to all such Pass
Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of the
Trust Indenture Act and shall, to the extent applicable, be governed by such
provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in the
Pass Through Agreement, either directly or by reference therein, have the
meanings assigned to them therein as supplemented by this Article I, if
applicable, except to the extent the context requires otherwise. Any such
defined term that is defined in the Pass Through Agreement as relating to a
particular Pass Through Trust or Series rather than to any Pass Through
Trust or Series generally shall, when used in this Series Supplement,
relate solely to the Federal Express Corporation Pass Through Trust, 1996-
B2, or the Federal Express Corporation 1996 Pass Through Certificates,
Series B2, as the case may be, whether or not expressly so stated herein.
"Authenticating Agent" has the meaning set forth in Section 3.06
hereof.
"Certificate Account" means the Certificate Account specified in
Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series of
Pass Through Certificates designated in Section 2.01 hereof.
"Cut-off Date for Pass Through Trust" is inapplicable.
"Delivery Date" means, for any Equipment Certificates, the
Refunding Date (as such term is defined in the related Participation
Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Certificates listed
in Schedule I hereto.
"Issuance Date" means the date defined as the Closing Time in the
Underwriting Agreement.
"Participation Agreements" means those Participation Agreements
listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through Certificates
designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other like words
means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section 3.06
hereof.
"Record Date" means any Record Date specified in Section 3.02 hereof.
"Registrar" means the Person specified as such in Section 3.06
hereof.
"Regular Distribution Date" means any Regular Distribution Date
specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment, the
Special Distribution Date for such Special Payment specified in Section 3.01
hereof.
"Special Payments Account" means the Special Payments Account
specified in Section 3.03 hereof.
"Trust Property" means all money, instruments, including the
Equipment Certificates that have been issued by the related Owner Trustee
and delivered to and accepted by the Pass Through Trustee for the benefit
of the Certificateholders, and other property held as the property of this
Pass Through Trust, including all distributions thereon and proceeds
thereof.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
October 17, 1996 among the Company and Goldman, Sachs & Co., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated, BA Securities, Inc. and
First Chicago Capital Markets, Inc.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. The Pass Through
Trust created hereby shall be designated Federal Express Corporation Pass
Through Trust, 1996-B2 (herein sometimes called this "Pass Through Trust").
The Pass Through Certificates evidencing Fractional Undivided Interests in
such Pass Through Trust shall be designated as the Federal Express
Corporation 1996 Pass Through Certificates, Series B2 (herein sometimes
called the "Series B2 Pass Through Certificates"). The Series B2 Pass
Through Certificates shall be the only instruments evidencing a Fractional
Undivided Interest in such Pass Through Trust.
Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass
Through Agreement, the aggregate amount of Series B2 Pass Through
Certificates that may be authenticated, delivered and outstanding under
this Series Supplement is limited to $48,211,000..
SECTION 2.02. Declaration of Trust; Authorization. Each initial
Certificateholder, by its acceptance of any Series B2 Pass Through Certificate
is hereby deemed (1) as grantor, to join in the creation and declaration of
this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to
authorize and direct the Pass Through Trustee to execute and deliver all
documents to which the Pass Through Trustee is a party that may be necessary
or desirable to consummate the transactions contemplated hereby and to
exercise its rights and perform its duties under the Participation Agreements,
the Indentures, the Pass Through Agreement and this Series Supplement.
The Pass Through Trustee hereby acknowledges and accepts this
grant of trust and declares that it will hold the Trust Property as Pass
Through Trustee of this Pass Through Trust for the use and benefit of the
Certificateholders.
SECTION 2.03. Issuance of Pass Through Certificates. Subject to the
terms set forth herein, on the Issuance Date (i) the Company shall direct the
Underwriters to execute a wire transfer or intra-bank transfer to the Pass
Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Series
B2 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver
the Series B2 Pass Through Certificates to the Underwriters as provided in the
Underwriting Agreement upon receipt by the Pass Through Trustee of such
proceeds.
SECTION 2.04. Purchase of Equipment Certificates. On the Issuance
Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02
of the Pass Through Agreement, each of the Equipment Certificates upon the
satisfaction or waiver of the conditions for such purchase by the Pass Through
Trustee set forth in the related Participation Agreement.
SECTION 2.05. Representations and Warranties of the Company. All of
the representations and warranties of the Company set forth or incorporated by
reference in Section 1 of the Underwriting Agreement are incorporated by
reference in this Series Supplement as if set forth herein and the Company
represents and warrants that such representations and warranties are true and
correct on the date hereof, except to the extent that such representations and
warranties expressly relate solely to an earlier date or later date (in which
case such representations and warranties were correct on and as of such
earlier date or will be correct on and as of such later date, as the case may
be).
SECTION 2.06. Conditions Precedent. The obligations of the Pass
Through Trustee to participate in the transactions described in Sections 2.03
and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a
certificate of the Company to the same effect as the certificate of the
Company delivered to the Underwriters pursuant to Section 5(c) of the
Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for
the purchase by the Underwriters of the Pass Through Certificates set forth in
Section 5 of the Underwriting Agreement, which satisfaction or waiver for the
purposes hereof shall be conclusively demonstrated by the receipt by the Pass
Through Trustee of the total proceeds payable by such Underwriters pursuant to
the Underwriting Agreement with respect to the Series B2 Pass Through
Certificates.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND
THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates. The Regular Distribution Dates
are each January 30 and July 30, commencing on January 30, 1997. The Special
Distribution Date for any month in which a Special Payment is to be
distributed will be the thirtieth day of such month, except that the Special
Distribution Date for any Special Payment received by the Pass Through Trustee
in connection with a prepayment of any Equipment Certificate pursuant to
Section 6.02(a)(i) or 6.02(a)(v) of the related Indenture will correspond to
the date of the receipt of such Special Payment by the Pass Through Trustee.
Notice of such Special Payment shall be mailed as soon as practicable after
receipt by the Pass Through Trustee of the notice of such prepayment.
SECTION 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are January 15 and July 15, respectively, and the Record
Date for any Special Distribution Date is the fifteenth day preceding such
Special Distribution Date, in any event, whether or not such date is a
Business Day.
SECTION 3.03. Certificate Account and Special Payments Account. In
accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt
of any Scheduled Payment, the Pass Through Trustee shall immediately deposit
such Scheduled Payment into the Certificate Account, a separate and
non-interest bearing account designated by the Pass Through Trustee to be used
for such purpose. In accordance with Section 5.01(b) of the Pass Through
Agreement and upon receipt of any Special Payment, the Pass Through Trustee
shall immediately deposit such Special Payment into the Special Payments
Account, a separate and, except as provided in Section 5.04 of the Pass
Through Agreement, non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose.
SECTION 3.04. Form of Pass Through Certificates. Subject to Section
2.07 of the Pass Through Agreement, each of the Series B2 Pass Through
Certificates will be substantially in the form of Exhibit A hereto. The
Series B2 Pass Through Certificates will be issued pursuant to a book-entry
system in the form of one Registered Global Certificate and subject to the
conditions set forth in the Letter of Representations among the Company, the
Pass Through Trustee and The Depository Trust Company.
SECTION 3.05. Indenture Documents. The related Indenture Documents
are listed in Schedule I hereto.
SECTION 3.06. Appointment of Authenticating Agent; Paying Agent and
Registrar. (a) The Pass Through Trustee may appoint an authenticating agent
(the "Authenticating Agent") with respect to the Pass Through Certificates
which shall be authorized to act on behalf of the Pass Through Trustee to
authenticate the Pass Through Certificates issued upon original issue and upon
exchange or registration of transfer thereof or pursuant to Section 2.09 of
the Pass Through Agreement. Pass Through Certificates so authenticated shall
be entitled to the benefits of the Pass Through Agreement and this Series
Supplement and shall be valid and obligatory for all purposes as if
authenticated by the Pass Through Trustee. Whenever reference is made in the
Pass Through Agreement or this Series Supplement to the authentication and
delivery of Pass Through Certificates by the Pass Through Trustee or the Pass
Through Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Pass Through
Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Pass Through Trustee by an Authenticating Agent.
(b) The Paying Agent, Registrar and Authenticating Agent for the
Series B2 Pass Through Certificates initially shall be State Street Bank and
Trust Company ("State Street Bank and Trust Company"), Two International
Place, 4th Floor, Boston, Massachusetts 02110. State Street Bank and Trust
Company hereby represents and warrants to the Company that it is qualified to
serve as Paying Agent, Registrar and Authenticating Agent under the provisions
of, and subject to all of the terms and conditions set forth in, the Pass
Through Agreement and this related Series Supplement.
SECTION 3.07. Intentionally Left Blank.
SECTION 3.08. ERISA. Any Person who is, or who in acquiring a Pass
Through Certificate is or may be using the assets of, an employee benefit plan
subject to Title I of The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or an individual retirement account or plan subject to
Section 4975 of the Code, or any trust established under any such plan or
account, may acquire or hold any of the Pass Through Certificates, if such
Person determines either that an administrative or a statutory exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code is applicable to its purchase and holding of a Pass Through
Certificate or that its purchase and holding of a Pass Through Certificate
will not result in a prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code.
SECTION 3.09. Registered Global Certificate. The Series B2 Pass
Through Certificates are to be issued in whole in the form of a Registered
Global Certificate, and Section 2.12 of the Pass Through Agreement shall,
accordingly, be applicable. The Depository for the Registered Global
Certificate and the Letter of Representations is The Depository Trust Company.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. THE PASS THROUGH
AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES B2 PASS THROUGH CERTIFICATE
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 4.02. Reports by the Company. In addition to the reports
required to be provided by the Company pursuant to Section 4.03 of the Pass
Through Agreement, the Company agrees to furnish to the Pass Through Trustee
from time to time, such other financial information as the Pass Through
Trustee may reasonably request.
SECTION 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Series Supplement as if
set forth in full herein, and is in all respects ratified and confirmed, as
supplemented and modified by this Series Supplement.
SECTION 4.04. Termination. In no event shall this Pass Through
Trust continue beyond the expiration of 21 years after the death of the
last survivor of George Pataki, Governor of New York State, living on the
date of this Series Supplement.
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all on the day
and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
STATE STREET BANK AND TRUST COMPANY,
as Pass Through Trustee
By: _________________________________________
Name:
Title:
Exhibit A
to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
Unless this pass through certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Pass Through Trustee or its agent for registration or
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1996-B2
1996 Pass Through Certificate, Series B2
CUSIP 31331FAT8
Final Regular Distribution Date: January 30, 2018
evidencing a fractional undivided interest in a pass through trust, the
property of which includes certain Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 1996-B2: 7.84%.
$___________ Fractional Undivided Interest representing _______ of the Pass
Through Trust per $1,000 face amount.
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered
owner of a $_________ (_____________ dollars) Fractional Undivided Interest in
the Federal Express Corporation Pass Through Trust, 1996-B2 (the "Pass Through
Trust") created and declared by State Street Bank and Trust Company, as pass
through trustee (the "Pass Through Trustee"), pursuant to the Pass Through
Trust Agreement dated as of June 1, 1996 (the "Pass Through Agreement"), as
supplemented by Series Supplement 1996-B2 thereto dated October 23, 1996 (the
"Series Supplement") between the Pass Through Trustee and Federal Express
Corporation, a Delaware corporation (the "Company"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Pass Through Agreement and the Series Supplement.
This Pass Through Certificate is one of the duly authorized Pass
Through Certificates designated as "Federal Express Corporation 1996 Pass
Through Certificates, Series B2." This Pass Through Certificate is issued
under and is subject to the terms, provisions, and conditions of the Pass
Through Agreement and the Series Supplement, to which the Certificateholder of
this Pass Through Certificate by virtue of the acceptance hereof assents and
by which such Certificateholder is bound. The property of the Pass Through
Trust (the "Trust Property") includes certain Equipment Certificates (the
"Equipment Certificates"). Each series of Equipment Certificates is
secured by a security interest in an aircraft leased to or owned by the
Company and, in the case of a leased aircraft, an assignment of the rights
of the related Owner Trustee with respect to such aircraft, including the
right to receive rent and other amounts payable under the related Lease or
Indenture with respect to such aircraft. The Certificateholders have no
rights, benefits or interests in respect of any other separate trust
established pursuant to the terms of the Pass Through Agreement for any
other series of Pass Through Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement and the Series Supplement, from funds then available to the Pass
Through Trustee, there will be distributed on each January 30 and July 30 (a
"Regular Distribution Date"), commencing on January 30, 1997, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding the applicable Regular Distribution Date,
an amount in respect of the Scheduled Payments on the Equipment Certificates
due on such Regular Distribution Date, equal to the product of the percentage
interest in the Pass Through Trust evidenced by this Pass Through Certificate
and an amount equal to the sum of such Scheduled Payments. Subject to and in
accordance with the terms of the Pass Through Agreement and the Series
Supplement, if Special Payments on the Equipment Certificates are received by
the Pass Through Trustee, from funds then available to the Pass Through
Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Pass Through Certificate is registered
at the close of business on the 15th day preceding such Special Distribution
Date, an amount in respect of such Special Payments on the Equipment
Certificates, equal to the product of the percentage interest in the Pass
Through Trust evidenced by this Pass Through Certificate and an amount equal
to the sum of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution shall be
made on the immediately following Business Day with the same force and effect
as if made on such Distribution Date and no interest shall accrue during the
intervening period. The Special Distribution Date shall be the thirtieth day
of the month determined as provided in the Pass Through Agreement and the
Series Supplement, except in certain circumstances, in which case it will be
the date of receipt of proceeds by the Pass Through Trustee as provided in the
Series Supplement. The Pass Through Trustee shall mail notice of each Special
Payment and the Special Distribution Date therefor to the Certificateholder of
this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by the
Pass Through Trustee to the Person entitled thereto, without the presentation
or surrender of this Pass Through Certificate or the making of any notation
hereon. Except as otherwise provided in the Pass Through Agreement and
notwithstanding the above, the final distribution on this Pass Through
Certificate will be made after notice is mailed by the Pass Through Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Pass Through Certificate at the office or agency of the Pass Through
Trustee specified in such notice.
Any Person who is, or who in acquiring this Pass Through Certificate
is or may be using the assets of, an employee benefit plan subject to Title I
of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or an individual retirement account or plan subject to Section 4975 of the
Code, or any trust established under any such plan or account, may acquire or
hold any of the Pass Through Certificates, if such Person determines either
that an administrative or a statutory exemption from the prohibited
transaction rules under Section 406 of ERISA and Section 4975 of the Code is
applicable to its purchase and holding of this Pass Through Certificate or
that its purchase and holding of this Pass Through Certificate will not result
in a prohibited transaction under Section 406 of ERISA and Section 4975 of the
Code.
This Pass Through Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Pass Through Certificate
shall not be entitled to any benefit under the Pass Through Trust or be valid
for any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, 1996-B2
By: STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated: October 23, 1996
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and the Series Supplement.
STATE STREET BANK AND TRUST COMPANY
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct obligation
of, or an obligation guaranteed by, or an interest in, the Company or the Pass
Through Trustee or any affiliate thereof. The Pass Through Certificates are
limited in right of payment, all as more specifically set forth on the face
hereof and in the Pass Through Agreement and the Series Supplement. All
payments or distributions made to Certificateholders under the Pass Through
Agreement shall be made only from the Trust Property and only to the extent
that the Pass Through Trustee shall have sufficient income or proceeds from
the Trust Property to make such payments in accordance with the terms of the
Pass Through Agreement and the Series Supplement. Each Certificateholder of
this Pass Through Certificate, by its acceptance hereof, agrees that it will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution to such Certificateholder as provided in the Pass
Through Agreement and the Series Supplement.
In connection with withholding taxes, under certain circumstances
the Pass Through Trustee may retain certain amounts otherwise distributable
to a Certificateholder. The purchase by any Certificateholder of any Pass
Through Certificate constitutes the consent of such Certificateholder to
such retention in accordance with the terms of the Pass Through Agreement.
This Pass Through Certificate does not purport to summarize the
Pass Through Agreement and the Series Supplement and reference is made to
the Pass Through Agreement and the Series Supplement for information with
respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby. A copy of the Pass Through Agreement may be
examined by any Certificateholder upon request during normal business hours
at the principal office of the Pass Through Trustee, and at such other
places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment or default in respect of payment on the Equipment
Certificates shall occur, the aggregate scheduled repayments of principal on
the Equipment Certificates for the Pass Through Trust and the resulting Pool
Factors for the Pass Through Trust after taking into account each such
repayment are set forth below:
Pass Through Trust, 1996-B2
Scheduled
Principal
Payments on
Regular Equipment Trust
Distribution Dates Certificates Pool Factor
- -------------------------- ----------------- -------------
July 30, 2013 $ 0 1.0000000
January 30, 2014 6,571,190 0.8636994
July 30, 2014 0 0.8636994
January 30, 2015 5,151,810 0.7568397
July 30, 2015 0 0.7568397
January 30, 2016 11,601,384 0.5162020
July 30, 2016 0 0.5162020
January 30, 2017 12,105,859 0.2651004
July 30, 2017 426,963 0.2562443
January 30, 2018 12,353,794 0.0000000
The Pass Through Agreement and the Series Supplement permit, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificateholders under the Pass Through Trust at any time by the Company
and the Pass Through Trustee with the consent of the Majority In Interest of
Certificateholders in the Pass Through Trust. Any such consent by the
Certificateholder of this Pass Through Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders of
this Pass Through Certificate and of any Pass Through Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Pass Through Certificate. The Pass
Through Agreement and the Series Supplement also permit the amendment thereof,
in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of this
Pass Through Certificate for registration of transfer to the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
Fractional Undivided Interests and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement and
the Series Supplement and the disposition of all property held as part of the
Trust Property.
Schedule I
to
Series Supplement
Federal Express Corporation
Pass Through Trust, 1996-B2
Equipment Certificates;
Related Indenture Documents
1. Equipment Trust Certificates (Federal Express Corporation Trust No.
N586FE):
Interest Rate: 7.84%
Maturity: January 30, 2015
Principal Amount: $11,723,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N586FE) dated as of September 1, 1996, amended and restated as of
October 15, 1996, between First Security Bank, National Association, as
Owner Trustee, and State Street Bank and Trust Company, as Indenture
Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N586FE) dated September 23, 1996, between First
Security Bank, National Association, as Owner Trustee, and State Street
Bank and Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N586FE)
dated as of April 1, 1996, amended and restated as of September 1, 1996 and
as further amended and restated as of October 15, 1996, among Federal
Express Corporation, as Lessee, Ameritech Credit Corporation, as Owner
Participant, First Security Bank, National Association, as Owner Trustee,
State Street Bank and Trust Company, as Indenture Trustee, State Street
Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty Trust
Company of New York, Bank of America National Trust & Savings Association,
The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank,
N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N586FE) dated as of
April 1, 1996, amended and restated as of September 1, 1996 and as further
amended and restated as of October 15, 1996, between Ameritech Credit
Corporation, as Owner Participant and First Security Bank, National
Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N586FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
First Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N586FE) dated
September 23, 1996, between First Security Bank, National Association, as
Owner Trustee and Lessor, and Federal Express Corporation, as Lessee.
2. Equipment Trust Certificates (Federal Express Corporation Trust No.
N662FE):
Interest Rate: 7.84%
Maturity: January 30, 2018
Principal Amount: $18,300,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N662FE) dated as of September 1, 1996, amended and restated as of
October 15, 1996, between First Security Bank, National Association, as
Owner Trustee, and State Street Bank and Trust Company, as Indenture
Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, between First
Security Bank, National Association, as Owner Trustee, and State Street
Bank and Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N662FE)
dated as of September 1, 1996, amended and restated as of October 15, 1996,
among Federal Express Corporation, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank, National Association, as Owner
Trustee, State Street Bank and Trust Company, as Indenture Trustee, State
Street Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty
Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N662FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
PMCC Leasing Corporation, as Owner Participant and First Security Bank,
National Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N662FE) dated as of
September 1, 1996, amended and restated as of October 15, 1996, between
First Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N662FE) dated
September 23, 1996, between First Security Bank, National Association, as
Owner Trustee and Lessor, and Federal Express Corporation, as Lessee.
3. Equipment Trust Certificates (Federal Express Corporation Trust No.
N667FE):
Interest Rate: 7.84%
Maturity: January 30, 2018
Principal Amount: $18,188,000.00
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N667FE) dated as of August 1, 1996, amended and restated as of October
15, 1996, between First Security Bank, National Association, as Owner
Trustee, and State Street Bank and Trust Company, as Indenture Trustee;
Trust Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, between First Security
Bank, National Association, as Owner Trustee, and State Street Bank and
Trust Company, as Indenture Trustee;
Participation Agreement (Federal Express Corporation Trust No. N667FE)
dated as of August 1, 1996, amended and restated as of October 15, 1996,
among Federal Express Corporation, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank, National Association, as Owner
Trustee, State Street Bank and Trust Company, as Indenture Trustee, State
Street Bank and Trust Company, as Pass Through Trustee and Morgan Guaranty
Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N667FE) dated as of
August 1, 1996, amended and restated as of October 15, 1996, between PMCC
Leasing Corporation, as Owner Participant and First Security Bank, National
Association, as Owner Trustee;
Lease Agreement (Federal Express Corporation Trust No. N667FE) dated as of
August 1, 1996, amended and restated as of October 15, 1996, between First
Security Bank, National Association, as Owner Trustee and Lessor, and
Federal Express Corporation, as Lessee; and
Lease Supplement No. 1 (Federal Express Corporation Trust No. N667FE) dated
August 28, 1996, between First Security Bank, National Association, as Owner
Trustee and Lessor, and Federal Express Corporation, as Lessee.
EXHIBIT 4.b.1
==============================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
(Federal Express Corporation Trust No. N586FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Not in its Individual
Capacity, but solely
As Indenture Trustee,
Indenture Trustee
COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48487, REGISTRATION NO. N586FE
==============================================================================
TABLE OF CONTENTS
Page
----
Initial Recitals......................................................... 1
Granting Clause.......................................................... 2
Habendum Clause.......................................................... 5
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................. 8
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.............. 8
Section 2.02. Execution of Certificates................................ 8
Section 2.03. Certificate of Authentication............................ 9
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest......................... 9
Section 2.05. Payments from Trust Indenture Estate Only................ 10
Section 2.06. Registration, Transfer and Exchange...................... 11
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates............................................ 12
Section 2.08. Cancellation of Certificates; Destruction Thereof........ 13
Section 2.09. Temporary Certificates................................... 14
Section 2.10. Termination of Interest in Trust Indenture Estate........ 14
Section 2.11. Certificates in Respect of Replacement Aircraft.......... 14
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements.................................... 15
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.... 15
Section 3.02. Offices for Payments, etc................................ 15
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee................................................. 16
Section 3.04. Paying Agents............................................ 16
Section 3.05. Covenants of FSB and the Owner Trustee................... 16
Section 3.06. [Intentionally Left Blank.].............................. 17
Section 3.07. Disposal of Trust Indenture Estate....................... 17
Section 3.08. No Representations or Warranties as to Aircraft or
Documents............................................... 17
Section 3.09. Further Assurances; Financing Statements................. 18
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates.................. 18
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution.................................. 18
Section 5.02. Event of Loss and Replacement; Prepayment................ 19
Section 5.03. Payment After Indenture Event of Default, etc............ 20
Section 5.04. Certain Payments......................................... 21
Section 5.05. Other Payments........................................... 21
Section 5.06. Payments to Owner Trustee................................ 21
Section 5.07. Application of Payments.................................. 21
Section 5.08. Investment of Amounts Held by Indenture Trustee.......... 22
Section 5.09. Withholding Taxes........................................ 23
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity.......................... 23
Section 6.02. Prepayment of Certificates............................... 23
Section 6.03. Notice of Prepayment to Holders.......................... 25
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price................................................... 25
Section 6.05. Certificates Payable on Prepayment Date.................. 26
Section 6.06. Mandatory Sinking Fund Redemption........................ 26
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default............................... 28
Section 7.02. Remedies................................................. 30
Section 7.03. Return of Aircraft, etc.................................. 32
Section 7.04. Indenture Trustee May Prove Debt......................... 35
Section 7.05. Remedies Cumulative...................................... 37
Section 7.06. Suits for Enforcement.................................... 37
Section 7.07. Discontinuance of Proceedings............................ 37
Section 7.08. Limitations on Suits by Holders.......................... 37
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute
Certain Suits........................................... 38
Section 7.10. Control by Holders....................................... 38
Section 7.11. Waiver of Past Indenture Default......................... 39
Section 7.12. Notice of Indenture Default.............................. 39
Section 7.13. Waiver of Appraisement, etc.; Laws....................... 40
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40
Section 8.02. Owner Participant's Right to Elect to Prepay or Purchase
the Certificates........................................ 43
Section 8.03. Certain Rights of Owner Participant...................... 45
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts..................................... 46
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an
Indenture Event of Default.............................. 46
Section 9.03. Certain Rights of the Indenture Trustee.................. 49
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds
Thereof................................................. 50
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc.......... ............................. 50
Section 9.06. Moneys Held by Indenture Trustee......................... 50
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc........................................ 50
Section 9.08. Replacement Airframes and Replacement Engines............ 51
Section 9.09. Indenture and Security Agreement Supplement for
Replacements............................................ 54
Section 9.10. Effect of Replacement.................................... 54
Section 9.11. Compensation............................................. 54
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders..................... 55
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates........................................... 55
Section 10.03. Holders to Be Treated as Owners......................... 55
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding................................. 56
Section 10.05. Right of Revocation of Action Taken..................... 56
Section 10.06. ERISA................................................... 57
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee....................... 58
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor............................... 58
Section 12.03. Persons Eligible for Appointment as Indenture Trustee... 60
Section 12.04. Acceptance of Appointment by Successor Trustee.......... 60
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.......................... 61
Section 12.06. Appointment of Separate Trustees........................ 61
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders...... 63
Section 13.02. Supplemental Indentures With Consent of Holders......... 65
Section 13.03. Effect of Supplemental Indenture........................ 66
Section 13.04. Documents to Be Given to Indenture Trustee.............. 67
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures............................................. 67
Section 13.06. No Request Necessary for Lease Supplement or
Indenture and Security Agreement Supplement............ 67
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination of
Indenture.............................................. 67
Section 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates............................... 69
Section 14.03. Repayment of Moneys Held by Paying Agent................ 69
Section 14.04. Transfer of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years and Eleven
Months................................................. 69
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting................................ 69
Section 15.02. No Legal Title to Trust Indenture Estate in Holders..... 70
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding................................................ 70
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee,
Owner Participant and Holders.......................... 70
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease.................................................. 70
Section 15.06. Notices................................................. 70
Section 15.07. Officer's Certificates and Opinions of Counsel; Statements
to Be Contained Therein................................ 71
Section 15.08. Severability............................................ 72
Section 15.09. No Oral Modifications or Continuing Waivers............. 72
Section 15.10. Successors and Assigns.................................. 72
Section 15.11. Headings................................................ 73
Section 15.12. Normal Commercial Relations............................. 73
Section 15.13. Governing Law; Counterparts............................. 73
Exhibit A --Form of Indenture and Security Agreement Supplement
Exhibit B --Form of Certificate
Schedule I --[Intentionally Left Blank]
Schedule II --Definitions
Schedule III --Description of Original Indenture
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N586FE) dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Indenture"), between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as otherwise specifically set forth herein (when acting in such
individual capacity, "FSB"), but solely as owner trustee (the "Owner Trustee")
under the Trust Agreement, as defined herein, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Indenture Trustee hereunder (the
"Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and FSB entered into the Original
Trust Agreement whereby, among other things, the Owner Trustee declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of the Original Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee entered into the
Original Indenture for the benefit and security of the Original Loan
Participants and pursuant to which the Owner Trustee issued to the Original
Loan Participants the Original Loan Certificates as evidence of the loan made
by the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, the Original Indenture was recorded by the FAA and
assigned a Conveyance Number as more particularly described on Schedule III
attached hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the parties hereto desire to refinance the Original Loan
Certificates with the proceeds of the Certificates to be issued hereunder;
WHEREAS, in connection with the refinancing of the Original Loan
Certificates, the parties hereto desire to amend and restate the Original
Indenture in its entirety as this Indenture sets forth, in order to provide,
among other things, (i) for the issuance by the Owner Trustee of the
Certificates, as provided in the Participation Agreement, and (ii) for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, among other things, of
certain of the Owner Trustee's right, title and interest in and to the
Aircraft, the Lease and payments and other amounts received hereunder or
thereunder in accordance with the terms hereof (other than Excepted Payments),
as security for the Owner Trustee's obligations to the Holders and for the
ratable benefit and security of such Holders;
WHEREAS, the Owner Participant and FSB, prior to the execution and
delivery of this Indenture, entered into the Trust Agreement whereby the
Original Trust Agreement was amended and restated and pursuant to which, among
other things, the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, all things have been done to make the Certificates, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree that such Original Indenture be and
the same is hereby amended and restated to read in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and
all other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the
Lease contained for the benefit of the Holders of the Certificates, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee, the Owner Participant or the
Lessee to the Holders and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Certificates and of the purchase of
the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a first priority security interest in and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
grant a first priority security interest in and confirm to the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
security and benefit of the Holders from time to time of the Certificates, a
first priority security interest in and first mortgage Lien on all estate,
right, title and interest of the Owner Trustee in, to and under the following
described property, rights and privileges other than Excepted Payments, which
collectively, excluding Excepted Payments but including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by
any Indenture and Security Agreement Supplement or any mortgage supplemental
to this Indenture, are included within the Trust Indenture Estate, subject
always to the rights granted to the Owner Trustee or the Owner Participant
hereunder and to the other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described in the
Indenture and Security Agreement Supplement and any airframe substituted in
replacement thereof pursuant to the provisions of this Indenture; the Engines,
as the same are more particularly described in the Indenture and Security
Agreement Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Modification Agreement (to the extent assigned to the Owner
Trustee pursuant to the Warranty Bill of Sale), the GTA, the Engine Warranty
Assignment and the Engine Consent, the Bills of Sale, the Ancillary Agreements
and the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease, the Trust
Agreement and the Certificates, the "Indenture Documents"), including all
rights of the Owner Trustee to execute any election or option or to give or
receive any notice, consent, waiver or approval under or in respect of any of
the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required
to be subjected to the Lien of this Indenture, and all of the estate, right,
title and interest of the Owner Trustee in and to the same and every part of
said property;
(5) All moneys and securities (including Permitted Investments)
now or hereafter paid or deposited or required to be paid or deposited to
or with the Indenture Trustee by or for the account of the Owner Trustee
pursuant to any term of any Operative Agreement, except the Tax Indemnity
Agreement, and held or required to be held by the Indenture Trustee
hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Article 13 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Article 13 of the Lease; and
(7) All proceeds of the foregoing.
Notwithstanding the foregoing provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted
Payments and to commence an action at law to obtain such Excepted Payments and
(B) to adjust Basic Rent and the percentages relating to Stipulated Loss Value
and Termination Value and the EBO Price as provided in Section 3.04 of the
Lease and Section 15.01 of the Participation Agreement, (C) to exercise any
election or option to make any decision or determination, or to give or
receive any notice, consent, waiver or approval, or to take any other action
in respect of, but in each case only to the extent relating to, Excepted
Payments (except for, in respect of Basic Rent constituting an Excepted
Payment, the manner by which such amount is paid), (D) to retain the rights of
the "Lessor" with respect to solicitations of bids, and the election to retain
the Aircraft pursuant to Article 10 of the Lease, (E) to retain the right of
"Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to
Article 4 of the Lease, (F) to retain all rights with respect to insurance
maintained for its own account which Section 13.05 of the Lease specifically
confers on the "Lessor" and (G) to exercise, to the extent necessary to
enable it to exercise its rights under Section 8.03 hereof, the rights of
the "Lessor" under Section 17.04 of the Lease;
(ii)whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to
give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in
respect thereof, and (E) the right to consent to changes to the list of
countries on Schedule III to the Participation Agreement;
(iii)(A) so long as no Indenture Event of Default shall have occurred
and be continuing (but subject to the provisions of Section 8.01 hereof), the
Owner Trustee shall retain the right, to the exclusion of the Indenture
Trustee, to approve as satisfactory any accountants, engineers, appraisers or
counsel to render services for or issue appraisals, reports, certificates or
opinions to the Owner Trustee and to exercise all rights, elections and
options of the Lessor in connection with the return, renewal or purchase of
the Aircraft and to exercise rights with respect to the use, operation,
maintenance and modification of the Aircraft, in each case pursuant to express
provisions of the Operative Agreements (other than in connection with an Event
of Default), and (B) so long as no Indenture Event of Default not constituting
an Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
jointly with the Indenture Trustee (agreement of both not being required), to
further assurances and financial information from the Lessee pursuant to
Section 19.01 of the Lease (other than the right to receive any funds to be
delivered to the "Lessor" under the Lease (except funds delivered with respect
to Excepted Payments);
(iv)at all times the Owner Trustee shall have the right as Lessor,
but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft; and
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section 7.02
hereof.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so
long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
benefit and security of the Holders from time to time of the Certificates,
without any priority of any one Certificate over any other and for the uses
and purposes and subject to the terms and conditions set forth in this
Indenture.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any
of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of
the Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file
any claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture
Event of Default, the Owner Trustee hereby constitutes the Indenture
Trustee the true and lawful attorney of the Owner Trustee, irrevocably,
with full power (in the name of the Owner Trustee or otherwise), subject to
the terms and conditions of this Indenture, to ask, require, demand,
receive, compound and give acquittance for any and all Basic Rent,
Supplemental Rent payable to the Owner Trustee, Stipulated Loss Value and
Termination Value payments, insurance proceeds and any and all moneys and
claims for moneys due and to become due under or arising out of the Lease
(subject to Section 8.01 hereof) or the other Indenture Documents (other
than Excepted Payments), to endorse any checks or other instruments or
orders in connection with the same and to file any claims, take any action
or institute any proceeding which the Indenture Trustee may deem to be
necessary or advisable in the premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the
Owner Trustee and all other amounts (other than Excepted Payments not
constituting Basic Rent) which are required to be paid to or deposited with
the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at
such address in the United States of America as the Indenture Trustee shall
specify for application as provided in this Indenture. The Owner Trustee
agrees that if, notwithstanding such provision, it shall have received any
such amounts, promptly on receipt of any such payment, it will transfer to the
Indenture Trustee any and all moneys from time to time received by the Owner
Trustee constituting part of the Trust Indenture Estate for distribution by
the Indenture Trustee pursuant to this Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement (i) any
amounts distributed to it by the Indenture Trustee under this Indenture, and
(ii) any Excepted Payments not constituting Basic Rent.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any
and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted; provided, however, that
the Owner Trustee shall have no obligation to execute and deliver or cause to
be executed or delivered to the Indenture Trustee any such instrument or
document if such execution and delivery would result in the imposition of
additional liabilities on the Owner Trustee or the Owner Participant or would
result in a burden on the Owner Participant's business activities, unless the
Owner Trustee or the Owner Participant, as the case may be, is indemnified to
its reasonable satisfaction against any losses, liabilities and expenses
incurred in connection with such execution and delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant
to Section 14.01 hereof, any of its right, title or interest hereby assigned,
to anyone other than the Indenture Trustee, and that it will not, except in
respect of Excepted Payments or otherwise as provided in or permitted by this
Indenture, accept any payment from the Lessee or any sublessee (other than
Excepted Payments not constituting Basic Rent), enter into an agreement
amending or supplementing any of the Operative Agreements, execute any waiver
or modification of, or consent under the terms of any of the Operative
Agreements, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Operative
Agreements, or submit or consent to the submission of any dispute, difference
or other matter arising under or in respect of any of the Operative
Agreements, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee
has delivered to the Indenture Trustee executed counterparts of the Trust
Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in
Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of this Indenture, and from time to
time thereafter, Certificates in an aggregate principal amount not in excess
of the amount specified in Section 2.04 hereof (except as otherwise provided
in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture
Trustee shall thereupon authenticate and deliver said Certificates to or upon
the oral or written order of the Owner Trustee, signed, if written, by an
authorized officer of the Owner Trustee, without any further action by the
Owner Trustee.
Section 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of FSB. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of FSB who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of
by FSB, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of FSB; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the
execution of such Certificate, shall be the proper officers of FSB, although
at the date of the execution and delivery of this Indenture any such person
was not such an officer. Certificates bearing the facsimile signatures of
individuals who were authorized officers of FSB at the time such Certificates
were issued shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the respective dates of such Certificates.
Section 2.03. Certificate of Authentication. Only such Certificates
as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit B, executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the security
and benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Indenture Trustee upon any Certificate executed by the
Owner Trustee shall be conclusive evidence that the Certificate so
authenticated has been duly authenticated and delivered hereunder and that the
Holder, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. Certificates may differ with respect to Maturity and as to
other terms. The Certificates shall be issuable as registered securities
without coupons and shall be numbered, lettered, or otherwise distinguished in
such manner or in accordance with such plans as the Owner Trustee executing
the same may determine with the approval of the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Refunding Date, and shall be issued in
the Maturities and principal amounts, and shall bear interest at the rates per
annum, specified in the form of Certificate set forth in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Certificates are admitted to trading, or to
conform to general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the
basis of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on
demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on,
the Certificates shall be payable at the Corporate Trust Administration of
the Indenture Trustee or at any office or agency maintained for such
purpose pursuant to Section 3.02 hereof in immediately available funds
prior to 10:30 A.M. (New York time) on the due date thereof and the
Indenture Trustee shall remit all such amounts received by it to the
Holders at such account or accounts at such financial institution or
institutions as the Holders shall have designated to the Indenture Trustee
in writing, in immediately available funds, such payment to be made if the
payment was received prior to 10:30 A.M. New York time by the Indenture
Trustee on any Business Day, by 12:00 noon New York time on such Business
Day; otherwise, the Indenture Trustee shall make payment promptly, but not
later than 11:00 A.M. New York time on the next succeeding Business Day;
provided, however, that interest may be payable at the option of the
Indenture Trustee or its Paying Agent, as defined in Section 3.04, by
mailing checks for such interest payable to or upon the written order of
the Holders entitled thereto as they shall appear on the Register. If any
amount payable under the Certificates, or under this Indenture, falls due
on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on
such next succeeding Business Day) additional interest thereon for the
period of such extension.
The Holder at the close of business on any Record Date with respect
to any Payment Date shall be entitled to receive the interest if any payable
on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
Section 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Lessor's Estate to the extent included
in the Trust Indenture Estate (and such other amounts) to enable the Indenture
Trustee to make distributions of the amounts due in respect of the
Certificates in accordance with the terms hereof and thereof. Each Holder by
its acceptance of a Certificate agrees that it will look solely to the income
and proceeds from the Trust Indenture Estate (and such other amounts of the
type described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee) to the extent available for distribution to it as provided
herein and that neither the Owner Participant, the Owner Trustee, FSB nor the
Indenture Trustee is personally liable to such Holder for any amounts payable
under this Indenture or such Certificate or for any amounts payable or
liability under any Certificate or this Indenture, except as expressly
provided herein in the case of FSB, the Owner Trustee or the Indenture
Trustee.
FSB is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates,
except as a result of FSB's gross negligence or willful misconduct, or as
otherwise expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of
a debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required,
by reason of the Owner Participant being held to have recourse liability to
the debtor or the trustee of the debtor directly or indirectly, to make
payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Participant under the Participation Agreement, or from
retaining any amount paid by the Owner Participant under Sections 5.01, 8.02
and 8.03 hereof.
Section 2.06. Registration, Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Certificates
as provided in this Article. Such Register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable period of time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees a new Certificate or Certificates of the same Maturity,
principal amount and interest rate and in authorized denominations for an
equal aggregate principal amount; provided, that such Certificate being
transferred shall be cancelled in accordance with Section 2.08 hereof
simultaneously with the issuance of the new Certificate.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Maturity and interest rate but in other authorized
denominations, in an equal aggregate principal amount. Certificates to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner
Trustee and the Indenture Trustee duly executed by the Holder or its attorney
duly authorized in writing and (except in the case of transfers pursuant to
Section 15.01 of the Participation Agreement) the Indenture Trustee may
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
Certificates. No service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of fifteen (15) days immediately
preceding the first mailing of notice of prepayment of such Certificates or
(b) with respect to which notice of prepayment has been given pursuant to
Section 6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request of
any officer of FSB, the Indenture Trustee shall authenticate and deliver, a
new Certificate of like Maturity, principal amount and interest rate as the
Certificate being replaced, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Certificate, or in lieu of and substitution for the Certificate so
apparently destroyed, lost or stolen. In the case of any Certificate so
apparently destroyed, lost or stolen, the applicant for a substitute
Certificate shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith.
In case any Certificate which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of
issuing a substitute Certificate, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated or defaced
Certificate), if the applicant of any Certificate so apparently destroyed,
lost or stolen, for such payment shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as any of them may require to
hold each of them harmless and the applicant shall also furnish to the Owner
Trustee and the Indenture Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered
hereunder. All Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Certificates and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
Section 2.08. Cancellation of Certificates; Destruction Thereof.
All Certificates surrendered for payment, prepayment, registration of
transfer or exchange, if surrendered to the Owner Trustee or any agent of
the Owner Trustee or the Indenture Trustee, shall be delivered to the
Indenture Trustee for cancellation or, if surrendered to the Indenture
Trustee, shall be cancelled by it; and no Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Indenture Trustee shall destroy cancelled Certificates held
by it and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Certificates, such acquisition
shall not operate as a prepayment or satisfaction of the indebtedness
represented by such Certificates unless and until the same are delivered to
the Indenture Trustee for cancellation.
Section 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of FSB, the Indenture Trustee shall authenticate
and deliver temporary Certificates (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Indenture
Trustee). Temporary Certificates shall be issuable as registered Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Certificates, all as may be
determined by the Owner Trustee with the concurrence of the Indenture Trustee.
Temporary Certificates may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Certificate shall be
executed by the Owner Trustee and, upon the oral or written request of an
authorized officer of the Owner Trustee, be authenticated by the Indenture
Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Certificates. Without unreasonable delay
the Owner Trustee shall execute and shall furnish definitive Certificates and
thereupon temporary Certificates shall be surrendered in exchange therefor
without charge at any office or agency to be maintained by the Indenture
Trustee for the purpose pursuant to Section 3.02 hereof, and, upon the oral
or written request of an authorized officer of the Owner Trustee, the
Indenture Trustee shall authenticate and deliver in exchange for such
temporary Certificates an equal aggregate principal amount of definitive
Certificates of the same Maturities and interest rates and in authorized
denominations. Until so exchanged, temporary Certificates shall be entitled
to the same security and benefits under this Indenture as definitive
Certificates.
Section 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder shall have been paid in full.
Section 2.11. Certificates in Respect of Replacement Aircraft. Upon
the execution and delivery of an Indenture and Security Agreement Supplement
covering a replacement airframe and/or Replacement Engine, as provided in
Section 9.09 hereof, each Certificate shall be deemed to have been issued in
connection with such replacement airframe and/or Replacement Engine and each
Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such replacement airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction
of the conditions set forth in Section 7.11 of the Participation Agreement,
the Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Administration (or such other account
at such other financial institution as the Indenture Trustee may designate for
the purpose). If any amount payable under the Certificates or under this
Indenture falls due on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
Section 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented
for payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
and for prepayment as provided in this Indenture (the "Registrar"). The
Registrar shall keep a register (the "Register") with respect to the
Certificates and their transfer and exchange. The Indenture Trustee may
appoint one or more co-registrars ("Co-Registrars") for the Certificates and
may terminate any such appointment at any time upon written notice. The term
"Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in
the office of Indenture Trustee, will, with the consent of the Lessee,
appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee,
so that there shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its
sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Certificates when the same shall be due
and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to
the provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of FSB and the Owner Trustee.
(a) FSB hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii)the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice received pursuant to Article 11
of the Lease, to the extent that the same shall not have been furnished to
the Indenture Trustee;
(iii)the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Indenture Documents; and
(iv)except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Intentionally Left Blank.]
Section 3.07. Disposal of Trust Indenture Estate. At any time and
from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR FSB NOR
THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO
THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that FSB warrants that on the Delivery Date (a) the Owner
Trustee shall have received whatever title was conveyed to it by the Lessee,
and (b) the Aircraft shall be free and clear of Lessor's Liens attributable to
FSB. Neither FSB, the Indenture Trustee nor the Owner Participant makes or
shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Indenture, the Trust Agreement,
the Certificates or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of FSB, the Indenture Trustee and the Owner Participant made under
this Indenture or in the Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time
and from time to time, upon the request of the Indenture Trustee or the
Lessee, the Owner Trustee shall promptly and duly execute and deliver any and
all such further instruments and documents as may be specified in such request
and as are necessary or advisable to perfect, preserve or protect the Liens
and assignments created or intended to be created hereby, or to obtain for the
Indenture Trustee the full benefit of the specific rights and powers granted
herein, including, without limitation, the execution and delivery of Uniform
Commercial Code financing statements and continuation statements with respect
thereto, or similar instruments relating to the perfection of the Liens or
assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than ten (10)
days after each Record Date, as of such Record Date, or at such other times as
the Indenture Trustee may request in writing, a list, in such form and as of
such date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Holders and the amounts and Maturities of the Certificates
held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register
kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided
in Section 5.03 hereof, each installment of Basic Rent, any payment of
interest on overdue installments of Basic Rent and any payment received by the
Indenture Trustee pursuant to Section 8.03(a) hereof shall be distributed by
the Indenture Trustee no later than the time herein provided in the following
order of priority: first, so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on Make-Whole Premium, if any,
interest and other amounts) then due under all Certificates shall be
distributed to the Holders ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then due under each
such Certificate bears to the aggregate amount of the payments then due under
all such Certificates, and, second, the balance if any of such installment or
payment remaining thereafter shall be distributed to the Owner Trustee, or as
the Owner Trustee may request, for distribution pursuant to the Trust
Agreement.
Section 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the
case of said Section 11.03(e), subject to the time limits specified therein)
or as the result of, or in connection with any event under the Lease giving
rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably
incurred in connection with such prepayment, second, as provided in clause
"second" of Section 5.03 hereof (without giving effect to the parenthetical at
the end thereof), and third, as provided in clause "third" of Section 5.03
hereof; provided that if a replacement airframe shall be substituted for an
Airframe subject to an Event of Loss as provided in Section 11.03 of the Lease
and Section 9.08 hereof, any proceeds which result from such Event of Loss and
are paid to the Indenture Trustee shall be held by the Indenture Trustee as
part of the Trust Indenture Estate and, unless otherwise applied pursuant to
Section 5.01 or 5.03 hereof, such proceeds shall be released to the Lessee
upon the release of such damaged Airframe and the replacement thereof as
herein provided.
(b) Any amounts received directly or indirectly from any
governmental authority, insurer or other party pursuant to any provision of
Article 11 or 13 of the Lease as the result of loss or damage not
constituting an Event of Loss (x) with respect to the Aircraft, or as a
result of such loss or damage constituting an Event of Loss if and to the
extent that such amounts would at the time be required to be paid to the
Lessee pursuant to said Article 11 or 13 but for the fact that an Event of
Default shall have occurred and be continuing or (y) are pledged to the
Lessor as security in connection with an Event of Loss in accordance with
Section 11.03(e) of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the
Participation Agreement and shall be invested in accordance with the terms
of Section 5.08 hereof and at such time as the conditions for payment to
the Lessee specified in said Article 11 or 13, as the case may be, shall be
fulfilled and there shall not be continuing any Event of Default, such
amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof,
all payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee (a) after an Indenture Event of Default
shall have occurred and so long as such an Indenture Event of Default shall be
continuing, and after the Indenture Trustee has received a request to
accelerate the Certificates in accordance with Section 7.10 hereof, or (b)
after the Certificates shall have become due and payable as provided in
Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to
Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent
not previously reimbursed) (including, without limitation, the expenses of
any sale, taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or advances made
by the Indenture Trustee in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon such Indenture Event of Default) shall be
applied by the Indenture Trustee in reimbursement of such expenses;
second, so much of such payments or amounts as shall be required to
pay in full the aggregate unpaid principal amount of all Outstanding
Certificates, all accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder, shall be
distributed to the Holders, and if the aggregate amount so to be
distributed shall be insufficient to pay all such amounts in full as
aforesaid, then such amount shall be distributed ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
principal amount of all Certificates held by each such Holder, the accrued
but unpaid interest thereon to the date of distribution and all other
amounts due hereunder and thereunder, bears to the aggregate unpaid
principal amount of all Outstanding Certificates, plus accrued but unpaid
interest thereon to the date of distribution and all other amounts due
hereunder and thereunder (it being understood that amounts payable
hereunder shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
Section 5.04. Certain Payments. (a) Except as otherwise provided
in this Indenture, any payments received by the Indenture Trustee which are to
be applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt,
any Excepted Payment received by it from the Owner Trustee or the Lessee
pursuant to Article 8 or Article 9 of the Participation Agreement or as
Supplemental Rent, directly to the Person (which may include the Indenture
Trustee) entitled thereto.
(c) Notwithstanding anything to the contrary contained herein, any
sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly
to the Person or Persons entitled thereto.
Section 5.05. Other Payments. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is
made elsewhere in this Indenture or in any other Indenture Document
(including without limitation Article 9 of the Lease) shall be distributed
by the Indenture Trustee (a) to the extent received or realized at any time
prior to the payment in full of all obligations to the Holders, in the
order of priority specified in Section 5.01 hereof, and (b) to the extent
received or realized at any time after payment in full of all obligations
to the Holders, in the following order of priority: first, in the manner
provided in clause "first" of Section 5.03 hereof and second, in the manner
provided in clause "third" of Section 5.03 hereof.
Section 5.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee
hereby notifies the Indenture Trustee that unless and until the Indenture
Trustee receives notice to the contrary from the Owner Trustee, all amounts to
be distributed to the Owner Trustee hereunder for distribution in accordance
with the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account
of the Owner Participant as may be specified pursuant to Section 2.06 of the
Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of
and interest or other amounts due on each Certificate shall, except as
otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable to the date of such payment, as provided in
such Certificate, as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest and other
amounts due thereunder, second, to the payment of any other amount (other than
the principal of such Certificate) due hereunder to the Holder of such
Certificate or under such Certificate, third, to the payment of the principal
of such Certificate if then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment of the
principal of such Certificate remaining unpaid (provided that such Certificate
shall not be subject to prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that,
solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed
applied in the following order of priority: first, in the manner provided in
clause "first" above, second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and fourth, in the
manner provided in clause "fourth" above.
Section 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment
by the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or
this Section 5.08 shall be invested by the Indenture Trustee from time to time
in securities selected by (i) so long as no Event of Default shall have
occurred and be continuing, the Lessee (and in the absence of written
direction by the Lessee, the Indenture Trustee shall invest such monies in
direct obligations of the United States of America) or (ii) so long as an
Event of Default shall have occurred and be continuing, the Indenture Trustee
and in each case shall be of the type listed in clauses (i) through (iv) of
Section 23.01 of the Lease. Unless otherwise expressly provided in this
Indenture, any income realized as a result of any such investment, net of the
Indenture Trustee's reasonable fees and expenses in making such investment,
shall be held and applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Lessee shall be responsible for and will
promptly pay to the Indenture Trustee or the Lessor, as the case may be, on
demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other costs and expenses, if any,
incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms hereof
or the Lease, as the case may be. The Indenture Trustee shall not be liable
for any loss resulting from any investment made by it or any investment sold
by it under this Indenture in accordance with instructions from the Lessee
other than by reason of its willful misconduct or gross negligence, and any
such investment may be sold (without regard to its maturity) by the Indenture
Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee)
shall be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the
Lessee notifies the Indenture Trustee in writing to the contrary within 30
days of the date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to
the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of
the Participation Agreement, if the Lessee is required to pay any such Tax, or
any interest or penalty thereon, or to indemnify the Owner Participant or the
Owner Trustee with respect thereto pursuant to Section 8.01(c) of the
Participation Agreement, the Lessee shall be entitled to receive any payments
otherwise distributable to the Holder of any Certificate who was subject to
such Tax pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts
shall have been recovered in full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity. Except as provided
in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid
prior to their respective Maturities.
Section 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08
hereof replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and Section 2.12 hereof shall not be
applicable in connection with such purchase).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a refinancing of the Certificates.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Section 15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to Section 6.02(c) hereof)
written notice to the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Certificates shall be
prepaid. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(i) above, the Certificates shall be prepaid in full on the Loss
Payment Date as defined in Section 11.02 of the Lease. In the case of a
prepayment of the Certificates pursuant to Section 6.02(a)(iii) above, the
Certificates shall be prepaid in full on the date so designated in the notice
referred to in Section 8.02 hereof. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(ii) or (iv) above, the Certificates
shall be prepaid in full on the Termination Date. In the case of a prepayment
of the Certificates pursuant to Section 6.02(a)(v) above, the Certificates
shall be prepaid on the effective date of the Refinancing. The day on which
the Certificates are to be prepaid pursuant to this Section 6.01(b) is herein
referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section
6.02 hereof on or after the applicable Premium Termination Date, or (ii)
if such prepayment is made prior to the applicable Premium Termination
Date pursuant to Section 6.02(a)(i) or 6.02(a)(iii) above (if clause (i)
of the first sentence of Section 8.02(a) hereof is applicable), the sum
of (A) the aggregate principal amount of such Certificates then
Outstanding, (B) accrued interest on the Certificates to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee
hereunder or under the Participation Agreement or the Lease, but
excluding any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause
(ii) of the first sentence of Section 8.02(a) hereof is applicable),
6.02(a)(iv) or 6.02(a)(v) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole
Premium payable in respect of all Certificates with respect to which the
Premium Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 10.01(f) of the
Lease, no Termination Date shall occur, or if, pursuant to Section 4.02(a) of
the Lease, the Lessee revokes its notice of election to purchase, or if no
refinancing shall occur pursuant to Section 15.01 of the Participation
Agreement, the Lessee shall give notice thereof to the Indenture Trustee, and
the prepayment proposed to be effected in respect thereof shall not occur.
Section 6.03. Notice of Prepayment to Holders. In order to effect
any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee
shall give prompt notice by first class mail of prepayment to each Holder of
an Outstanding Certificate. Any notice of prepayment given by the Owner
Trustee may be revoked by the Owner Trustee at any time on or before the
Prepayment Date by prompt notice to the Holders except as otherwise provided
in the Lease or the Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions hereof,
the Prepayment Price will become due and payable, and that interest
on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
Section 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price. On the Prepayment Date or the Sinking Fund Redemption
Date (as defined in Section 6.06 hereof), the Owner Trustee shall, to the
extent an amount equal to the Prepayment Price or the Sinking Fund
Redemption Price (as defined in Section 6.06 hereof), as the case may be,
shall not then be held in cash or Permitted Investments (marked-to-market
net of all costs and expenses of liquidation thereof) by the Indenture
Trustee in immediately available funds and deposited for the purpose, pay
to the Indenture Trustee an amount equal to the difference between (a) the
amount then so held and (b) the Prepayment Price or the Sinking Fund
Redemption Price, as the case may be. If there shall so be on deposit
and/or deposited the applicable Prepayment Price or Sinking Fund Redemption
Price on or prior to a Prepayment Date or Sinking Fund Redemption Date,
interest shall cease to accrue in respect of all or, in the case of a
mandatory sinking fund redemption, the relevant portion being prepaid of,
the Outstanding Certificates on and after such Prepayment Date or such
Sinking Fund Redemption Date.
Section 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of
prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided
in the Lease) become due and payable and from and after such Prepayment Date
(unless there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of
its Certificate for prepayment in accordance with said notice, such Holder
shall be paid the principal amount of its Certificate then outstanding,
accrued interest thereon to the Prepayment Date, all other sums due to such
Holder hereunder, under the Participation Agreement or the Lease, plus, if
a Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Certificate.
If any Certificate called for prepayment shall not be so paid upon
surrender thereof for prepayment, the principal shall, until paid, continue to
bear interest from the Prepayment Date at the interest rate applicable to such
Certificate.
Section 6.06. Mandatory Sinking Fund Redemption. The Certificates
with a Maturity of January 30, 2013 and the Certificates with a Maturity of
January 30, 2015 shall be subject to partial redemption, at the aggregate
principal amount set forth for the Certificates of the respective Maturity, on
a pro rata basis, on each date specified in this Section (a "Sinking Fund
Redemption Date") for such payment on the Certificates of such Maturity. The
Owner Trustee shall deposit funds sufficient to pay the Sinking Fund
Redemption Price with the Indenture Trustee as provided in Section 6.04
hereof. The Indenture Trustee shall pay from the amounts so deposited on
each applicable Sinking Fund Redemption Date to the Holders of each
Certificate then Outstanding on a pro rata basis the aggregate principal
amount set forth below, together with accrued interest to such Sinking Fund
Redemption Date, but without Make-Whole Premium (the "Sinking Fund
Redemption Price"):
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2013 January 30, 2015
--------------- ------------------ -------------------
January 30, 1997 $ 632,305 0
July 30, 1997 0 0
January 30, 1998 1,380,850 0
July 30, 1998 0 0
January 30, 1999 1,457,330 0
July 30, 1999 0 0
January 30, 2000 1,570,479 0
July 30, 2000 14,614 0
January 30, 2001 1,669,413 0
July 30, 2001 3,281,947 0
January 30, 2002 2,437,899 0
July 30, 2002 0 0
January 30, 2003 2,295,276 0
July 30, 2003 0 0
January 30, 2004 2,470,323 0
July 30, 2004 0 0
January 30, 2005 2,658,719 0
July 30, 2005 0 0
January 30, 2006 2,861,484 0
July 30, 2006 0 0
January 30, 2007 3,444,972 0
July 30, 2007 0 0
January 30, 2008 3,176,376 0
July 30, 2008 0 0
January 30, 2009 4,008,453 0
July 30, 2009 0 0
January 30, 2010 3,590,647 0
July 30, 2010 0 0
January 30, 2011 3,997,087 0
July 30, 2011 0 0
January 30, 2012 5,788,061 0
July 30, 2012 0 0
January 30, 2013 4,312,765 0
July 30, 2013 0 0
January 30, 2014 0 6,571,190
July 30, 2014 0 0
January 30, 2015 0 5,151,810
Total $ 51,049,000 $ 11,723,000
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii)the failure of the Owner Trustee other than by reason of a
Default or an Event of Default (i) to pay principal, interest or Make-
Whole Premium, if any, on any Certificate when due, and such failure
shall have continued unremedied for ten (10) Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Certificates when due and such failure shall have continued unremedied
for a period of thirty (30) days after the Owner Trustee and the Owner
Participant shall receive written demand therefor from the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates; or
(iii)(A) any representation or warranty made by FSB, the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or any
Owner Trustee Guarantor, in any Operative Agreement or in any
certificate of FSB, the Owner Trustee, the Owner Participant, or any
Owner Participant Guarantor furnished to the Indenture Trustee or any
Holder in connection herewith or therewith or pursuant hereto or thereto
shall prove to have been incorrect when made and was and remains in any
respect material to the Holders and if such misrepresentation is capable
of being corrected as of a subsequent date and if such correction is
being sought diligently, and such misrepresentation shall not have been
corrected within 30 days following notice thereof identified as a
"Notice of Indenture Event of Default" being given to the Owner Trustee
and the Owner Participant by the Indenture Trustee or by a Majority in
Interest of Holders; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or Section 3.05(b)(iii)
hereof or Section 7.02(b) (unless otherwise removed as Owner Trustee
within 10 days after notice thereof to the Owner Participant) or 7.04(b)
(unless such Lien is removed within the 30-day period set forth therein)
of the Participation Agreement shall be breached in any respect or (y)
other covenant made by the Owner Trustee, in its individual capacity or
as Owner Trustee, or by any Owner Trustee Guarantor, or by the Owner
Participant or any Owner Participant Guarantor in any Operative
Agreement shall be breached in any respect and such breach shall remain
unremedied for a period of thirty (30) days after there has been given
to the Owner Trustee and the Owner Participant by the Indenture Trustee
or by Certificate Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates a written notice identified as a
"Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied; or
(iv)the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or any Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(v) an order for relief shall be entered in respect of the Owner
Trustee or any Owner Trustee Guarantor or the Owner Participant or any
Owner Participant Guarantor or the Lessor's Estate by a court having
jurisdiction in the premises in an involuntary case under the federal
bankruptcy laws as now or hereafter in effect; or the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate shall file any answer
admitting or not contesting the material allegations of a petition filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate in
any proceeding referred to in clause (vi) below or seek or consent or
acquiesce in the appointment of any trustee, custodian, receiver or
liquidator of the Owner Trustee or any Owner Trustee Guarantor or the
Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, or of all or any substantial part of its
properties; or
(vi)without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered constituting an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or if any such petition shall be filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such petition shall not be dismissed within 60 days,
or if, without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or
any Owner Participant Guarantor or the Lessor's Estate, as the case may be,
or of all or any substantial part of the properties of the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and such
order shall not be dismissed within 60 days; or
(vii)any Owner Trustee Guaranty or any Owner Participant Guaranty
shall cease to be a valid and enforceable obligation of any Owner Trustee
Guarantor or any Owner Participant Guarantor, as the case may be, or
otherwise shall not be in full force and effect.
Section 7.02. Remedies. (a) If an Indenture Event of Default shall
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Article
17 of the Lease; provided that such exercise of remedies shall not occur until
after the latest date on which the Owner Trustee may cure the related Event of
Default pursuant to Section 8.03 hereof. The Indenture Trustee may take
possession of all or any part of the properties covered or intended to be
covered by the Lien and security interest created hereby or pursuant hereto
and may exclude the Owner Participant, the Owner Trustee, the Lessee and any
transferee of the Lessee and all Persons claiming under any of them wholly or
partly therefrom. In addition, the Indenture Trustee may exercise any other
right or remedy in lieu of or in addition to the foregoing that may be
available to it under applicable law, or proceed by appropriate court action
to enforce the terms hereof, of the Lease, or both, or to rescind the Lease.
Without limiting any of the foregoing, it is understood and agreed that the
Indenture Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall
not have possession thereof at the time of such sale.
Notwithstanding the foregoing, it is understood and agreed that if
the Indenture Trustee shall proceed to foreclose the Lien of this
Indenture, it shall substantially simultaneously therewith, to the extent
the Indenture Trustee is then entitled to do so hereunder and under the
Lease, and is not then stayed or otherwise prevented from doing so, proceed
(to the extent it has not already done so) to declare the Lease in default
and commence the exercise in good faith of one or more of the significant
remedies under Article 17 of the Lease (as the Indenture Trustee determines
in its sole discretion). It is further understood and agreed that if the
Indenture Trustee is unable to exercise one or more remedies under Article
17 of the Lease because of any stay or operation or law or otherwise, the
Indenture Trustee shall not be entitled to foreclose the Lien of this
Indenture (A) until the earlier of (i) 60 days from the date of any such
stay or applicable order under Section 1110 of the Bankruptcy Code
including any extension consented to by the Indenture Trustee or the
Holders of Certificates of such period permitted under Section 1110(b) of
the Bankruptcy Code and (ii) the date of actual repossession of the
Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to
perform or assume the Lease and no Event of Default other than as specified
in Section 16.01(e), (f) or (g) of the Lease shall be continuing. For the
avoidance of doubt, it is expressly understood and agreed that except as
aforesaid the above-described inability of the Indenture Trustee to
exercise any right or remedy under the Lease shall in no event and under no
circumstances prevent the Indenture Trustee from exercising all of its
rights, powers and remedies under this Indenture, including, without
limitation, this Article VII. The Indenture Trustee further agrees that
notice of intent to foreclose shall be given to the Owner Trustee at the
earlier of the commencement of any proceeding or at least 30 days prior to
the consummation of foreclosure of the Lien of this Indenture.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi)
of Section 7.01 hereof shall occur and be continuing, the unpaid principal of
all Outstanding Certificates, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of
Holders of not less than 25% in aggregate principal amount of Outstanding
Certificates, at any time, by written notice to the Owner Trustee and the
Lessee, declare the principal of all the Certificates to be due and payable,
whereupon the unpaid principal amount of all Outstanding Certificates,
together with accrued interest thereon and all other amounts due thereunder,
but without Make-Whole Premium, shall immediately become due and payable
without presentment, demand, protest or other notice, all of which are hereby
waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to a credit against
any purchase price bid at such sale by such Holder all or any part of the
unpaid obligations owing to such Holder secured by the Lien of this Indenture.
Section 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify,
to obtain possession of all or any part of the Trust Indenture Estate to which
the Indenture Trustee shall at the time be entitled under this Indenture.
Subject to the foregoing, if the Owner Trustee shall for any reason fail to
execute and deliver such documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, the right to immediate possession and requiring the Owner Trustee to
execute and deliver such instruments and documents to the Indenture Trustee or
an agent or representative designated by the Indenture Trustee, to the entry
of which judgment the Owner Trustee hereby specifically consents, and (ii)
pursue all or part of such Trust Indenture Estate wherever it may be found and
enter any of the premises of the Lessee or the Owner Trustee wherever such
Trust Indenture Estate may be or be supposed to be and search for such Trust
Indenture Estate and take possession of and remove such Trust Indenture
Estate. All expenses of obtaining such judgment or of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the
Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, lease, control or manage the Trust
Indenture Estate and to carry on the business and to exercise all rights and
powers of the Owner Trustee relating to the Trust Indenture Estate, as the
Indenture Trustee may reasonably deem best, including the right to enter into
any and all such agreements with respect to the maintenance, insurance, use,
operation, storage, leasing, control, management or disposition of all or any
part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Trust Indenture Estate other than Excepted Payments,
without prejudice, however, to the right of the Indenture Trustee under any
provision of this Indenture to collect and receive all cash held by, or
required to be deposited with, the Indenture Trustee under this Indenture.
Such tolls, rents (including Rent), revenues, issues, income, products and
profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management, or disposition of the Trust Indenture Estate,
and of all maintenance and repairs, and to make all payments which the
Indenture Trustee may be required or may reasonably elect to make for any
taxes, assessments, insurance or other proper charges upon the Trust Indenture
Estate (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the
Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder, and subject to Article VIII hereof, the Indenture Trustee, either
with or without taking possession, and either before or after taking
possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or any part
thereof, or interest therein, at any private sale or public auction to the
highest bidder, with or without demand, advertisement or notice, except that
in respect of any private sale 20 days prior notice will be provided, for cash
or, with the consent of the Owner Trustee, which shall not be unreasonably
withheld, credit or for other property, for immediate or future delivery, and
for such price or prices and on such terms as the Indenture Trustee in
exercising reasonable commercial discretion may determine; provided, that any
such action shall be at the time lawful and that all mandatory legal
requirements shall be complied with. Any notice required pursuant to the
terms hereof in the case of a public sale, shall state the time and place
fixed for such sale. Any such public sale shall be held at such time or times
within ordinary business hours as the Indenture Trustee shall fix in the
notice of such sale. At any such sale, the Trust Indenture Estate may be sold
in one lot as an entirety or in separate lots. The Indenture Trustee shall
not be obligated to make any sale pursuant to such notice. The Indenture
Trustee may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at
the time and place fixed for such sale, and any such sale may be made at
any time or place to which the same may be so adjourned without further
notice or publication. The Indenture Trustee may exercise such right of
sale without possession or production of the Certificates or proof of
ownership thereof, and as representative of the Holders may exercise such
right without notice to the Holders or without including the Holders as
parties to any suit or proceedings relating to the foreclosure of any part
of the Trust Indenture Estate. The Owner Trustee shall execute any and all
such bills of sale, assignments and other documents, and perform and do all
other acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Trust Indenture Estate in accordance with
this Section 7.03(c) and to effectuate the transfer or conveyance referred
to in the first sentence of this Section 7.03(c). Notwithstanding any
other provision of this Indenture, the Indenture Trustee shall not sell the
Trust Indenture Estate or any part thereof unless the Certificates shall
have been accelerated.
(d) To the extent permitted by applicable law, the Indenture Trustee
or any Holder may be a purchaser of the Trust Indenture Estate or any part
thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Certificates secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder, under any other
Indenture Document or under the Certificates held by such Holder to the extent
that such portion of the purchase price as it would have received had it been
entitled to share any distribution thereof. The Indenture Trustee or any
Holder or nominee thereof shall, upon any such purchase, acquire good title to
the property so purchased, free of the Lien of this Indenture and, to the
extent permitted by applicable law, free of all rights of redemption in the
Owner Trustee or the Owner Participant in respect of the property so
purchased.
(e) Subject to Article VIII hereof, and effective upon the
occurrence and continuance of an Indenture Event of Default, the Owner Trustee
hereby irrevocably appoints and constitutes the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant
to foreclosure or power of sale or otherwise, to execute and deliver all such
bills of sale, assignments and other instruments as the Indenture Trustee may
consider necessary or appropriate, with full power of substitution, and the
Owner Trustee hereby ratifies and confirms all that such attorney or any
substitute shall lawfully do by virtue hereof. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(f) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of
the Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
(g) Any sale of the Trust Indenture Estate or any part thereof or
any interest therein, whether pursuant to foreclosure or power of sale or
otherwise hereunder, shall be a perpetual bar against the Owner Trustee after
the expiration of the period, if any, during which the Owner Trustee shall
have the benefit of prepayment laws which may not be waived pursuant to
Section 7.13 hereof.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Section 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Owner Trustee or its property, or in case of any other comparable judicial
proceedings relative to the Owner Trustee, or to the creditors or property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the
principal of the Certificates shall then be due and payable as therein or
herein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or
property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders, as provided
herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
the Lessee or to be an acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided, that any sale of any portion of the Trust Indenture Estate
shall be done in accordance with Section 7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any
right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and
all rights, remedies and powers of the Indenture Trustee and the Holders
shall continue as if no such proceeding had been instituted.
Section 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Indenture Trustee written notice that an
Indenture Event of Default shall then have occurred and be continuing, as
hereinbefore provided, and the Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates shall have made written request
upon the Indenture Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or
more Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Certificate on or after
the respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not
be impaired or affected without the consent of such Holder.
Section 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent
provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders not joining
in the giving of said direction, it being understood that (subject to Section
9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
Section 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other Indenture Default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
all Holders, the Indenture Trustee shall not waive any Indenture Default (a)
in the payment of the principal of or Make-Whole Premium, if any, or interest
on, or other amounts due under, any Certificate then Outstanding, or (b) in
respect of a covenant or provision of this Indenture which, under Article XIII
hereof, cannot be modified or amended without the consent of each Holder.
Section 7.12. Notice of Indenture Default. The Indenture Trustee
shall transmit to the Owner Trustee, the Holders and to the Owner Participant
notice of any Indenture Defaults actually known to a Responsible Officer of
the Indenture Trustee, such notice to be transmitted by mail to the Holders
within 90 days, and to the Owner Trustee and the Owner Participant promptly
after the occurrence thereof, unless such Indenture Default shall have been
cured before the giving of such notice; provided that except in the case of a
default in the payment of the principal of or interest on any Certificate,
under no circumstances shall the Indenture Trustee give such notice to the
Holders until the expiration of a period of 60 days from the occurrence of
such Indenture Default; and provided further that, except in the case of
default in the payment of the principal of or interest on or any other
amount due under any of the Certificates, the Indenture Trustee shall be
protected in withholding such notice to the Holders if and so long as the
board of directors, the executive committee, or a trust committee of
directors or trustees and/or Responsible Officers of the Indenture Trustee
in good faith determines that the withholding of such notice is in the
interests of the Holders.
Section 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension or
prepayment law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or the execution
of any power granted herein to the Indenture Trustee, or the absolute sale of
the Trust Indenture Estate, or any part thereof, or the possession thereof by
any purchaser at any sale under this Article VII; and the Owner Trustee for
itself and all who may claim under it, so far as it or any of them now or
hereafter lawfully may, hereby waives the benefit of all such laws. The Owner
Trustee for itself and all who may claim under it waives, to the extent that
it lawfully may, all right to have the property in the Trust Indenture Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Indenture may order the sale of the Trust
Indenture Estate as an entirety.
If any law referred to in this Section 7.13 and now in force, of
which the Owner Trustee or its successors might take advantage despite this
Section 7.13, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 7.13.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof, without the consent of a Majority in
Interest of Certificate Holders, the respective parties to the Indenture
Documents may not modify, amend or supplement any of said agreements, or give
any consent, waiver, authorization or approval thereunder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the respective
parties thereunder; provided, however, that the actions specified in
subsection (b) of this Section 8.01 may be taken without the consent of the
Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the respective parties to the Indenture Documents, at any time and from
time to time, without the consent of the Indenture Trustee or of any Holder,
may:
(1) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Lease, or give any waiver
with respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Lease shall not modify, amend or
supplement, or give any waiver for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Lease as in effect on the
effective date hereof: Article 2 (provided that, if in respect of the
Term, the result thereof would not be to shorten the Term of the Lease to a
period shorter than the period ending with the Maturity of any
Certificate), Section 3.03 (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to Persons
other than Holders and the Indenture Trustee in its individual capacity),
Section 3.05, Section 3.06 (except insofar as it relates to the address or
account information of the Owner Trustee or the Indenture Trustee) (other
than as such Sections 3.03, 3.05 and 3.06 may be amended pursuant to
Section 3.04 of the Lease as in effect on the effective date hereof),
Section 5.01, Article 6, Article 10 (except that further restrictions may
be imposed on the Lessee), Article 11 (except that additional requirements
may be imposed on the Lessee), Article 13 (except for Section 13.05 and
except that additional insurance requirements may be imposed on the
Lessee), Article 14 (except in order to increase the Lessee's
liabilities or enhance the Lessor's rights thereunder), Article 15
(except in the case of an assignment by the Lessor in circumstances
where the Aircraft shall remain registrable under the Federal Aviation
Act), Section 16.01 (except to impose additional or more stringent
Events of Default), Article 17 (except to impose additional remedies),
Section 19.01 (except to impose additional requirements on the Lessee),
Section 20.01, Article 22, Section 23.01, Section 26.03 and any
definition of terms used in the Lease, to the extent that any
modification of such definition would result in a modification of the
Lease not permitted pursuant to this subsection (b); provided that the
parties to the Lease may take any such action without the consent of the
Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner
Participant's or the Lessee's rights or obligations with respect to,
Excepted Payments (other than the place, time and manner of payment of
Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement),
or give any consent, waiver, authorization or approval with respect
thereto, in each case only to the extent any such action shall not
adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except
that without compliance with subsection (a) of this Section 8.01 the
parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following provisions
of the Participation Agreement as in effect on the effective date hereof:
Articles 6, 8 and 9 and Section 10.01(b) (insofar as such Articles 6, 8 and
9 and Section 10.01(b) relate to the Indenture Trustee, the Pass Through
Trustee and the Holders), Article 7 and Sections 15.01 and 17.11 and any
definition of terms used in the Participation Agreement, to the extent that
any modification of such definition would result in a modification of the
Participation Agreement not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without
the consent of the Holder of each Outstanding Certificate affected thereby,
(1) modify, amend or supplement the Lease in such a way as to extend
the time of payment of Basic Rent, Stipulated Loss Value or any other
amounts payable to the Indenture Trustee for its own account or for the
account of the Holders (subject in any event to Section 3.05 of the Lease)
upon the occurrence of an Event of Loss, or Termination Value or EBO Price
and any other amounts payable to the Indenture Trustee for its own account
or for the account of the Holders (subject in any event to Section 3.05 of
the Lease) upon termination of the Lease with respect to the Aircraft
payable under, or as provided in, the Lease as in effect on the effective
date hereof, or reduce the amount of any installment of Basic Rent or
Supplemental Rent so that the same is less than the payment of principal
of, and interest on the Certificates and Make-Whole Premium, if any, as the
case may be, to be made from such installment of Basic Rent or Supplemental
Rent, or reduce the aggregate amount of Stipulated Loss Value, or any other
amounts payable under, or as provided in, the Lease as in effect on the
effective date hereof upon the occurrence of an Event of Loss so that the
same is less than the accrued interest on and the principal as of the Loss
Payment Date, of the Certificates at the time Outstanding or reduce the
amount of Termination Value or EBO Price and any other amounts payable
under, or as provided in, the Lease as in effect on the effective date
hereof upon termination of the Lease with respect to the Aircraft so that
the same is less than the accrued interest on and principal as of the
Lease Termination Date or EBO Date, as the case may be, and Make-Whole
Premium, if any, of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligations in respect of payment of Basic Rent or Supplemental Rent, or
Stipulated Loss Value and any other amounts payable to the Indenture
Trustee for its own account or the account of the Holders (subject in any
event to Section 3.05 of the Lease) upon the occurrence of an Event of
Loss, or Termination Value or EBO Price and any other amounts payable to
the Indenture Trustee for its own account or the account of the Holders
(subject in any event to Section 3.05 of the Lease) of the Lease with
respect to the Aircraft, payable under, or as provided in, the Lease as in
effect on the effective date hereof, except for any such assignment
pursuant to Section 2.12 hereof, and except as provided in the Lease as in
effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the consent
of the Owner Trustee (at the direction of the Owner Participant) shall be
required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive
compliance by the Lessee with any of its obligations thereunder and (ii) to
grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving
payment of, any Excepted Payment; provided, however, that if the Owner Trustee
is proceeding under the Lease, the Owner Trustee shall proceed pursuant to
Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
Section 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf
of the Owner Participant) may, but shall be under no obligation to, do either
of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable and shall designate a Prepayment Date
which shall be a Rent Payment Date or monthly anniversary thereof and which
shall be not less than 15 days after the date of such notice on which the
Owner Trustee shall, in the manner provided for in Section 6.04 hereof,
deposit the sum of amounts contemplated by paragraph "first" under Section
5.03 and the aggregate Prepayment Price of all such Certificates with the
Indenture Trustee. If such payment by the Owner Trustee to the Indenture
Trustee is made, the Certificates shall cease to accrue interest from and
after the Prepayment Date, and after distribution of such payment to the
Holders, the Indenture Trustee shall release the Trust Indenture Estate
from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable and
shall designate a date which shall be a Rent Payment Date or monthly
anniversary thereof and which shall be not less than 15 days after the date
of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Certificates, together with accrued interest on such amount to
the date of purchase, the aggregate amount of any Make-Whole Premium
applicable to each Outstanding Certificate (if such purchase occurs prior
to the Premium Termination Date for such Outstanding Certificate) in the
case of a purchase pursuant to clause (a)(ii) above, plus all other sums
due any Holder or the Indenture Trustee hereunder or under the
Participation Agreement or the Lease. Upon receipt by the Indenture
Trustee of such amount, each Holder will be deemed, whether or not
Certificates shall have been delivered to the Indenture Trustee on such
date, to have thereupon sold, assigned, transferred and conveyed (and shall
promptly take such actions as the Owner Participant shall reasonably
request to evidence such sale, assignment, transfer and conveyance) to the
Owner Participant (without recourse or warranty of any kind except for its
own acts), all of the right, title and interest of such Holder in and to
the Trust Indenture Estate and this Indenture and all Certificates held by
such Holder and the former Holders shall not be entitled to receive any
interest on the principal amount of such Certificates after the purchase
date, and the Owner Participant shall be deemed to have assumed (and shall
promptly take such actions as any Holder shall reasonably request to
evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale.
If the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Certificates to
be issued to the Owner Participant in such authorized denominations as the
Owner Participant shall request. All charges and expenses required
pursuant to Section 2.06 hereof in connection with the issuance of any such
new Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the
applicable Prepayment Price or purchase price with the Indenture Trustee
pursuant to Section 8.02(a) hereof, the Owner Trustee shall be entitled to
exercise all remedies of the Indenture Trustee under Article VII hereof as
well as of the Lessor under the Lease.
Section 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such
installment of Basic Rent or of interest on account of such installment's
being overdue shall not constitute or result in an Indenture Event of Default
under this Indenture and any declaration based solely on the same shall be
deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee to exercise any rights
and powers or pursue any remedies pursuant to Article 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it
or them under this Indenture by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee for the payment
of such amount or taking appropriate action in a pending action at law against
the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v),
of the Lease. Upon curing any such Event of Default pursuant to this Section
8.03, the Owner Trustee or the Owner Participant, as the case may be, shall,
so long as no Indenture Event of Default shall have occurred and be
continuing, be subrogated on an unsecured basis to all the rights of the
Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same,
and shall be entitled to any payment of Basic Rent (or interest thereon)
actually made by the Lessee in respect of such cured payment upon receipt by
the Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to
each Certificate Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
Notwithstanding anything in this Indenture or the Lease to the contrary, the
Owner Participant and the Owner Trustee collectively, shall not be entitled to
cure more than six (6) Events of Default (no more than three (3) of which may
be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after such Event of
Default, then the failure of the Lessee to perform such covenant, condition or
agreement, the observance or performance of which was accomplished by the
Owner Trustee hereunder shall not constitute or result in an Indenture Event
of Default under this Indenture and any declaration based solely on the same
shall be deemed to be automatically rescinded. Nothing contained in the
preceding sentence shall be deemed to entitle the Owner Trustee or the Owner
Participant to exercise any rights and powers or pursue any remedies pursuant
to Article 17 of the Lease or otherwise except as set forth in this Indenture,
and except that the Owner Trustee or the Owner Participant may attempt to
recover any amount paid by it or them in effecting such cure by demanding of
the Lessee payment of such amount, plus any interest due, or by commencing an
action at law against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee pursuant to
Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon
curing any such Event of Default pursuant to this Section 8.03(b), the Owner
Trustee or the Owner Participant, as the case may be, shall be subrogated to
all the rights of the Indenture Trustee under the Lease in respect of the
payment, agreement or covenant giving rise to such Event of Default, and any
right to any interest in respect of the same, and shall be entitled to any
payment or other performance upon receipt by the Indenture Trustee; provided
that no such amount shall be paid to the Owner Trustee or the Owner
Participant until all amounts then due and payable to each Certificate Holder
hereunder and thereunder shall have been paid in full and no Indenture Event
of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this
Indenture, and covenants and agrees to perform the same as expressed herein
and agrees to receive and disburse all moneys constituting part of the Trust
Indenture Estate in accordance with the terms hereof.
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an
Indenture Event of Default has occurred and has not been cured or waived, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read in to this Indenture against
the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii)the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts; and
(iii)the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner
Trustee agrees that it will file or cause to be filed such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Trust Indenture Estate as may be specified
from time to time in written instructions of the Holders of not less than 25%
in aggregate principal amount of Certificates (which instructions may, by
their terms, be operative only at a future date and which shall be accompanied
by the execution form of such continuation statement so to be filed); provided
that, notwithstanding the foregoing, the Indenture Trustee may execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate.
(b) If any Event of Default shall have occurred and be continuing
and, after the latest date on which the Owner Trustee may cure such Event of
Default pursuant to Section 8.03 hereof, on request of the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates and subject
to indemnification, to the extent provided in Sections 7.08 and 9.03 and
Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity
in respect of any such cost or expense under Article XI hereof) promptly take
such action as may be necessary duly to discharge all Indenture Trustee's
Liens on any part of the Trust Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Article 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such
document, instrument, financing or continuation statement as evidencing the
fact that it is properly prepared and presented, provided that the Indenture
Trustee shall promptly correct any error in any such document, instrument,
financing or continuation statement of which a Responsible Officer of the
Indenture Trustee has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have
been furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officer's
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to prove
or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing to do so by the Majority in Interest
of Certificate Holders; provided that, if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture Trustee
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs,
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Owner Trustee or,
if paid by the Indenture Trustee or any predecessor trustee, shall be
repaid by the Owner Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates, except the Indenture Trustee's
certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Certificates. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Certificates or of the proceeds
thereof.
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and
receive, collect, hold and retain collections from the Owner Trustee with the
same rights it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither
the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee
nor any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be specifically prescribed herein) may, in
the absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officer's Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on
the part of the Indenture Trustee, shall be full warrant to the Indenture
Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine which has been subject to an
Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine,
as the case may be, shall be replaced in accordance with the provisions of
this Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or
other applicable registration information) and manufacturer's
serial number;
(ii)a description of the replacement airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the replacement airframe the Owner Trustee
will be the legal owner of and have good and marketable title to such
replacement airframe free and clear of all Liens except Liens
permitted under Section 6.01 of the Lease, that such replacement
airframe will on such date be in at least as good operating condition
and repair as required by the terms of the Lease, and that such
replacement airframe has been or, substantially concurrently with
such replacement, will be duly registered in the name of the Owner
Trustee under the Aviation Act or under the law then applicable to
the registration of the Airframe subject to the Event of Loss and
that an airworthiness certificate has been duly issued under the
Aviation Act (or such other applicable law) with respect to such
replacement airframe and that such registration and certificate
is, or will be, in full force and effect, and that the Lessee will
have the full right and authority to use such replacement
airframe;
(iv)that the insurance required by Article 13 of the Lease is in full
force and effect with respect to such replacement airframe and all
premiums then due thereon have been paid in full;
(v) that the replacement airframe is of the same or an improved
make or model as the Airframe requested to be released from this
Indenture;
(vi)that the value of the replacement airframe as of the date of such
certificate is not less than the value of the Airframe requested to
be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii)that no Event of Default has occurred and is continuing or would
result from the making and granting of the request for release and
the addition of a replacement airframe;
(viii)that the release of the Airframe subject to the Event of Loss
will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(ix)that upon such replacement, the Lien of this Indenture will apply
to the replacement airframe and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11.03 of the
Lease with respect to such replacement airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii)a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee will
be the legal owner of such Replacement Engine free and clear of all
Liens except Liens permitted under Section 6.01 of the Lease, and
that such Replacement Engine will on such date be in at least as good
operating condition and repair as required by the terms of the Lease;
(iv)that the value of the Replacement Engine as of the date of such
certificate is not less than the value of the Engine to be released
(assuming such Engine was in the condition and repair required to be
maintained under the Lease);
(v) that the release of the Engine subject to the Event of Loss will
not impair the security of the Indenture in contravention of any of
the provisions of this Indenture;
(vi)that upon such replacement, the Lien of this Indenture will apply
to the Replacement Engine and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(vii)that each of the conditions specified in Section 10.03, 11.03 or
11.04 of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the replacement airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties, if any, generally available with respect to such replacement
airframe or Replacement Engine, and an Indenture and Security Agreement
Supplement subjecting such replacement airframe or Replacement Engine to the
Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or property
which have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii)the replacement airframe or Replacement Engine has been validly
subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such replacement airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the case may be, have been
duly filed for recordation pursuant to the Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such replacement airframe or Replacement Engine and the
Indenture Trustee would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to such replacement airframe or Replacement
Engine, provided, that such opinion need not be to the effect specified in
the foregoing clause to the extent that the benefits of such Section 1110
would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such substitution
had such Event of Loss not occurred.
Section 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a replacement airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of
the Holders and the Lessee, subject to fulfillment of the conditions precedent
and compliance by the Lessee with its obligations set forth in Section 10.03
or Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided
no Event of Default shall have occurred and be continuing, execute and deliver
to the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the
substitution of a replacement airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such replacement airframe or Replacement
Engine or Engines with the same force and effect as if such replacement
airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees
to pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of its counsel, agents and other persons not regularly in
its employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Lessee, and shall have the right to use or apply any moneys held by it
hereunder in the Trust Indenture Estate toward such payments; provided that,
so long as the Lease is in effect, the Indenture Trustee shall not make any
claim for payment under this Section 9.11 against the Owner Trustee without
first making demand on the Lessee for payment of such claim. The Indenture
Trustee agrees that it shall have no right against any Holder, FSB or the
Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the
Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee
shall deem and treat the Person in whose name such Certificate shall be
registered upon the Register as the absolute owner of such Certificate
(whether or not such Certificate shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
this Indenture, interest on such Certificate and for all other purposes; and
neither the Owner Trustee nor the Indenture Trustee (nor any agent of the
Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Lessee shall be affected by any notice to the contrary. All
such payments so made to any such person, or upon his order, shall be valid,
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Certificate.
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding. In determining whether the Holders of the requisite
aggregate principal amount of Certificates have concurred in any direction,
consent or waiver under this Indenture, Certificates which are owned by the
Owner Trustee, the Owner Participant, FSB, the Lessee or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSB or
the Lessee shall such Certificates be so disregarded; and provided further
that if all Certificates which would be deemed Outstanding in the absence of
the foregoing provision are owned by the Owner Trustee, FSB or the Owner
Participant or by any Affiliate thereof, then such Certificates shall be
deemed Outstanding for the purpose of any such determination. Certificates
so owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Owner Trustee, the Owner Participant, FSB or the Lessee or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Owner Trustee, the Owner Participant, FSB
or the Lessee. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Indenture
Trustee in accordance with such advice, unless the Lessee, the Owner Trustee,
FSB, or the Owner Participant are actually named in the Register. Upon
request of the Indenture Trustee, the Owner Trustee, the Owner Participant,
FSB and the Lessee shall furnish to the Indenture Trustee promptly an
Officer's Certificate listing and identifying all Certificates, if any, known
by the Owner Trustee, the Owner Participant, FSB or the Lessee to be owned or
held by or for the account of any of the above-described persons; and, subject
to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to
accept such Officer's Certificate as conclusive evidence of the facts set
forth therein and of the fact that all Certificates not listed therein are
outstanding for the purpose of any such determination.
Section 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Administration and upon proof of
holding as provided in this Article, revoke such action so far as concerns
such Certificate. Except as aforesaid, any such action taken by the Holder
shall be conclusive and binding upon such Holder and upon all future Holders
and owners of such Certificate and of any Certificates issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Certificate or otherwise. Any action taken by
the Holders of the percentage in aggregate principal amount of the
Certificates specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Holders of all the Certificates.
Section 10.06. ERISA. Any Person who is, or who in acquiring the
Certificates is or may be using the assets of, an employee benefit plan
subject to Title I of ERISA, or an individual retirement account or plan
subject to Section 4975 of the Code, or any trust established under any such
plan or account, may acquire or hold any of the Certificates, if such Person
determines either that an administrative or a statutory exemption from the
prohibited transaction rules under Section 406 of ERISA and Section 4975 of
the Code is applicable to its purchase and holding of the Certificates or that
its purchase and holding of the Certificates will not result in a prohibited
transaction under Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out
of this Indenture, or any other Indenture Documents or the enforcement of any
of the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation,
latent and other defects, whether or not discoverable, and any claim for
patent, trademark or copyright infringement), or in any way relating to or
arising out of the administration of the Trust Indenture Estate or the action
or inaction of the Indenture Trustee hereunder, except only (a) in the case of
willful misconduct or gross negligence of the Indenture Trustee in the
performance of its duties hereunder, (b) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 8 or Article 9 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Articles; provided that so long as the Lease
is in effect, the Indenture Trustee shall not make any claim under this
Article XI for any claim or expense indemnified by the Lessee under the
Participation Agreement without first making demand on the Lessee for
payment of such claim or expense. The Indenture Trustee shall be entitled
to indemnification, from the Trust Indenture Estate, for any liability,
obligation, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Article XI to the extent
not reimbursed by the Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same
the Indenture Trustee shall have a prior Lien on the Trust Indenture
Estate. The indemnities contained in this Article XI shall survive the
termination of this Indenture and the resignation or removal of the
Indenture Trustee. Upon payment in full by the Owner Trustee of any
indemnity pursuant to this Article XI, the Owner Trustee shall, so long as
no Indenture Event of Default shall have occurred and be continuing, be
subrogated to the rights of the Indenture Trustee, if any, in respect of
the matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of
any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of the Owner Trustee pursuant to the
Trust Agreement, the successor Owner Trustee shall give prompt written
notice thereof to the Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each
Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, the Majority in
Interest of the Certificate Holders or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Lessee, the Owner Trustee, the Owner Participant, and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder
thereof of such action in writing, such removal to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In the case
of the resignation or removal of the Indenture Trustee, the Majority in
Interest of the Certificate Holders, or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders, may
appoint a successor Indenture Trustee by an instrument signed by such Holders.
If a successor Indenture Trustee shall not have been appointed within 30 days
after such notice of resignation or removal, the Indenture Trustee, the Owner
Trustee, the Lessee, the Owner Participant, or any Holder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee to
act until such time, if any, as a successor shall have been appointed as
provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 12.03 hereof and shall fail to resign after
written request therefor by the Owner Trustee or by any Holder; or
(ii)the Indenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in
duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of
which instrument shall be delivered to the Indenture Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as provided above
within one year from the date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which
shall be (i)(x) a bank or trust company organized and doing business under the
laws of the United States of America or any state or the District of Columbia
having a combined capital and surplus of at least $100,000,000 or (y) a bank
or trust company whose obligations hereunder are fully guaranteed by a direct
or indirect parent thereof having a combined capital and surplus of at least
$100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to
supervision of examination by Federal, state or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Indenture Trustee shall resign immediately in the manner and with the
effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee
an instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Owner Trustee or of the successor trustee, upon
payment of its charges then unpaid, the trustee ceasing to act shall, subject
to Section 14.04 hereof, pay over to the successor trustee all moneys at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Owner Trustee
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear
in the Register, and shall mail a copy of such notice to the Lessee and the
Owner Trustee. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 12.02
hereof.
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Indenture Trustee shall be a party, or any corporation succeeding to
the corporate trust business of the Indenture Trustee, shall be the successor
to the Indenture Trustee hereunder, provided that, anything herein to the
contrary notwithstanding, such corporation shall be eligible under the
provisions of Section 12.03 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Certificates or in this Indenture provided
that the certificate of the Indenture Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Certificates in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any
time or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Indenture Estate may at the
time be located or in which any action of the Indenture Trustee may be
required to be performed or taken, the Indenture Trustee, by an instrument
in writing signed by it, may appoint one or more individuals or
corporations to act as a separate trustee or separate trustees or co-
trustee, acting jointly with the Indenture Trustee, of all or any part of
the Trust Indenture Estate, to the full extent that local law makes it
necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it, he or they shall be vested with such title to the Trust
Indenture Estate or any part thereof, and with such rights, powers, duties and
obligations, as shall be specified in the instrument of appointment, and such
rights, powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee and
such separate trustee or separate trustees or co-trustee jointly with the
Indenture Trustee subject to all the terms of this Indenture, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument
in writing, constitute the Indenture Trustee its or his attorney-in-fact and
agent with full power and authority to do all acts and things and to exercise
all discretion on its or his behalf and in its or his name. In case any such
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of
the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii)all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional trustee
or trustees and separate trustee or trustees jointly except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees;
(iii)no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent of,
the Indenture Trustee; and
(iv)no trustee hereunder shall be liable either personally or in its
capacity as such trustee, by reason of any act or omission of any other
trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or
separate trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders.
The Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner
Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture
Event of Default permitting the enforcement of all or any of the several
remedies provided herein; provided, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Indenture Event of
Default or may limit the remedies available to the Indenture Trustee upon
such an Indenture Event of Default or may limit the right of not less than
the Majority in Interest of Certificate Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Owner Trustee may deem necessary or desirable and which
shall not adversely affect the interests of the Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject replacement airframe or
Replacement Engines to the Lien of this Indenture in accordance with the
provisions hereof or with the Lease or to release from the Lien of this
Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting replacement
airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates
in coupon form (including Certificates registrable as to principal only)
and to provide for exchangeability of such Certificates with Certificates
issued hereunder in fully registered form, and to make all appropriate
changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture may be executed without the consent of the
Holders of Outstanding Certificates, notwithstanding any of the provisions of
Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders; provided, however, that,
without the consent of each and every Holder, no such amendment of or
supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Certificate or reduce the interest payable on any Certificate (except that
only the consent of the Holder shall be required for any decrease in any
amounts of or the rate of interest payable on such Certificate or any
extension for the time of payment of any amount payable under such
Certificate), or alter or modify the provisions of Article V hereof with
respect to the order of priorities in which distributions thereunder shall be
made as between the Holder and the Owner Trustee or the Owner Participant or
with respect to the amount or time of payment of any such distribution, or
alter or modify the circumstances under which a Make-Whole Premium shall be
payable, or alter the currency in which any amount payable under any
Certificate is to be paid, or impair the right of any Holder to commence legal
proceedings to enforce a right to receive payment hereunder, (c) reduce,
modify or amend any indemnities in favor of any Holder or in favor of or to be
paid by the Owner Participant (except as consented to by each Person adversely
affected thereby), or (d) create or permit the creation of any Lien on the
Trust Indenture Estate or any part thereof prior to or pari passu with the
Lien of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply to
any indenture or indentures supplemental hereto permitted by, and complying
with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance
thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the
provisions of this Section, the Indenture Trustee shall mail a notice thereof
by first-class mail to the Holders at their addresses as they shall appear on
the registry books of the Registrar, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officer's Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustee as to any matter provided
for by such supplemental indenture. If the Owner Trustee or the Indenture
Trustee shall so determine, new Certificates so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Certificates.
Section 13.06. No Request Necessary for Lease Supplement or
Indenture and Security Agreement Supplement. Notwithstanding anything
contained in Section 13.02 hereof, no written request or consent of the
Indenture Trustee, any Holder or the Owner Participant pursuant to Section
13.02 hereof shall be required to enable the Owner Trustee to enter into
any supplement to the Lease with the Lessee in accordance with the terms
and conditions of the Lease to subject a replacement airframe or
Replacement Engine thereto or to execute and deliver an Indenture and
Security Agreement Supplement pursuant to the terms hereof.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trustee shall have paid or
caused to be paid the principal of and interest on all the Certificates
outstanding hereunder, as and when the same shall have become due and payable,
or (b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Certificates theretofore authenticated (other than any
Certificates which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all
such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment
within one year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of prepayment by the Indenture Trustee in the name and at
the expense of the Owner Trustee, and (ii) the Owner Trustee shall have
irrevocably deposited or caused to be deposited with the Indenture Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Indenture Trustee or any paying agent to the Owner Trustee in accordance with
Section 14.04 hereof) or Government obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity all such Certificates not theretofore
delivered to the Indenture Trustee for cancellation, including principal and
interest due or to become due to such date of maturity as the case may be, and
if, in any such case, the Owner Trustee shall also pay or cause to be paid all
other sums then payable hereunder by the Owner Trustee, then this Indenture
shall cease to be of further effect (except in the case of (c) above as to (A)
rights of registration of transfer and exchange, and the Owner Trustee's right
of optional prepayment pursuant to Section 6.02(a)(ii) hereof, (B)
substitution of mutilated, defaced, destroyed, lost or stolen Certificates,
(C) rights of Holders to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (D) the rights, obligations, indemnities and immunities of the
Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them), and the Indenture Trustee, on demand of the
Owner Trustee accompanied by an Officer's Certificate and an Opinion of
Counsel (covering such matters reasonably requested by, and in form and
substance reasonably satisfactory to, the Indenture Trustee) and at the cost
and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs
or expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the
Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates and
provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and
releasing the Indenture Documents from the assignment thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Trustee
to give effect to such release; provided, however, that this Indenture and the
trusts created hereby shall terminate earlier and this Indenture shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property forming a part of the Trust Indenture Estate
and the final distribution by the Indenture Trustee of all moneys or other
property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided,
this Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
Section 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become
due and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the
Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the
Owner Participant) by the Indenture Trustee or such Paying Agent and the
Holder of such Certificate, as a general unsecured creditor, shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of FSB (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of FSB (or its
permitted successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders.
No Holder shall have legal title to any part of the Trust Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Holder in and to the Trust Indenture Estate
or hereunder shall operate to terminate this Indenture or entitle such Holder
or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture
Trustee is Binding. Any sale or other conveyance of all or any part of the
Trust Indenture Estate by the Indenture Trustee made pursuant to the terms
of this Indenture or of the Lease shall bind the Lessee, the Owner Trustee,
the Holders and the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Indenture Trustee, the Owner
Trustee, the Owner Participant and such Holders therein and thereto. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with
respect thereto by the Indenture Trustee.
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders. Nothing in this Indenture, whether
express or implied, shall be construed to give to any person other than FSB,
the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its
individual capacity, the Owner Participant, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Indenture. Upon
termination of this Indenture pursuant to Article XIV hereof, the Indenture
Trustee in connection with the satisfaction of the Indenture shall return to
the Owner Trustee all property (and related documents and instruments)
constituting or evidencing the Trust Indenture Estate.
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet
possession and enjoyment of the Aircraft by the Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (telephone:
(801) 246-5630, facsimile: (801) 246-5053) (with a copy to the Owner
Participant at the address provided for notice pursuant to Section 14.01 of
the Participation Agreement), (b) if personally delivered to the Indenture
Trustee, addressed to it at its office at Two International Place, 4th Floor,
Boston, Massachusetts 02110 (telephone: (617) 664-5414, facsimile: (617)
664-5371), Attention: Corporate Trust Administration or (c) if to the Owner
Participant or the Lessee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Indenture
Trustee, or, until an address is so furnished, addressed to the address of
such party if any, set forth in Section 14.01 of the Participation Agreement.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trustee
and Holders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
Section 15.07. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officer's Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and
that the proposed action is in conformity with the requirements of this
Indenture, and (b) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or demand as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
Any certificate, statement or opinion of an officer of FSB may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Lessee or FSB, upon the certificate, statement or
opinion of or representations by an officer or officers of the Lessee or FSB,
as the case may be, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
FSB or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the
case may be, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
Section 15.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
Section 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of
such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent
permitted hereby and thereby.
Section 15.11. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 15.12. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed this 23rd day of October, 1996 by their respective officers
thereunto duly authorized and acknowledge that this Indenture has been made
and delivered in the City of New York, and this Indenture shall be effective
only upon such execution and delivery.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as specifically set forth herein
but solely as Owner Trustee,
By_________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee,
By_________________________________
Name:
Title:
Exhibit A
to
Trust Indenture and Security Agreement
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement (Federal Express
Corporation Trust No. N586FE) dated ________, ____, of FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as owner trustee (herein called the "Owner Trustee") under
the Trust Agreement dated as of April 1, 1996 as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996
(as at any time amended, herein called the "Trust Agreement") between First
Security Bank, National Association and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and delivery
of this Indenture and Security Agreement Supplement which shall particularly
describe the Aircraft and any replacement airframe or Replacement Engine
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture, Mortgage and Security Agreement
(Federal Express Corporation Trust No. N586FE) dated as of September 1,
1996 (herein called the "Original Indenture") between the Owner Trustee and
State Street Bank and Trust Company, as Indenture Trustee (herein called
the "Indenture Trustee"), provides for the execution and delivery of a
supplement thereto substantially in the form hereof which shall
particularly describe the Aircraft (such term and other defined terms in
the Indenture being used herein with the same meanings) and any replacement
airframe or Replacement Engine included in the Trust Indenture Estate, and
shall specifically mortgage such Aircraft, replacement airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture dated as of September 1, 1996
which together with the Indenture and Security Agreement Supplement No. 1
(Federal Express Corporation Trust No. N586FE) dated September 23, 1996
(the Original Indenture being attached to and made a part of such Indenture
and Security Agreement Supplement and filed therewith) have been duly
recorded pursuant to Subtitle VII of Title 49 of the United States Code on
September 24, 1996 as one document and have been assigned Conveyance No.
HH012951.
WHEREAS, the Original Indenture, as amended and restated by the
Trust Indenture and Security Agreement dated as of October 15, 1996 (herein
called the "Indenture"), was duly recorded pursuant to Subtitle VII of
Title 49 of the United States Code on ______________ and assigned
Conveyance No. ________;
NOW, THEREFORE, this Supplement witnesseth, that, to secure the
prompt payment of the principal of and Make-Whole Premium, if any, and
interest on, and all other amounts due with respect to, all Outstanding
Certificates under the Indenture and all other amounts due hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions for the benefit of the Holders contained in the
Indenture, in the Lease, in the Participation Agreement and the
Certificates, and the prompt payment of any and all amounts from time to
time owing under the Participation Agreement by the Owner Trustee, the
Owner Participant or the Lessee to the Holders and for the uses and
purposes and subject to the terms and provisions of the Indenture and the
Certificates, and in consideration of the premises and of the covenants
contained in the Indenture, and of the purchase of the Certificates by the
Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture
Trustee at or before the delivery of the Indenture, the receipt of which is
hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in, and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust
for the equal and ratable security and benefit of the Holders, in the trust
created by the Indenture, and subject to all of the terms, conditions,
provisions and limitations set forth in the Indenture, a first priority
security interest in and mortgage lien on all estate, right, title and
interest of the Owner Trustee in, to and under the following described
property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above,
whether the same are now owned by the Owner Trustee or shall hereafter be
acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture,
and subject to all of the terms, conditions, provisions and limitations set
forth in the Indenture, all of the estate, right, title and interest of the
Owner Trustee in, to and under the Lease Supplement (other than Excepted
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
Exhibit B
to
Trust Indenture and Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N586FE)
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N586FE)
dated as of April 1, 1996
as amended and restated as of September 1, 1996 and
as further amended and restated as of October 15, 1996
Interest Rate Maturity
First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee
(herein in such capacity called the "Owner Trustee") under that certain Trust
Agreement (Federal Express Corporation Trust No. N586FE) dated as of April 1,
1996 as amended and restated as of September 1, 1996 and as further amended
and restated as of October 15, 1996, between the Owner Participant named
therein and First Security Bank, National Association (herein as such Trust
Agreement may be amended or supplemented from time to time called the "Trust
Agreement"), hereby promises to pay to State Street Bank and Trust Company, as
Pass Through Trustee, or its registered assigns, the principal sum of
________________ _______________ Dollars, payable as set forth below for the
Maturity specified above, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest on the principal outstanding
from time to time, semiannually on each January 30 and July 30, on said
principal sum in like coin or currency at the rate per annum set forth above
from the January 30 or the July 30, as the case may be, next preceding the
date of this Certificate to which interest on the Certificates has been paid
or duly provided for, unless the date hereof is a date to which interest on
the Certificates has been paid or duly provided for, in which case from the
date of this Certificate. Notwithstanding the foregoing, if the date
hereof is after any January 15 or July 15 and before the following January
30 or July 30, as the case may be, this Certificate shall bear interest
from such January 30 or July 30; provided that, if the Owner Trustee shall
default in the payment of interest due on such January 30 or July 30, then
this Certificate shall bear interest from the next preceding January 30 or
July 30 to which interest on this Certificate has been paid or duly
provided for. The interest so payable on any January 30 or July 30 will,
except as otherwise provided in the Indenture referred to below, be paid to
the person in whose name this Certificate is registered at the close of
business on the January 15 or July 15 preceding such January 30 or July 30,
whether or not such day is a Business Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the
period from and including the date thereof to but excluding the date the same
is paid in full, payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of State Street Bank and Trust Company (the
"Indenture Trustee") maintained for such purpose in immediately available
funds prior to 10:30 A.M. (New York time) on the due date thereof and the
Indenture Trustee shall remit all such amounts received by it to the Holders
at such account or accounts at such financial institution or institutions as
the Holders shall have designated to the Indenture Trustee in writing, in
immediately available funds, such payment to be made if the payment was
received prior to 10:30 A.M. New York time by the Indenture Trustee on any
Business Day, by 12:00 noon New York time on such Business Day; otherwise, the
Indenture Trustee shall make payment promptly, but not later than 11:00 A.M.
New York time on the next succeeding Business Day; provided that, at the
option of the Indenture Trustee or its Paying Agent, interest may be paid by
mailing a check therefor payable to or upon the written order of the
registered holder entitled thereto at his last address as it appears on the
Register. If any amount payable under this Certificate, or under the
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
First Security Bank, National Association and State Street Bank and
Trust Company are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person who is, or who in acquiring the Certificates is or may be
using the assets of, an employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code,
or any trust established under any such plan or account, may acquire or hold
any of the Certificates, if such Person determines either that an
administrative or a statutory exemption from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code is applicable to its
purchase and holding of the Certificates or that its purchase and holding of
the Certificates will not result in a prohibited transaction under Section 406
of ERISA and Section 4975 of the Code.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N586FE) dated as of September 1, 1996
as amended and restated as of October 15, 1996 (herein as amended,
supplemented or modified from time to time called the "Indenture") between the
Owner Trustee and the Indenture Trustee, designated as Equipment Trust
Certificates (Federal Express Corporation Trust No. N586FE) limited in
aggregate initial principal amount to $62,772,000.00 consisting of the
following aggregate principal amounts of Certificates with the interest rates
per annum and Maturities shown:
Initial
Aggregate
Principal
Maturity Amount Interest Rate
- -------- --------- -------------
January 30, 2013 $51,049,000.00 7.39%
January 30, 2015 $11,723,000.00 7.84%
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its
principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of
this Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as follows.
The Certificates with a Maturity of January 30, 2013 are subject to
redemption in part, pro rata (based on the face amount thereof), commencing
on January 30, 1997 and the Certificates with a Maturity of January 30,
2015 are subject to redemption in part, pro rata (based on the face amount
thereof), commencing on January 30, 2014, in each case through mandatory
sinking fund redemptions providing for the redemption on the Sinking Fund
Redemption Dates of the aggregate principal amounts set forth below,
together with interest accrued thereon to the applicable Sinking Fund
Redemption Date, but without Make-Whole Premium.
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2013 January 30, 2015
--------------- ------------------ -------------------
January 30, 1997 $ 632,305 0
July 30, 1997 0 0
January 30, 1998 1,380,850 0
July 30, 1998 0 0
January 30, 1999 1,457,330 0
July 30, 1999 0 0
January 30, 2000 1,570,479 0
July 30, 2000 14,614 0
January 30, 2001 1,669,413 0
July 30, 2001 3,281,947 0
January 30, 2002 2,437,899 0
July 30, 2002 0 0
January 30, 2003 2,295,276 0
July 30, 2003 0 0
January 30, 2004 2,470,323 0
July 30, 2004 0 0
January 30, 2005 2,658,719 0
July 30, 2005 0 0
January 30, 2006 2,861,484 0
July 30, 2006 0 0
January 30, 2007 3,444,972 0
July 30, 2007 0 0
January 30, 2008 3,176,376 0
July 30, 2008 0 0
January 30, 2009 4,008,453 0
July 30, 2009 0 0
January 30, 2010 3,590,647 0
July 30, 2010 0 0
January 30, 2011 3,997,087 0
July 30, 2011 0 0
January 30, 2012 5,788,061 0
July 30, 2012 0 0
January 30, 2013 4,312,765 0
July 30, 2013 0 0
January 30, 2014 0 6,571,190
July 30, 2014 0 0
January 30, 2015 0 5,151,810
Total $ 51,049,000 $ 11,723,000
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder
or under the Indenture shall be made only from the income and proceeds from
the Lessor's Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such distributions in
accordance with the terms of the Indenture; provided that under the Lease, the
Lessee is obligated to pay or cause to be paid, to the extent such payments
are not required to be made from the assets subject to the Lien of this
Indenture or the income and proceeds received by the Indenture Trustee
therefrom, any net loss arising from the investment of funds held by the
Indenture Trustee which but for an Event of Default would be payable to
Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees
that it will (except as aforesaid) look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as provided above and that neither the Owner Participant, the
Owner Trustee, First Security Bank, National Association nor the Indenture
Trustee is personally liable to the Holder hereof for any amounts payable or
any liability under this Certificate or under the Indenture, except as
expressly provided in the Indenture, in the case of First Security Bank,
National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and the Lessee shall not have revoked
such notice or effected an assumption of the Certificates as provided in
Section 2.12 of the Indenture).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 of the Indenture.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or
Section 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to
the Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is
directed to prepay the Certificates. In the case of a prepayment pursuant to
clause (i) above, the Certificates shall be prepaid on the Loss Payment Date
(as defined in Section 11.02 of the Lease). In the case of a prepayment
pursuant to clause (iii) above, the Certificates shall be prepaid on the date
designated in the notice of prepayment required by Section 8.02 of the
Indenture. In the case of a prepayment of the Certificates pursuant to clauses
(ii) and (iv) above, the Certificates shall be prepaid in full on the
Termination Date. In the case of a prepayment of the Certificates pursuant to
clause (v) above, the Certificates shall be prepaid on the effective date of
the Refinancing. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment
Date, immediately available funds shall be deposited with the Indenture
Trustee in an amount in respect of the Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section
6.02 of the Indenture on or after the applicable Premium Termination Date,
or (ii) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (i) or (iii) above (if clause (i) of
the first sentence of Section 8.02(a) of the Indenture is applicable), the
sum of (A) the aggregate principal amount of such Certificates then
Outstanding, (B) accrued interest on the Certificates to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee under the
Indenture or under the Participation Agreement or the Lease, but excluding
any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (ii), (iii) (if clause (ii) of the
first sentence of Section 8.02(a) of the Indenture is applicable), (iv) or
(v) above, the sum of the amounts specified in clauses (A), (B) and (C) of
the preceding clause (1) plus any Make-Whole Premium payable in respect of
all Certificates with respect to which the Premium Termination Date
therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall (except for prior acts) be released
and discharged from any further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and
be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its
consequences may be waived the Majority in Interest of Holders. Any such
consent or waiver shall be conclusive and binding upon the Holder of this
Certificate and upon all future Holders and owners of this Certificate and
any Certificate that may be issued in exchange or substitution therefor,
whether or not any notation thereof is made upon this Certificate or such
other Certificates. Moreover, if, and only if, an Event of Default shall
occur, the Indenture Trustee may declare the Lease to be in default, and
may, to the exclusion of the Owner Trustee, exercise one or more of the
remedies of the Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing for
more than 180 days or the Certificates shall have been accelerated or (B) an
Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all the
Outstanding Certificates by notifying the Indenture Trustee of such
election and depositing the sum of amounts contemplated by paragraph
"first" under Section 5.03 of the Indenture and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee
for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to the
Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, plus accrued interest on such
amount to the date of purchase and any Make-Whole Premium applicable
to each Outstanding Certificate, if such purchase occurs prior to the
Premium Termination Date for such Outstanding Certificate (in the
case of a purchase pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture) plus all other sums due any Holder
or the Indenture Trustee under the Indenture, the Participation
Agreement or the Lease.
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long as
any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the Certificates
may be presented for registration of transfer and for exchange as provided in
the Indenture. As provided in the Indenture and subject to certain
limitations therein, this Certificate is transferable, and upon surrender of
this Certificate for registration of transfer at the principal corporate
trust office of the Indenture Trustee, or at the office or agency
maintained for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Indenture Trustee duly executed by, the Holder or his attorney duly
authorized in writing, one or more new Certificates of the same Maturity
and interest rate and of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee shall deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Federal Express Corporation Trust No. N586FE) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By ___________________________
Name:
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N586FE) referred to in the within mentioned Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY,
not in its individual
capacity, but solely as
Indenture Trustee
By __________________________
Authorized Signatory
SCHEDULE I
[Intentionally left blank.]
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Additional Leverage Amount. An amount equal to 5.506252521% of the
outstanding principal amount of the Original Loan Certificates to be
refinanced on the Refunding Date.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person 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. In the case of amounts
payable to the Lessor, the Owner Participant, or any corporate Affiliate of
the Owner Participant, it shall be presumed that such Person is at all times
subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe)
together with three Engines (whether any of which is an initial Engine or a
Replacement Engine) whether or not any of such initial or Replacement Engines
may from time to time be installed on such Airframe or may be installed on any
other airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any replacement airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N586FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date or any date
thereafter in connection with the transactions contemplated by the
Operative Agreements, as such agreement may be amended and supplemented
from time to time with the consent of the Lessor and delivered to the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N586FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N586FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant on the Delivery Date pursuant to Section 4.01(n) of
the Original Participation Agreement.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent for the Interim Term and the
Basic Term payable for the Aircraft throughout the Basic Term pursuant to
Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on March 22, 2017, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty
Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee
and the city in which the office or agency in the United States is
maintained by the Pass Through Trustee for the payment of the Pass Through
Certificates, and after the Lien of the Indenture is discharged, Salt Lake
City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N586FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the
Owner Trustee's corporate trust business shall be administered which the
Owner Trustee shall have specified by notice in writing to the Lessee, the
Owner Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
EBO Date. As defined in Section 4.02(a)(F) of the Lease.
EBO Price. Has the meaning specified in Section 4.02(a)(F) of the
Lease.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
due to theft or disappearance for a period in excess of 30 days (or such
longer period not to exceed 60 days from the end of such 30 day period if and
so long as the location of such property is known and the Lessee is pursuing
the recovery thereof) or to the end of the Term, if less, unless such event
constitutes an Event of Loss under clause (i)(B) or clause (ii) below, or (B)
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by the government of Canada, France, Germany, Japan,
the Netherlands, Sweden, Switzerland or the United Kingdom, or instrumentality
or agency of any such foreign government, for a period in excess of 180 days,
(B) by a foreign government (other than any such government referred to in the
immediately preceding clause (A)), or instrumentality or agency of any such
foreign government, or any purported government or instrumentality or agency
thereof, or (C) by the Government for a period extending beyond the Term
provided that no Event of Loss shall be deemed to have occurred, and the Term
shall be extended automatically for a period of up to six months beyond the
end of the Term in the event that the Aircraft or the Airframe or any Engine
is requisitioned by the Government pursuant to an activation as part of the
CRAF Program described in Section 7.02(a)(iv) of the Lease; or (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited for a period of six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward all steps which are necessary and desirable to
permit the normal use of the Aircraft or Airframe provided, however, that an
Event of Loss shall be deemed to have occurred if (x) the Lessee fails to
continue diligently carrying forward all such steps or (y) the use of the
Aircraft or the Airframe in the normal course of air transportation of cargo
shall have been prohibited for a period of an additional 12 months following
such 6 month period or (z) unless waived by the Lessor, the Term shall have
expired. The date of such Event of Loss shall be (t) the 30th day or the 90th
day, as the case may be, following loss of such property or its use due to
theft or disappearance; (u) the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal
use; (v) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (w) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (x) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
and the date of such condemnation, confiscation, seizure or requisition in the
case of any other foreign government or instrumentality or agency thereof; (y)
the last day of the Term in the case of requisition for use of such property
by the Government or (z) the last day of the 6 month or additional 12 month
period, referred to in clause (iv) above. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments of
expenses paid or payable by the Lessee in respect of the Owner Participant,
the Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to Article 8, 9, or 10 and Section 15.01 of the
Participation Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to
Section 7.01(e), Article 9 or Section 11.03(a) of the Lease or Section 15.01
of the Participation Agreement, (ii) proceeds of public liability insurance
(or government indemnities in lieu thereof) in respect of the Aircraft payable
as a result of insurance claims paid for the benefit of, or losses suffered
by, the Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained with
respect to the Aircraft by the Owner Participant (whether directly or through
the Owner Trustee) maintained in accordance with the provisions of but not
required under Article 13 of the Lease, (iv) all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to
the Owner Participant or the Owner Trustee in its individual capacity, after
the release thereof from the Lien of the Indenture, (vi) subject to Section
3.05 of the Lease, payments constituting increases in Basic Rent attributable
to payments arising pursuant to Section 5 of the Tax Indemnity Agreement,
(vii) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (vi) above and (viii)
any payments in respect of interest to the extent attributable to the payments
referred to in clauses (i) through (vi) above.
Exempt Recipient. A person described in Section 6049(b)(4) of the
Code.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
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 the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Joseph International Sales Corporation, a United States Virgin
Islands corporation.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, except for purposes of Section 17.01 of the
Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft pursuant to such
Section 17.01, in which case an appraiser shall not be appointed and such Fair
Market Rental shall be deemed to be zero.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming the Aircraft (or other property)
is unencumbered by the Lease. In such determination, except for purposes
of Section 17.01 of the Lease, it shall be assumed that the Aircraft is in
at least the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease and Fair Market Value
shall be determined in accordance with the provisions of Section 4.03 of
the Lease. For purposes of Section 17.01 of the Lease, such determination
shall be made on an "as is, where is" basis by a qualified independent
appraiser selected by the Lessor and the costs and expenses of the
appraisal shall be borne by the Lessee, unless the Lessor has not obtained
possession of the Aircraft free and clear of all Liens and unencumbered by
the Lease pursuant to such Section 17.01, in which case an appraiser shall
not be appointed and such Fair Market Value shall be deemed to be zero.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, and any successor (including any trustee which may succeed to
the Lessor's interest under the Lease), Affiliate, assign, officer, director,
employee, agent and servant of any of the foregoing, the Lessor's Estate and
the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N586FE), dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N586FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N586FE), dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, the
GTA, the Engine Warranty Assignment, the Engine Consent, any Ancillary
Agreement, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of either the Owner Trustee in its individual capacity or the
Owner Participant) and requisition, indemnity or other payments of any kind
for or with respect to the Aircraft (except amounts owing to the Owner
Participant or to the Owner Trustee in its individual capacity, or to any of
their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) "Lessor's Estate" shall include all property intended to be subjected to
the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, the Owner Participant or any Affiliate of the
Owner Participant, in each case not related to the transactions contemplated
by the Operative Agreements, (ii) acts or omissions of the Lessor in its
individual capacity or as Owner Trustee, and, in the case of the Lessor in its
individual capacity, arising from its gross negligence or willful misconduct
either not related to the transactions contemplated by or expressly prohibited
under the Operative Agreements and any act or omission of the Owner
Participant or any Affiliate of the Owner Participant which is not related to
the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, (iii) Taxes or Expenses
imposed against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant or any Affiliate of the Owner Participant, the Lessor's
Estate or the trust created by the Trust Agreement which are not required to
be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement
or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. McDonnell Douglas Corporation, a Maryland corporation,
and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Modification Agreement. The Aircraft Modification Agreement dated as
of December 1, 1995 between the Lessee and the Manufacturer providing for the
refurbishing and reconfiguration of the Aircraft including any warranties
relating thereto, as originally executed or as modified, supplemented, amended
or supplemented in accordance with the terms thereof, but only to the extent
that the foregoing relates to the Aircraft, to the extent assigned to the
Owner Trustee pursuant to the Warranty Bill of Sale.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe
or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, if any, the Owner Trustee Guaranty, if any, any Ancillary Agreement
entered into by or with the written consent of the Indenture Trustee, which by
its terms is an Operative Agreement, the Certificates outstanding at the time
of reference, the Indenture, the Indenture and Security Agreement Supplement,
the Engine Consent and the Tax Indemnity Agreement, each as amended from time
to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N586FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012951.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N586FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012952.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N586FE), dated as of April 1, 1996, as
amended and restated as of September 1, 1996, among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N586FE), between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996, between the Owner Participant and the Owner
Trustee as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996, and filed with the FAA on September 23,
1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Interim Term and
the Basic Term, utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N586FE), dated as of April 1, 1996, as
amended and restated as of September 1, 1996 and as further amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the
Owner Participant, the Indenture Trustee not in its individual capacity
except as otherwise expressly provided therein, but solely as indenture
trustee and the Pass Through Trustee not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through
trustee, as amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of June 1, 1996 between the Lessee and the Pass Through Trustee, as such
Pass Through Agreement may be modified, supplemented or amended from time
to time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series B1 or 1996 Pass Through Certificates, Series B2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 30 and July 30 commencing on January 30,
1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, October 23, 2006 and with respect to the Certificates having
a Maturity in 2015, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term
with respect to which the Lessee has exercised its option to renew the
Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 30 and July 30 commencing on January
30, 1997, and continuing thereafter during the Term.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent and, accordingly, no further accrual or credit
shall be required whenever Stipulated Loss Value is to be calculated with
reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Factors."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to FSB, the Lessor, the Owner Participant,
the Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, EBO Price and amounts calculated by reference to
Termination Value, and all amounts required to be paid by Lessee under the
agreements, covenants and indemnities contained in the Lease or in the
Participation Agreement or the Tax Indemnity Agreement or any other Operative
Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term, the Basic Term and any Renewal Term unless
the Lease is terminated earlier pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after the seventh anniversary of the Commencement Date in the case of
Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the
Lease, July 30, 2013, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, July 30, 2011.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996,
between the Owner Participant and the Owner Trustee in its individual
capacity, as from time to time modified, amended or supplemented pursuant to
its applicable provisions and in accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
Warranty Bill of Sale. The full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and dated the
Delivery Date.
SCHEDULE III
DESCRIPTION OF ORIGINAL INDENTURE
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N586FE) dated as of September 1, 1996 between First
Security Bank, National Association, as owner trustee under Trust Agreement
(Federal Express Corporation Trust No. N586FE) dated as of April 1, 1996,
amended and restated as of September 1, 1996 between Ameritech Credit
Corporation, as owner participant and First Security Bank, National
Association, and State Street Bank and Trust Company, as indenture trustee,
recorded by the Federal Aviation Administration on September 24, 1996 and
assigned Conveyance No. HH012951, as supplemented by the following described
instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Indenture and Security Agreement
Supplement No. 1
(Federal Express Corporation
Trust No. N586FE) 09/23/96 09/24/96 HH012951
TRUST INDENTURE AND SECURITY AGREEMENT
(Federal Express Corporation Trust No. N662FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Not in its Individual
Capacity, but solely
As Indenture Trustee,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 761, REGISTRATION NO. N662FE
TABLE OF CONTENTS
Page
----
Initial Recitals......................................................... 1
Granting Clause.......................................................... 2
Habendum Clause.......................................................... 6
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................. 8
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.............. 8
Section 2.02. Execution of Certificates................................ 9
Section 2.03. Certificate of Authentication............................ 9
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest......................... 9
Section 2.05. Payments from Trust Indenture Estate Only................ 11
Section 2.06. Registration, Transfer and Exchange...................... 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates............................................ 13
Section 2.08. Cancellation of Certificates; Destruction Thereof........ 14
Section 2.09. Temporary Certificates................................... 14
Section 2.10. Termination of Interest in Trust Indenture Estate........ 15
Section 2.11. Certificates in Respect of Replacement Aircraft.......... 15
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements.................................... 15
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.... 16
Section 3.02. Offices for Payments, etc................................ 16
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee................................................. 16
Section 3.04. Paying Agents............................................ 16
Section 3.05. Covenants of FSB and the Owner Trustee................... 17
Section 3.06. [Intentionally Left Blank.].............................. 18
Section 3.07. Disposal of Trust Indenture Estate....................... 18
Section 3.08. No Representations or Warranties as to Aircraft or
Documents............................................... 18
Section 3.09. Further Assurances; Financing Statements................. 18
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates.................. 19
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution.................................. 19
Section 5.02. Event of Loss and Replacement; Prepayment................ 20
Section 5.03. Payment After Indenture Event of Default, etc............ 20
Section 5.04. Certain Payments......................................... 21
Section 5.05. Other Payments........................................... 22
Section 5.06. Payments to Owner Trustee................................ 22
Section 5.07. Application of Payments.................................. 22
Section 5.08. Investment of Amounts Held by Indenture Trustee.......... 23
Section 5.09. Withholding Taxes........................................ 23
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity.......................... 24
Section 6.02. Prepayment of Certificates............................... 24
Section 6.03. Notice of Prepayment to Holders.......................... 26
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price................................................... 26
Section 6.05. Certificates Payable on Prepayment Date.................. 26
Section 6.06. Mandatory Sinking Fund Redemption........................ 27
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default............................... 28
Section 7.02. Remedies................................................. 31
Section 7.03. Return of Aircraft, etc.................................. 33
Section 7.04. Indenture Trustee May Prove Debt......................... 35
Section 7.05. Remedies Cumulative...................................... 37
Section 7.06. Suits for Enforcement.................................... 37
Section 7.07. Discontinuance of Proceedings............................ 37
Section 7.08. Limitations on Suits by Holders.......................... 38
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute
Certain Suits............................................ 38
Section 7.10. Control by Holders....................................... 38
Section 7.11. Waiver of Past Indenture Default......................... 39
Section 7.12. Notice of Indenture Default.............................. 39
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40
Section 8.02. Owner Participant's Right to Elect to Prepay or Purchase
the Certificates........................................ 43
Section 8.03. Certain Rights of Owner Participant...................... 45
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts..................................... 46
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
an Indenture Event of Default; Prior to an Indenture
During Event of Default................................. 46
Section 9.03. Certain Rights of the Indenture Trustee.................. 48
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of
Proceeds Thereof........................................ 50
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc........................................ 50
Section 9.06. Moneys Held by Indenture Trustee......................... 50
Section 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc........................................ 50
Section 9.08. Replacement Airframes and Replacement Engines............ 50
Section 9.09. Indenture and Security Agreement Supplement for
Replacements............................................ 54
Section 9.10. Effect of Replacement.................................... 54
Section 9.11. Compensation............................................. 54
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders..................... 55
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates........................................... 55
Section 10.03. Holders to Be Treated as Owners......................... 55
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding................................. 56
Section 10.05. Right of Revocation of Action Taken..................... 56
Section 10.06. ERISA................................................... 57
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee....................... 58
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor............................... 58
Section 12.03. Persons Eligible for Appointment as Indenture Trustee... 60
Section 12.04. Acceptance of Appointment by Successor Trustee.......... 60
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.......................... 61
Section 12.06. Appointment of Separate Trustees........................ 61
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders...... 63
Section 13.02. Supplemental Indentures With Consent of Holders......... 65
Section 13.03. Effect of Supplemental Indenture........................ 66
Section 13.04. Documents to Be Given to Indenture Trustee.............. 66
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures............................................. 66
Section 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement..................... 67
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination of
Indenture.............................................. 67
Section 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates................................ 68
Section 14.03. Repayment of Moneys Held by Paying Agent................ 69
Section 14.04. Transfer of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years and Eleven Months....... 69
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting................................ 69
Section 15.02. No Legal Title to Trust Indenture Estate in Holders..... 69
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding................................................ 70
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee,
Owner Participant and Holders.......................... 70
Section 15.05. No Action Contrary to the Lessee's Rights Under
the Lease.............................................. 70
Section 15.06. Notices................................................. 70
Section 15.07. Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein............................... 71
Section 15.08. Severability............................................ 72
Section 15.09. No Oral Modifications or Continuing Waivers............. 72
Section 15.10. Successors and Assigns.................................. 72
Section 15.11. Headings................................................ 72
Section 15.12. Normal Commercial Relations............................. 73
Section 15.13. Governing Law; Counterparts............................. 73
Exhibit A --Form of Indenture and Security Agreement Supplement
Exhibit B --Form of Certificate
Schedule I --[Intentionally Left Blank]
Schedule II --Definitions
Schedule III --Description of Original Indenture
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N662FE) dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Indenture"), between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as otherwise specifically set forth herein (when acting in such
individual capacity, "FSB"), but solely as owner trustee (the "Owner Trustee")
under the Trust Agreement, as defined herein, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Indenture Trustee hereunder (the
"Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and FSB entered into the Original Trust
Agreement whereby, among other things, the Owner Trustee declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to
the Lien of the Original Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee entered into the
Original Indenture for the benefit and security of the Original Loan
Participants and pursuant to which the Owner Trustee issued to the Original
Loan Participants the Original Loan Certificates as evidence of the loan made
by the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, the Original Indenture was recorded by the FAA and assigned a
Conveyance Number as more particularly described on Schedule III attached
hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the parties hereto desire to refinance the Original Loan
Certificates with the proceeds of the Certificates to be issued hereunder;
WHEREAS, in connection with the refinancing of the Original Loan
Certificates, the parties hereto desire to amend and restate the Original
Indenture in its entirety as this Indenture sets forth, in order to provide,
among other things, (i) for the issuance by the Owner Trustee of the
Certificates, as provided in the Participation Agreement, and (ii) for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, among other things, of
certain of the Owner Trustee's right, title and interest in and to the
Aircraft, the Lease and payments and other amounts received hereunder or
thereunder in accordance with the terms hereof (other than Excepted Payments),
as security for the Owner Trustee's obligations to the Holders and for the
ratable benefit and security of such Holders;
WHEREAS, the Owner Participant and FSB, prior to the execution and
delivery of this Indenture, entered into the Trust Agreement whereby the
Original Trust Agreement was amended and restated and pursuant to which, among
other things, the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, all things have been done to make the Certificates, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree that such Original Indenture be and
the same is hereby amended and restated to read in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and
all other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the
Lease contained for the benefit of the Holders of the Certificates, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee, the Owner Participant or the
Lessee to the Holders and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Certificates and of the purchase of
the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a first priority security interest in and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
grant a first priority security interest in and confirm to the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
security and benefit of the Holders from time to time of the Certificates, a
first priority security interest in and first mortgage Lien on all estate,
right, title and interest of the Owner Trustee in, to and under the following
described property, rights and privileges other than Excepted Payments, which
collectively, excluding Excepted Payments but including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by
any Indenture and Security Agreement Supplement or any mortgage supplemental
to this Indenture, are included within the Trust Indenture Estate, subject
always to the rights granted to the Owner Trustee or the Owner Participant
hereunder and to the other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described in the
Indenture and Security Agreement Supplement and any airframe substituted in
replacement thereof pursuant to the provisions of this Indenture; the Engines,
as the same are more particularly described in the Indenture and Security
Agreement Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement, the Purchase Agreement Assignment, the
AVSA Consent and Agreement, the Consent and Agreement, the Consent and
Guaranty, the GTA, the Engine Warranty Assignment and the Engine Consent,
AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty,
the Ancillary Agreements and the Participation Agreement (to the extent of
amounts payable to the Owner Trustee thereunder) (collectively, and together
with the Lease, the Trust Agreement and the Certificates, the "Indenture
Documents"), including all rights of the Owner Trustee to execute any election
or option or to give or receive any notice, consent, waiver or approval under
or in respect of any of the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required
to be subjected to the Lien of this Indenture, and all of the estate, right,
title and interest of the Owner Trustee in and to the same and every part of
said property;
(5) All moneys and securities (including Permitted Investments) now or
hereafter paid or deposited or required to be paid or deposited to or with the
Indenture Trustee by or for the account of the Owner Trustee pursuant to any
term of any Operative Agreement, except the Tax Indemnity Agreement, and held
or required to be held by the Indenture Trustee hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Article 13 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Article 13 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and security
interest of this Indenture and from the Trust Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest
of the Owner Participant in, to and under the Tax Indemnity Agreement and any
moneys due or to become due under the Tax Indemnity Agreement and all rights
to collect and enforce Excepted Payments and (ii) rights granted to or
retained by the Owner Trustee or the Owner Participant hereunder and SUBJECT
TO the following provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted
Payments and to commence an action at law to obtain or otherwise demand, sue
for or receive and enforce the payment of such Excepted Payments, (B) to
exercise any election or option or make any decision or determination or to
give or receive any notice (including notice of Default), consent, waiver or
approval in respect of any such Excepted Payment, (C) to adjust (and make any
decision or determination or give any notice or consent with respect to) Basic
Rent and the percentages relating to Stipulated Loss Value and Termination
Value and the FPO Price as provided in Section 3.04 of the Lease and Section
15.01 of the Participation Agreement, (D) to exercise any election or option to
make any decision or determination, or to give or receive any notice, consent,
waiver or approval, or to take any other action in respect of, but in each
case only to the extent relating to, Excepted Payments (except for, in respect
of any portion of Basic Rent constituting an Excepted Payment, any action
changing the manner by which such Basic Rent is to be paid), (E) to retain the
rights of the "Lessor" with respect to solicitations of bids, and the election
to retain the Aircraft pursuant to Article 10 of the Lease, (F) to retain the
right of "Lessor" to determine the Fair Market Rental or Fair Market Value
pursuant to Article 4 of the Lease, (G) to exercise all other rights of the
Lessor under Articles 4 and 10 of the Lease with respect to the retention or
purchase by the Lessee or the Lessor of the Aircraft or the exercise by the
Lessee of the Lessee's renewal or purchase options, (H) to retain all rights
with respect to insurance maintained for its own account which Section 13.05
of the Lease specifically confers on the "Lessor", (I) to approve appraisers,
lawyers and other professionals and receive notices, certificates, reports,
filings, opinions and other documents, in each case with respect to matters
relating to the Owner Participant's tax position, (J) to approve any
accountants to be used in the verification of any Rent adjustment, and (K) to
exercise, to the extent necessary to enable it to exercise its rights under
Section 8.03 hereof, the rights of the "Lessor" under Section 17.04 of the
Lease;
(ii)whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to
give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in
respect thereof, and (E) the right to consent to changes to the list of
countries on Schedule III to the Participation Agreement;
(iii)(A) so long as no Indenture Event of Default not constituting an
Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
to the exclusion of the Indenture Trustee (or, if an Indenture Event of
Default that is also an Event of Default shall have occurred and be
continuing, acting jointly with and not to the exclusion of the Indenture
Trustee), to exercise all rights, elections and options of the Lessor in
connection with the return of the Aircraft under Article 12 of the Lease (but
not Article 17 thereof, it being understood that the Indenture Trustee shall
have the exclusive right to exercise remedies pursuant to such Article 17,
including in respect of any related return of the Aircraft pursuant to Article
12 of the Lease), including the right to approve as satisfactory any
accountants, engineers, appraisers or counsel to render services for or issue
appraisals, reports, certificates or opinions to the Owner Trustee and to
exercise all rights, elections and options of the Lessor in connection with the
return of the Aircraft pursuant to the express provisions of the Operative
Agreements, and (B) so long as no Indenture Event of Default not constituting
an Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
jointly with the Indenture Trustee (agreement of both not being required), to
further assurances and financial information from the Lessee pursuant to
Section 19.01 of the Lease (other than the right to receive any funds to be
delivered to the "Lessor" under the Lease (except funds delivered with respect
to Excepted Payments) and under the Purchase Agreement;
(iv)at all times the Owner Trustee shall have the right as Lessor,
but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft; and
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section 7.02
hereof.
Notwithstanding the foregoing, but subject always to the provisions of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) (other than
with respect to Excepted Payments) declare the Lease to be in default under
Article 17 thereof or any statute (including, without limitation, Article 2-A
of the Uniform Commercial Code) and (B) subject only to the provisions of this
Indenture, (other than in connection with Excepted Payments) exercise the
remedies set forth in such Article 17 of the Lease any statute (including
without limitation Article 2-A of the Uniform Commercial Code), at law and in
Article 7 hereof.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so
long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, in trust for the equal and ratable benefit and
security of the Holders from time to time of the Certificates, without any
priority of any one Certificate over any other and for the uses and purposes
and subject to the terms and conditions set forth in this Indenture and the
rights of the Owner Trustee and the Owner Participant under this Indenture.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any
of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of
the Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file
any claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture Event of
Default, the Owner Trustee hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Trustee, irrevocably, with full power (in the
name of the Owner Trustee or otherwise), subject to the terms and conditions
of this Indenture, to ask, require, demand, receive, compound and give
acquittance for any and all Basic Rent, Supplemental Rent payable to the Owner
Trustee, Stipulated Loss Value and Termination Value payments, insurance
proceeds and any and all moneys and claims for moneys due and to become due
under or arising out of the Lease (subject to Section 8.01 hereof) or the
other Indenture Documents (other than Excepted Payments), to endorse any
checks or other instruments or orders in connection with the same and to file
any claims, take any action or institute any proceeding which the Indenture
Trustee may deem to be necessary or advisable in the premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the
Owner Trustee and all other amounts (other than Excepted Payments not
constituting Basic Rent) which are required to be paid to or deposited with
the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at
such address in the United States of America as the Indenture Trustee shall
specify for application as provided in this Indenture. The Owner Trustee
agrees that if, notwithstanding such provision, it shall have received any
such amounts, promptly on receipt of any such payment, it will transfer to the
Indenture Trustee any and all moneys from time to time received by the Owner
Trustee constituting part of the Trust Indenture Estate for distribution by
the Indenture Trustee pursuant to this Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement (i) any
amounts distributed to it by the Indenture Trustee under this Indenture, and
(ii) any Excepted Payments not constituting Basic Rent.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will, at the
expense of the Lessee, promptly and duly execute and deliver or cause to be
duly executed and delivered any and all such further instruments and documents
as the Indenture Trustee may reasonably deem desirable in obtaining the full
benefits of the assignment hereunder and of the rights and powers herein
granted; provided, however, that the Owner Trustee shall have no obligation to
execute and deliver or cause to be executed or delivered to the Indenture
Trustee any such instrument or document if such execution and delivery would
result in the imposition of additional liabilities on the Owner Trustee or the
Owner Participant or would result in a burden on the Owner Participant's
business activities, unless the Owner Trustee or the Owner Participant, as the
case may be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant
to Section 14.01 hereof, any of its right, title or interest hereby assigned,
to anyone other than the Indenture Trustee, and that it will not, except in
respect of Excepted Payments or otherwise as provided in or permitted by this
Indenture, enter into an agreement amending or supplementing any of the
Indenture Documents, settle or compromise any claim (other than claims in
respect of Excepted Payments) against the Lessee arising under any of the
Indenture Documents, or submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Indenture
Documents, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee
has delivered to the Indenture Trustee executed counterparts of the Trust
Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in
Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of this Indenture, and from time to
time thereafter, Certificates in an aggregate principal amount not in excess
of the amount specified in Section 2.04 hereof (except as otherwise provided
in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture
Trustee shall thereupon authenticate and deliver said Certificates to or upon
the oral or written order of the Owner Trustee, signed, if written, by an
authorized officer of the Owner Trustee, without any further action by the
Owner Trustee.
Section 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of FSB. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of FSB who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of
by FSB, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of FSB; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the
execution of such Certificate, shall be the proper officers of FSB, although
at the date of the execution and delivery of this Indenture any such person
was not such an officer. Certificates bearing the facsimile signatures of
individuals who were authorized officers of FSB at the time such Certificates
were issued shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the respective dates of such Certificates.
Section 2.03. Certificate of Authentication. Only such Certificates
as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit B, executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the security
and benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Indenture Trustee upon any Certificate executed by the
Owner Trustee shall be conclusive evidence that the Certificate so
authenticated has been duly authenticated and delivered hereunder and that the
Holder, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. Certificates may differ with respect to Maturity (subject
to Section 15.01(d) of the Participation Agreement) and as to other terms.
The Certificates shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or
in accordance with such plans as the Owner Trustee executing the same may
determine with the approval of the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Refunding Date, and shall be issued in
the Maturities and principal amounts, and shall bear interest at the rates per
annum, specified in the form of Certificate set forth in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Certificates are admitted to trading, or to
conform to general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the
basis of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on
demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Certificates shall be payable at the Corporate Trust Administration of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 10:30
A.M. (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall
have designated to the Indenture Trustee in writing, in immediately available
funds, such payment to be made if the payment was received prior to 10:30 A.M.
New York time by the Indenture Trustee on any Business Day, by 12:00 noon New
York time on such Business Day; otherwise, the Indenture Trustee shall make
payment promptly, but not later than 11:00 A.M. New York time on the next
succeeding Business Day; provided, however, that interest may be payable at the
option of the Indenture Trustee or its Paying Agent, as defined in Section
3.04, by mailing checks for such interest payable to or upon the written order
of the Holders entitled thereto as they shall appear on the Register. If any
amount payable under the Certificates, or under this Indenture, falls due on a
day that is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, without (provided that payment is made on such next
succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect
to any Payment Date shall be entitled to receive the interest if any payable
on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
Section 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof (but only to the extent actually received by
the Indenture Trustee) and only to the extent that the Owner Trustee shall
have sufficient income or proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate (and such other amounts) to enable the
Indenture Trustee to make distributions of the amounts due in respect of the
Certificates in accordance with the terms hereof and thereof. Each Holder by
its acceptance of a Certificate agrees that it will look solely to the income
and proceeds from the Trust Indenture Estate (and such other amounts of the
type described in Section 5.01 hereof but only to the extent actually received
by the Indenture Trustee) to the extent available for distribution to it as
provided herein and that neither the Owner Participant, the Owner Trustee, FSB
nor the Indenture Trustee is personally liable to such Holder for any amounts
payable under this Indenture or such Certificate or for any amounts payable or
liability under any Certificate or this Indenture, except as expressly
provided herein in the case of FSB, the Owner Trustee or the Indenture
Trustee.
FSB is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates,
except as a result of FSB's gross negligence or willful misconduct, or as
otherwise expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of
a debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required,
by reason of the Owner Participant being held to have recourse liability to
the debtor or the trustee of the debtor directly or indirectly, to make
payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Participant under the Participation Agreement, or from
retaining any amount paid by the Owner Participant under Sections 5.01, 8.02
and 8.03 hereof.
Section 2.06. Registration, Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Certificates
as provided in this Article. Such Register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable period of time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees a new Certificate or Certificates of the same Maturity,
principal amount and interest rate and in authorized denominations for an
equal aggregate principal amount; provided, that such Certificate being
transferred shall be cancelled in accordance with Section 2.08 hereof
simultaneously with the issuance of the new Certificate.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Maturity and interest rate but in other authorized
denominations, in an equal aggregate principal amount. Certificates to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner
Trustee and the Indenture Trustee duly executed by the Holder or its attorney
duly authorized in writing and (except in the case of transfers pursuant to
Section 15.01 of the Participation Agreement) the Indenture Trustee may
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Certificates. No
service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of fifteen (15) days immediately
preceding the first mailing of notice of prepayment of such Certificates or
(b) with respect to which notice of prepayment has been given pursuant to
Section 6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request of
any officer of FSB, the Indenture Trustee shall authenticate and deliver, a
new Certificate of like Maturity, principal amount and interest rate as the
Certificate being replaced, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Certificate, or in lieu of and substitution for the Certificate so
apparently destroyed, lost or stolen. In the case of any Certificate so
apparently destroyed, lost or stolen, the applicant for a substitute
Certificate shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith.
In case any Certificate which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of
issuing a substitute Certificate, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated or defaced
Certificate), if the applicant of any Certificate so apparently destroyed,
lost or stolen, for such payment shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as any of them may require to
hold each of them harmless and the applicant shall also furnish to the Owner
Trustee and the Indenture Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered
hereunder. All Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Certificates and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
Section 2.08. Cancellation of Certificates; Destruction Thereof. All
Certificates surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner
Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee
for cancellation or, if surrendered to the Indenture Trustee, shall be
cancelled by it; and no Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Certificates held by it and deliver a
certificate of destruction to the Owner Trustee. If the Owner Trustee shall
acquire any of the Certificates, such acquisition shall not operate as a
prepayment or satisfaction of the indebtedness represented by such
Certificates unless and until the same are delivered to the Indenture Trustee
for cancellation.
Section 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of FSB, the Indenture Trustee shall authenticate
and deliver temporary Certificates (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Indenture
Trustee). Temporary Certificates shall be issuable as registered Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Certificates, all as may be
determined by the Owner Trustee with the concurrence of the Indenture Trustee.
Temporary Certificates may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Certificate shall be
executed by the Owner Trustee and, upon the oral or written request of an
authorized officer of the Owner Trustee, be authenticated by the Indenture
Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Certificates. Without unreasonable delay
the Owner Trustee shall execute and shall furnish definitive Certificates and
thereupon temporary Certificates shall be surrendered in exchange therefor
without charge at any office or agency to be maintained by the Indenture
Trustee for the purpose pursuant to Section 3.02 hereof, and, upon the oral
or written request of an authorized officer of the Owner Trustee, the
Indenture Trustee shall authenticate and deliver in exchange for such
temporary Certificates an equal aggregate principal amount of definitive
Certificates of the same Maturities and interest rates and in authorized
denominations. Until so exchanged, temporary Certificates shall be entitled
to the same security and benefits under this Indenture as definitive
Certificates.
Section 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder shall have been paid in full.
Section 2.11. Certificates in Respect of Replacement Aircraft. Upon
the execution and delivery of an Indenture and Security Agreement Supplement
covering a replacement airframe and/or Replacement Engine, as provided in
Section 9.09 hereof, each Certificate shall be deemed to have been issued in
connection with such replacement airframe and/or Replacement Engine and each
Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such replacement airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction
of the conditions set forth in Section 7.11 of the Participation Agreement,
the Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the
Certificates and all other Operative Agreements (except for any recourse
obligations of the Owner Participant or the Owner Trustee in its individual
capacity with respect to matters arising out of events occurring prior to such
assumption).
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Administration (or such other account
at such other financial institution as the Indenture Trustee may designate for
the purpose). If any amount payable under the Certificates or under this
Indenture falls due on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
Section 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented
for payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
and for prepayment as provided in this Indenture (the "Registrar"). The
Registrar shall keep a register (the "Register") with respect to the
Certificates and their transfer and exchange. The Indenture Trustee may
appoint one or more co-registrars ("Co-Registrars") for the Certificates and
may terminate any such appointment at any time upon written notice. The term
"Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in
the office of Indenture Trustee, will, with the consent of the Lessee,
appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee,
so that there shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its
sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Certificates when the same shall be due
and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to
the provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of FSB and the Owner Trustee.
(a) FSB hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall have
actual knowledge of an Indenture Event of Default, an Indenture Default or
an Event of Loss, the Owner Trustee will give prompt written notice of such
Indenture Event of Default, Indenture Default or Event of Loss to the
Indenture Trustee, the Lessee and the Owner Participant;
(ii)the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice from an insurer or an insurance
broker received pursuant to Article 13 of the Lease, to the extent that the
same shall not have been furnished to the Indenture Trustee;
(iii)the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Indenture Documents; and
(iv)except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Intentionally Left Blank.]
Section 3.07. Disposal of Trust Indenture Estate. At any time and
from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR FSB NOR
THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO
THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that FSB warrants that on the Delivery Date (a) the Owner
Trustee shall have received whatever title was conveyed to it by AVSA, and (b)
the Aircraft shall be free and clear of Lessor's Liens attributable to FSB.
Neither FSB, the Indenture Trustee nor the Owner Participant makes or shall be
deemed to have made any representation or warranty as to the validity,
legality or enforceability of this Indenture, the Trust Agreement, the
Certificates or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of FSB and the Indenture Trustee made under this Indenture or in
the Participation Agreement or of the Owner Participant made under the
Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time
and from time to time, upon the request of the Indenture Trustee or the
Lessee, at the expense of the Lessee, the Owner Trustee shall promptly and
duly execute and deliver any and all such further instruments and documents as
may be specified in such request and as are necessary or advisable to perfect,
preserve or protect the Liens and assignments created or intended to be
created hereby, or to obtain for the Indenture Trustee the full benefit of the
specific rights and powers granted herein, including, without limitation, the
execution and delivery of Uniform Commercial Code financing statements and
continuation statements with respect thereto, or similar instruments relating
to the perfection of the Liens or assignments created or intended to be created
hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than ten (10)
days after each Record Date, as of such Record Date, or at such other times as
the Indenture Trustee may request in writing, a list, in such form and as of
such date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Holders and the amounts and Maturities of the Certificates
held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register
kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided
in Section 5.03 hereof, each installment of Basic Rent, any payment of
interest on overdue installments of Basic Rent and any payment received by the
Indenture Trustee pursuant to Section 8.03(a) hereof shall be distributed by
the Indenture Trustee no later than the time herein provided in the following
order of priority: first, so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on Make-Whole Premium, if any,
interest and other amounts) then due and payable under all Certificates shall
be distributed to the Holders ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due and
payable under each such Certificate bears to the aggregate amount of the
payments then due and payable under all such Certificates, and, second, the
balance if any of such installment or payment remaining thereafter shall be
distributed to the Owner Trustee, or as the Owner Trustee may request, for
distribution pursuant to the Trust Agreement.
Section 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the
case of said Section 11.03(e), subject to the time limits specified therein)
or as the result of, or in connection with any event under the Lease giving
rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably
incurred in connection with such prepayment, second, as provided in clause
"second" of Section 5.03 hereof (but with the payment of Make-Whole Premium in
the particular circumstances provided in Section 6.02(b) hereof), and third,
as provided in clause "third" of Section 5.03 hereof; provided that if a
replacement airframe shall be substituted for an Airframe subject to an Event
of Loss as provided in Section 11.03 of the Lease and Section 9.08 hereof, any
proceeds which result from such Event of Loss and are paid to the Indenture
Trustee shall be held by the Indenture Trustee as part of the Trust Indenture
Estate and, unless otherwise applied pursuant to Section 5.01 or 5.03 hereof,
such proceeds shall be released to the Lessee upon the release of such damaged
Airframe and the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Article 11 or
13 of the Lease as the result of loss or damage not constituting an Event of
Loss (x) with respect to the Aircraft, or as a result of such loss or damage
constituting an Event of Loss if and to the extent that such amounts would at
the time be required to be paid to the Lessee pursuant to said Article 11 or
13 but for the fact that a Payment Default, Bankruptcy Default or an Event of
Default shall have occurred and be continuing or (y) are pledged to the Lessor
as security in connection with an Event of Loss in accordance with Section
11.03(e) of the Lease, shall be held by the Indenture Trustee as security for
the obligations of the Lessee under the Lease and the Participation Agreement
and shall be invested in accordance with the terms of Section 5.08 hereof and
at such time as the conditions for payment to the Lessee specified in said
Article 11 or 13, as the case may be, shall be fulfilled and there shall not
be continuing any Payment Default, Bankruptcy Default or Event of Default,
such amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Lessee to the extent provided in the
Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof,
all payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall
have occurred and so long as such an Indenture Event of Default shall be
continuing, and after the Certificates shall have become due and payable as
provided in Section 7.02(b) or (c) hereof, shall be promptly distributed by
the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to
Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent
not previously reimbursed) (including, without limitation, the expenses of
any sale, taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or advances made
by the Indenture Trustee in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon such Indenture Event of Default) shall be
applied by the Indenture Trustee in reimbursement of such expenses;
second, so much of such payments or amounts as shall be required to
pay in full the aggregate unpaid principal amount of all Outstanding
Certificates, all accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder (other than
Make-Whole Premium), shall be distributed to the Holders, and if the
aggregate amount so to be distributed shall be insufficient to pay all such
amounts in full as aforesaid, then such amount shall be distributed
ratably, without priority of one over the other, in the proportion that the
aggregate unpaid principal amount of all Certificates held by each such
Holder, the accrued but unpaid interest thereon to the date of distribution
and all other amounts due hereunder and thereunder (other than Make-Whole
Premium), bears to the aggregate unpaid principal amount of all Outstanding
Certificates, plus accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder (other than
Make-Whole Premium (it being understood that amounts payable under this
clause second shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
Section 5.04. Certain Payments. (a) Except as otherwise provided
in this Indenture, any payments received by the Indenture Trustee which are to
be applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt, any
Excepted Payment received by it from the Owner Trustee or the Lessee pursuant
to Article 8 or Article 9 of the Participation Agreement or as Supplemental
Rent, directly to the Person (which may include the Indenture Trustee)
entitled thereto.
(c) Notwithstanding anything to the contrary contained herein, any
sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly
to the Person or Persons entitled thereto.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document (including without
limitation Article 9 of the Lease) shall be distributed by the Indenture
Trustee (a) to the extent received or realized at any time prior to the
payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized
at any time after payment in full of all obligations to the Holders, in the
following order of priority: first, in the manner provided in clause "first"
of Section 5.03 hereof and second, in the manner provided in clause "third" of
Section 5.03 hereof.
Section 5.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee
hereby notifies the Indenture Trustee that unless and until the Indenture
Trustee receives notice to the contrary from the Owner Trustee, all amounts to
be distributed to the Owner Trustee hereunder for distribution in accordance
with the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account
of the Owner Participant as may be specified pursuant to Section 2.06 of the
Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of
and interest or other amounts due on each Certificate shall, except as
otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable to the date of such payment, as provided in
such Certificate, as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest and other
amounts due thereunder, second, to the payment of any other amount (other than
the principal of such Certificate) due hereunder to the Holder of such
Certificate or under such Certificate, third, to the payment of the principal
of such Certificate if then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment of the
principal of such Certificate remaining unpaid (provided that such Certificate
shall not be subject to prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that,
solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed
applied in the following order of priority: first, in the manner provided in
clause "first" above, second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and fourth, in the
manner provided in clause "fourth" above.
Section 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment
by the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or
this Section 5.08 shall be invested by the Indenture Trustee from time to time
in securities selected by (i) so long as no Event of Default shall have
occurred and be continuing, the Lessee (and in the absence of written
direction by the Lessee, the Indenture Trustee shall invest such monies in
direct obligations of the United States of America) or (ii) so long as an
Event of Default shall have occurred and be continuing, the Indenture Trustee
and in each case shall be of the type listed in clauses (i) through (iv) of
Section 23.01 of the Lease. Unless otherwise expressly provided in this
Indenture, any income realized as a result of any such investment, net of the
Indenture Trustee's reasonable fees and expenses in making such investment,
shall be held and applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Lessee shall be responsible for and will
promptly pay to the Indenture Trustee or the Lessor, as the case may be, on
demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other costs and expenses, if any,
incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms hereof
or the Lease, as the case may be. The Indenture Trustee shall not be liable
for any loss resulting from any investment made by it or any investment sold
by it under this Indenture in accordance with instructions from the Lessee
other than by reason of its willful misconduct or gross negligence, and any
such investment may be sold (without regard to its maturity) by the Indenture
Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee)
shall be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the
Lessee notifies the Indenture Trustee in writing to the contrary within 30
days of the date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to
the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of
the Participation Agreement, if the Lessee is required to pay any such Tax, or
any interest or penalty thereon, or to indemnify the Owner Participant or the
Owner Trustee with respect thereto pursuant to Section 8.01(c) of the
Participation Agreement, the Lessee shall be entitled to receive any payments
otherwise distributable to the Holder of any Certificate who was subject to
such Tax pursuant to Sections 5.01 to 5.05 hereof until the amounts the Lessee
shall have so paid in respect of any such Tax shall have been recovered in
full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity. Except as provided
in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid
prior to their respective Maturities.
Section 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08
hereof replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and Section 2.12 hereof shall not be
applicable in connection with such purchase), but subject to Section
6.02(c) below.
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof (unless such notice is revoked in
accordance with such Section).
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a refinancing of the Certificates, but subject to Section
6.02(c) below.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Section 15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to Section 6.02(c) hereof)
written notice to the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Certificates shall be
prepaid. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(i) above, the Certificates shall be prepaid in full on the Loss
Payment Date as defined in Section 11.02 of the Lease. In the case of a
prepayment of the Certificates pursuant to Section 6.02(a)(iii) above, the
Certificates shall be prepaid in full on the date so designated in the notice
referred to in Section 8.02 hereof. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(ii) or (iv) above, the Certificates
shall be prepaid in full on the Termination Date. In the case of a prepayment
of the Certificates pursuant to Section 6.02(a)(v) above, the Certificates
shall be prepaid on the effective date of the Refinancing. The day on which
the Certificates are to be prepaid pursuant to this Section 6.01(b) is herein
referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section 6.02
hereof on or after the applicable Premium Termination Date, or (ii) if such
prepayment is made prior to the applicable Premium Termination Date
pursuant to Section 6.02(a)(i) or 6.02(a)(iii) above (if clause (i) of the
first sentence of Section 8.02(a) hereof is applicable), the sum of (A) the
aggregate principal amount of such Certificates then Outstanding, (B)
accrued interest on the Certificates to the Prepayment Date and (C) all
other aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause
(ii) of the first sentence of Section 8.02(a) hereof is applicable),
6.02(a)(iv) or 6.02(a)(v) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole
Premium payable in respect of all Certificates with respect to which the
Premium Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 10.01(f) of the
Lease, no Termination Date shall occur, or if, pursuant to Section 4.02(a) of
the Lease, the Lessee revokes its notice of election to purchase, or if no
refinancing shall occur pursuant to Section 15.01 of the Participation
Agreement, the Lessee shall give notice thereof to the Indenture Trustee, and
the prepayment proposed to be effected in respect thereof shall not occur.
Section 6.03. Notice of Prepayment to Holders. In order to effect
any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee
shall give prompt notice by first class mail of prepayment to each Holder of
an Outstanding Certificate. Any notice of prepayment given by the Owner
Trustee may be revoked by the Owner Trustee at any time on or before the
Prepayment Date by prompt notice to the Holders except as otherwise provided
in the Lease or the Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions hereof,
the Prepayment Price will become due and payable, and that interest
on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price. On the Prepayment Date or the Sinking Fund Redemption Date (as defined
in Section 6.06 hereof), the Owner Trustee shall, to the extent an amount
equal to the Prepayment Price or the Sinking Fund Redemption Price (as defined
in Section 6.06 hereof), as the case may be, shall not then be held in cash or
Permitted Investments (marked-to-market net of all costs and expenses of
liquidation thereof) by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment
Price or the Sinking Fund Redemption Price, as the case may be. If there
shall so be on deposit and/or deposited the applicable Prepayment Price or
Sinking Fund Redemption Price on or prior to a Prepayment Date or Sinking Fund
Redemption Date, interest shall cease to accrue in respect of all or, in the
case of a mandatory sinking fund redemption, the relevant portion being
prepaid of, the Outstanding Certificates on and after such Prepayment Date or
such Sinking Fund Redemption Date.
Section 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of
prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided
in the Lease) become due and payable and from and after such Prepayment Date
(unless there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of
its Certificate for prepayment in accordance with said notice, such Holder
shall be paid the principal amount of its Certificate then outstanding, accrued
interest thereon to the Prepayment Date, all other sums due to such Holder
hereunder, under the Participation Agreement or the Lease, plus, if a
Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Certificate.
If any Certificate called for prepayment shall not be so paid upon
surrender thereof for prepayment, the principal shall, until paid, continue to
bear interest from the Prepayment Date at the interest rate applicable to such
Certificate.
Section 6.06. Mandatory Sinking Fund Redemption. The Certificates
with a Maturity of January 30, 2012 and the Certificates with a Maturity of
January 30, 2018 shall be subject to partial redemption, at the aggregate
principal amount set forth for the Certificates of the respective Maturity, on
a pro rata basis, on each date specified in this Section (a "Sinking Fund
Redemption Date") for such payment on the Certificates of such Maturity. The
Owner Trustee shall deposit funds sufficient to pay the Sinking Fund
Redemption Price with the Indenture Trustee as provided in Section 6.04
hereof. The Indenture Trustee shall pay from the amounts so deposited on each
applicable Sinking Fund Redemption Date to the Holders of each Certificate then
Outstanding on a pro rata basis the aggregate principal amount set forth below,
together with accrued interest to such Sinking Fund Redemption Date, but
without Make-Whole Premium (the "Sinking Fund Redemption Price"):
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2012 January 30, 2018
--------------- ------------------ -------------------
January 30, 1997 $ 180,349 0
July 30, 1997 1,034,339 0
January 30, 1998 107,795 0
July 30, 1998 1,000,210 0
January 30, 1999 225,066 0
July 30, 1999 969,153 0
January 30, 2000 345,524 0
July 30, 2000 941,400 0
January 30, 2001 469,406 0
July 30, 2001 917,199 0
January 30, 2002 1,528,197 0
July 30, 2002 0 0
January 30, 2003 4,591,438 0
July 30, 2003 0 0
January 30, 2004 862,400 0
July 30, 2004 0 0
January 30, 2005 2,706,376 0
July 30, 2005 0 0
January 30, 2006 2,350,900 0
July 30, 2006 0 0
January 30, 2007 2,531,298 0
July 30, 2007 0 0
January 30, 2008 3,531,727 0
July 30, 2008 0 0
January 30, 2009 4,301,520 0
July 30, 2009 0 0
January 30, 2010 4,631,598 0
July 30, 2010 0 0
January 30, 2011 4,987,006 0
July 30, 2011 0 0
January 30, 2012 5,058,099 0
July 30, 2012 0 0
January 30, 2013 0 0
July 30, 2013 0 0
January 30, 2014 0 0
July 30, 2014 0 0
January 30, 2015 0 0
July 30, 2015 0 0
January 30, 2016 0 5,784,749
July 30, 2016 0 0
January 30, 2017 0 6,131,049
July 30, 2017 0 122,912
January 30, 2018 0 6,261,290
Total $ 43,271,000 $ 18,300,000
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii)the failure of the Owner Trustee other than by reason of a Default
or an Event of Default (i) to pay principal, interest or Make-Whole
Premium, if any, on any Certificate when due, and such failure shall have
continued unremedied for ten (10) Business Days after the date when due or
(ii) to pay any other amounts hereunder or under the Certificates when due
and such failure shall have continued unremedied for a period of thirty
(30) days after the Owner Trustee and the Owner Participant shall receive
written demand therefor from the Indenture Trustee or by the Holders of not
less than 25% in aggregate principal amount of Outstanding Certificates; or
(iii)(A) any representation or warranty made by FSB, the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or any
Owner Trustee Guarantor, in any Operative Agreement or in any certificate of
FSB, the Owner Trustee, the Owner Participant, or any Owner Participant
Guarantor furnished to the Indenture Trustee or any Holder in connection
herewith or therewith or pursuant hereto or thereto shall prove to have been
incorrect when made and was and remains in any respect material to the
Holders and if such misrepresentation is capable of being corrected as of a
subsequent date and if such correction is being sought diligently, and such
misrepresentation shall not have been corrected within 30 days following
notice thereof identified as a "Notice of Indenture Event of Default" being
given to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by a Majority in Interest of Holders; or
(B) any (x) covenant made by the Owner Trustee in the fifth paragraph
following the Habendum Clause hereof or Section 3.05(b)(iii) hereof or
Section 7.02(b) or 7.12 of the Participation Agreement shall be breached in
any respect, (y) covenant made by the Owner Participant in Section 7.02(c)
or the last sentence of Section 7.13 of the Participation Agreement shall
be breached in any respect or (z) other covenant made by the Owner Trustee,
in its individual capacity or as Owner Trustee, or by any Owner Trustee
Guarantor, or by the Owner Participant or any Owner Participant Guarantor
in any Operative Agreement shall be breached in any respect and such breach
shall remain unremedied for a period of thirty (30) days after there has
been given to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by Certificate Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates a written notice identified as
a "Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied; or
(iv)the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or any Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(v) an order for relief shall be entered in respect of the Owner
Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate by a court having jurisdiction
in the premises in an involuntary case under the federal bankruptcy laws as
now or hereafter in effect; or the Owner Trustee or any Owner Trustee
Guarantor or the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate shall file any answer admitting or not contesting the
material allegations of a petition filed against the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate in any proceeding referred to in clause
(vi) below or seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, or of all or any
substantial part of its properties; or
(vi)without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered constituting an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or if any such petition shall be filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such petition shall not be dismissed within 60 days,
or if, without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or
any Owner Participant Guarantor or the Lessor's Estate, as the case may be,
or of all or any substantial part of the properties of the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and such
order shall not be dismissed within 60 days; or
(vii)any Owner Trustee Guaranty or any Owner Participant Guaranty
shall cease to be a valid and enforceable obligation of any Owner Trustee
Guarantor or any Owner Participant Guarantor, as the case may be, or
otherwise shall not be in full force and effect.
Section 7.02. Remedies. (a) If an Indenture Event of Default shall
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Article
17 of the Lease; provided that such exercise of remedies shall not occur until
after the latest date on which the Owner Trustee may cure the related Event of
Default pursuant to Section 8.03 hereof. The Indenture Trustee may (subject
to the provisions of the next succeeding paragraph) take possession of all or
any part of the properties covered or intended to be covered by the Lien and
security interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee
and all Persons claiming under any of them wholly or partly therefrom. In
addition, the Indenture Trustee may (subject to the provisions of the next
succeeding paragraph) exercise any other right or remedy in lieu of or in
addition to the foregoing that may be available to it under applicable law, or
proceed by appropriate court action to enforce the terms hereof, of the Lease,
or both, or to rescind the Lease. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of
sale of the Aircraft available to it, even though it shall not have taken
possession of the Aircraft and shall not have possession thereof at the time
of such sale.
Notwithstanding the foregoing, it is understood and agreed that if the
Indenture Trustee shall proceed to foreclose the Lien of this Indenture, it
shall substantially simultaneously therewith, to the extent the Indenture
Trustee is then entitled to do so hereunder and under the Lease, and is not
then stayed or otherwise prevented from doing so, proceed (to the extent it
has not already done so) to declare the Lease in default and commence the
exercise in good faith of one or more of the significant remedies under
Article 17 of the Lease (as the Indenture Trustee determines in its sole
discretion) for the purpose of recovering the Aircraft. It is further
understood and agreed that if the Indenture Trustee is unable to exercise one
or more remedies under Article 17 of the Lease because of any stay or
operation of law or otherwise, the Indenture Trustee shall not be entitled to
foreclose the Lien of this Indenture (A) until the earlier of (i) 60 days from
the date of any such stay or applicable order under Section 1110 of the
Bankruptcy Code plus any extension consented to by the Indenture Trustee or
the Holders of Certificates of such period as permitted under Section 1110(b)
of the Bankruptcy Code and (ii) the date of actual repossession of the
Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to perform
or assume the Lease pursuant to Section 365 or 1110 of the Bankruptcy Code and
no Event of Default (other than as specified in Section 16.01(e), (f) or (g)
of the Lease, or other Event of Default in respect of which the 30-day period
referred to in clause (a)(1)(B)(ii)(I) of Section 1110 of the Bankruptcy Code
shall not yet have expired) shall be continuing. For the avoidance of doubt,
it is expressly understood and agreed that except as aforesaid the
above-described inability of the Indenture Trustee to exercise any right or
remedy under the Lease shall in no event and under no circumstances prevent
the Indenture Trustee from exercising all of its rights, powers and remedies
under this Indenture, including, without limitation, this Article VII. The
Indenture Trustee further agrees that notice of intent to foreclose shall be
given to the Owner Trustee at the earlier of the commencement of any
proceeding or at least 30 days prior to the consummation of foreclosure of the
Lien of this Indenture.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi)
of Section 7.01 hereof shall occur and be continuing, the unpaid principal of
all Outstanding Certificates, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of
Holders of not less than 25% in aggregate principal amount of Outstanding
Certificates, at any time, by written notice to the Owner Trustee, the Owner
Participant and the Lessee, declare the principal of all the Certificates to
be due and payable, whereupon the unpaid principal amount of all Outstanding
Certificates, together with accrued interest thereon and all other amounts due
thereunder, but without Make-Whole Premium, shall immediately become due and
payable without presentment, demand, protest or other notice, all of which are
hereby waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to a credit against
any purchase price bid at such sale by such Holder all or any part of the
unpaid obligations owing to such Holder secured by the Lien of this Indenture.
Section 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify,
to obtain possession of all or any part of the Trust Indenture Estate to which
the Indenture Trustee shall at the time be entitled under this Indenture.
Subject to the foregoing, if the Owner Trustee shall for any reason fail to
execute and deliver such documents after such request by the Indenture
Trustee, the Indenture Trustee may pursue all or part of such Trust Indenture
Estate wherever it may be found and enter any of the premises of the Lessee or
the Owner Trustee wherever such Trust Indenture Estate may be or be supposed
to be and search for such Trust Indenture Estate and take possession of and
remove such Trust Indenture Estate. All expenses of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the
Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, lease, control or manage the Trust
Indenture Estate and to carry on the business and to exercise all rights and
powers of the Owner Participant and the Owner Trustee relating to the Trust
Indenture Estate, as the Indenture Trustee may reasonably deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, insurance, use, operation, storage, leasing, control, management
or disposition of all or any part of the Trust Indenture Estate as the
Indenture Trustee may determine. Further, the Indenture Trustee shall be
entitled to collect and receive directly all tolls, rents (including Rent),
revenues, issues, income, products and profits of the Trust Indenture Estate
other than Excepted Payments, without prejudice, however, to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
all cash held by, or required to be deposited with, the Indenture Trustee
under this Indenture. Such tolls, rents (including Rent), revenues, issues,
income, products and profits shall be applied to pay the expenses of the use,
operation, storage, leasing, control, management, or disposition of the Trust
Indenture Estate, and of all maintenance and repairs, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to make
for any taxes, assessments, insurance or other proper charges upon the Trust
Indenture Estate (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of
Default shall have occurred and be continuing and the Indenture Trustee shall
be entitled to exercise remedies hereunder, and subject to Article VIII
hereof, the Indenture Trustee, either with or without taking possession, and
either before or after taking possession, and without instituting any legal
proceedings whatsoever, may sell, assign, transfer and deliver the whole or,
from time to time, to the extent permitted by law, any part of the Trust
Indenture Estate, or any part thereof, or interest therein, at any private
sale or public auction to the highest bidder, with or without demand,
advertisement or notice, except that in respect of any private sale 30 days
prior written notice by registered mail to the Owner Trustee and the Owner
Participant will be provided, for cash or, with the consent of the Owner
Trustee and the Owner Participant, credit or for other property, for immediate
or future delivery, and for such price or prices and on such terms as the
Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal requirements shall be complied with. Any notice required
pursuant to the terms hereof in the case of a public sale, shall state the
time and place fixed for such sale. Any such public sale shall be held at
such time or times within ordinary business hours as the Indenture Trustee
shall fix in the notice of such sale. At any such sale, the Trust Indenture
Estate may be sold in one lot as an entirety or in separate lots. The
Indenture Trustee shall not be obligated to make any sale pursuant to such
notice. The Indenture Trustee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for such sale, and any such sale may
be made at any time or place to which the same may be so adjourned without
further notice or publication. The Indenture Trustee may exercise such right
of sale without possession or production of the Certificates or proof of
ownership thereof, and as representative of the Holders may exercise such
right without notice to the Holders or without including the Holders as
parties to any suit or proceedings relating to the foreclosure of any part of
the Trust Indenture Estate. The Owner Trustee shall execute any and all such
bills of sale, assignments and other documents, and perform and do all other
acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Trust Indenture Estate in accordance with this
Section 7.03(c) and to effectuate the transfer or conveyance referred to in
the first sentence of this Section 7.03(c). Notwithstanding any other
provision of this Indenture, the Indenture Trustee shall not sell the Trust
Indenture Estate or any part thereof unless the Certificates shall have been
accelerated.
(d) To the extent permitted by applicable law, and subject to
Section 7.02 hereof, the Indenture Trustee or any Holder may be a purchaser of
the Trust Indenture Estate or any part thereof or any interest therein at any
sale thereof, whether pursuant to foreclosure or power of sale or otherwise.
The Indenture Trustee may apply against the purchase price therefor the amount
then due hereunder or under any of the Certificates secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Certificates held
by such Holder to the extent that such portion of the purchase price as it
would have received had it been entitled to share any distribution thereof.
The Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect
of the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of
the Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Sections 7.02 and 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Owner Trustee or its property, or in case of any other comparable judicial
proceedings relative to the Owner Trustee, or to the creditors or property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the
principal of the Certificates shall then be due and payable as therein or
herein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or property of
the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
the Lessee or to be an acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided, that any sale of any portion of the Trust Indenture Estate
shall be done in accordance with Sections 7.02 and 7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any
right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and all
rights, remedies and powers of the Indenture Trustee and the Holders shall
continue as if no such proceeding had been instituted.
Section 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Indenture Trustee written notice that an
Indenture Event of Default shall then have occurred and be continuing, as
hereinbefore provided, and the Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates shall have made written request
upon the Indenture Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or
more Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Certificate on or after
the respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not
be impaired or affected without the consent of such Holder.
Section 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent
provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders not joining
in the giving of said direction, it being understood that (subject to Section
9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
Section 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other Indenture Default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
all Holders, the Indenture Trustee shall not waive any Indenture Default (a)
in the payment of the principal of or Make-Whole Premium, if any, or interest
on, or other amounts due under, any Certificate then Outstanding, or (b) in
respect of a covenant or provision of this Indenture which, under Article XIII
hereof, cannot be modified or amended without the consent of each Holder.
Section 7.12. Notice of Indenture Default. The Indenture Trustee
shall transmit to the Owner Trustee, the Holders and to the Owner Participant
notice of any Indenture Defaults actually known to a Responsible Officer of
the Indenture Trustee, such notice to be transmitted by mail to the Holders
within 90 days, and to the Owner Trustee and the Owner Participant promptly
after the occurrence thereof, unless such Indenture Default shall have been
cured before the giving of such notice; provided that except in the case of a
default in the payment of the principal of or interest on any Certificate,
under no circumstances shall the Indenture Trustee give such notice to the
Holders until the expiration of a period of 60 days from the occurrence of such
Indenture Default; and provided further that, except in the case of default in
the payment of the principal of or interest on or any other amount due under
any of the Certificates, the Indenture Trustee shall be protected in
withholding such notice to the Holders if and so long as the board of
directors, the executive committee, or a trust committee of directors or
trustees and/or Responsible Officers of the Indenture Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof and the provisions of paragraph (a)
immediately following the Granting Clause hereof, without the consent of a
Majority in Interest of Certificate Holders, the respective parties to the
Indenture Documents may not modify, amend or supplement any of said
agreements, or give any consent, waiver, authorization or approval thereunder,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder; provided, however, that the
actions specified in subsection (b) of this Section 8.01 may be taken without
the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the Lessor and the respective parties to the Indenture Documents, at any
time and from time to time, without the consent of the Indenture Trustee or of
any Holder, may:
(1) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Lease, or give any waiver
with respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Lease shall not modify, amend or
supplement, or give any waiver for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Lease as in effect on the
effective date hereof: Article 2 (except in respect of the Term, if the
result thereof would not be to shorten the Term of the Lease to a period
shorter than the period ending with the Maturity of any Certificate),
Section 3.03 (except to the extent such Section relates to amounts payable
(whether directly or pursuant to this Indenture) to Persons other than
Holders and the Indenture Trustee in its individual capacity), Section
3.05, Section 3.06 (except insofar as it relates to the address or account
information of the Owner Trustee or the Indenture Trustee) (other than as
such Sections 3.03, 3.05 and 3.06 may be amended pursuant to Section 3.04
of the Lease as in effect on the effective date hereof), Section 5.01,
Article 6, Article 10 (except that further restrictions may be imposed on
the Lessee), Article 11 (except that additional requirements may be imposed
on the Lessee), Article 13 (except for Section 13.05 and except that
additional insurance requirements may be imposed on the Lessee), Article 14
(except in order to increase the Lessee's liabilities or enhance the
Lessor's rights thereunder), Article 15 (except in the case of an
assignment by the Lessor in circumstances where the Aircraft shall remain
registrable under the Federal Aviation Act), Section 16.01 (except to
impose additional or more stringent Events of Default), Article 17 (except
to impose additional remedies), Section 19.01 (except to impose additional
requirements on the Lessee), Section 20.01, Article 22, Section 23.01,
Section 26.03 and any definition of terms used in the Lease, to the extent
that any modification of such definition would result in a modification of
the Lease not permitted pursuant to this subsection (b); provided that the
parties to the Lease may take any such action without the consent of the
Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner
Participant's or the Lessee's rights or obligations with respect to,
Excepted Payments (other than the place, time and manner of payment of any
portion of Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement),
or give any consent, waiver, authorization or approval with respect
thereto, in each case only to the extent any such action shall not
materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except
that without compliance with subsection (a) of this Section 8.01 the
parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following provisions
of the Participation Agreement as in effect on the effective date hereof:
Article 6 and Section 10.01(b) (insofar as such Article 6 and Section
10.01(b) relate to the Indenture Trustee, the Pass Through Trustee and the
Holders), Article 7 and Sections 15.01 and 17.11 and Articles 8 and 9
(insofar as such Articles relate to the Indenture Trustee; it being
understood that only the Indenture Trustee's consent in respect thereof
need be obtained) and any definition of terms used in the Participation
Agreement, to the extent that any modification of such definition would
result in a modification of the Participation Agreement not permitted
pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without
the consent of the Holder of each Outstanding Certificate affected thereby,
(1) modify, amend or supplement the Lease in such a way as to extend
the time of payment of Basic Rent, Stipulated Loss Value or any other
amounts payable for the account of the Holders (subject in any event to
Section 3.05 of the Lease) upon the occurrence of an Event of Loss, or
Termination Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3.05 of the Lease) upon
termination of the Lease with respect to the Aircraft payable under, or as
provided in, the Lease as in effect on the effective date hereof, or reduce
the amount of any installment of Basic Rent or Supplemental Rent so that
the same is less than the payment of principal of, and interest on the
Certificates and Make-Whole Premium, if any, as the case may be, to be made
from such installment of Basic Rent or Supplemental Rent, or reduce the
aggregate amount of Stipulated Loss Value, or any other amounts payable
under, or as provided in, the Lease as in effect on the effective date
hereof upon the occurrence of an Event of Loss so that the same is less
than the accrued interest on and the principal as of the Loss Payment Date,
of the Certificates at the time Outstanding or reduce the amount of
Termination Value and any other amounts payable under, or as provided in,
the Lease as in effect on the effective date hereof upon termination of the
Lease with respect to the Aircraft so that the same is less than the
accrued interest on and principal as of the Lease Termination Date and
Make-Whole Premium, if any, of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligations in respect of payment of Basic Rent or Supplemental Rent, or
Stipulated Loss Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3.05 of the Lease) upon the
occurrence of an Event of Loss, or Termination Value and any other amounts
payable for the account of the Holders (subject in any event to Section
3.05 of the Lease) with respect to the Aircraft, payable under, or as
provided in, the Lease as in effect on the effective date hereof, except
for any such assignment pursuant to Section 2.12 hereof, and except as
provided in the Lease as in effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the consent
of the Owner Trustee (at the direction of the Owner Participant) shall be
required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive
compliance by the Lessee with any of its obligations thereunder and (ii) to
grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving
payment of, any Excepted Payment; provided, however, that if the Owner Trustee
is proceeding under the Lease, the Owner Trustee shall proceed pursuant to
Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
Section 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf
of the Owner Participant) may, but shall be under no obligation to, do either
of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable (except as provided below) and shall
designate a Prepayment Date which shall be a Rent Payment Date or monthly
anniversary thereof and which shall be not less than 15 days after the date
of such notice on which the Owner Trustee shall, in the manner provided for
in Section 6.04 hereof, deposit the sum of amounts contemplated by
paragraph "first" under Section 5.03 and the aggregate Prepayment Price
(determined in accordance with Section 6.02(b) hereof) of all such
Certificates with the Indenture Trustee. If such payment by the Owner
Trustee to the Indenture Trustee is made, the Certificates shall cease to
accrue interest from and after the Prepayment Date, and after distribution
of such payment to the Holders, the Indenture Trustee shall release the
Trust Indenture Estate from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable (except
as provided below) and shall designate a date which shall be a Rent Payment
Date or monthly anniversary thereof and which shall be not less than 15
days after the date of such notice on which the Owner Trustee shall pay to
the Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, together with accrued interest on
such amount to the date of purchase, the aggregate amount of any Make-Whole
Premium applicable to each Outstanding Certificate (if such purchase occurs
prior to the Premium Termination Date for such Outstanding Certificate) in
the case of a purchase pursuant to clause (a)(ii) above (but not if such
purchase is pursuant to clause (a)(i) above), plus all other sums due any
Holder or the Indenture Trustee hereunder or under the Participation
Agreement or the Lease. Upon receipt by the Indenture Trustee of such
amount, each Holder will be deemed, whether or not Certificates shall have
been delivered to the Indenture Trustee on such date, to have thereupon
sold, assigned, transferred and conveyed (and shall promptly take such
actions as the Owner Participant shall reasonably request to evidence such
sale, assignment, transfer and conveyance) to the Owner Participant
(without recourse or warranty of any kind except for its own acts), all of
the right, title and interest of such Holder in and to the Trust Indenture
Estate and this Indenture and all Certificates held by such Holder and the
former Holders shall not be entitled to receive any interest on the
principal amount of such Certificates after the purchase date, and the
Owner Participant shall be deemed to have assumed (and shall promptly take
such actions as any Holder shall reasonably request to evidence such
assumption) all of such Holder's obligations under the Participation
Agreement and this Indenture arising subsequent to such sale. If the Owner
Trustee shall so request, such Holder will comply with all the provisions of
Section 2.06 of this Indenture to enable new Certificates to be issued to
the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to
Section 2.06 hereof in connection with the issuance of any such new
Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
(c) Any election to prepay or purchase the Certificates under this
Section 8.02 shall be irrevocable, provided that if on the specified date for
prepayment or purchase, the Event of Default giving rise to such election
shall no longer be continuing under the Lease such election shall be deemed to
be automatically withdrawn.
Section 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such
installment of Basic Rent or of interest on account of such installment's
being overdue shall not constitute or result in an Indenture Event of Default
under this Indenture and any declaration based solely on the same shall be
deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee to exercise any rights
and powers or pursue any remedies pursuant to Article 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it
or them under this Indenture by demanding of the Lessee payment of such
amount, or by commencing an action at law or equity against the Lessee for the
payment of such amount or taking appropriate action in a pending action at law
against the Lessee pursuant to Section 17.01(a)(v), but only said Section
17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to
this Section 8.03, the Owner Trustee or the Owner Participant, as the case may
be, shall be subrogated on an unsecured basis to all the rights of the
Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same,
and shall be entitled to any payment of Basic Rent (or interest thereon)
actually made by the Lessee in respect of such cured payment upon receipt by
the Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to
each Certificate Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
Notwithstanding anything in this Indenture or the Lease to the contrary, the
Owner Participant and the Owner Trustee collectively, shall not be entitled to
cure more than six (6) Events of Default (no more than three (3) of which may
be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after the Owner
Participant's receipt of the written notice of such Event of Default, then
the failure of the Lessee to perform such covenant, condition or agreement,
the observance or performance of which was accomplished by the Owner Trustee
hereunder shall not constitute or result in an Indenture Event of Default under
this Indenture and any declaration based solely on the same shall be deemed to
be automatically rescinded. Nothing contained in the preceding sentence shall
be deemed to entitle the Owner Trustee or the Owner Participant to exercise
any rights and powers or pursue any remedies pursuant to Article 17 of the
Lease or otherwise except as set forth in this Indenture, and except that the
Owner Trustee or the Owner Participant may attempt to recover any amount paid
by it or them in effecting such cure by demanding of the Lessee payment of
such amount, plus any interest due, or by commencing an action at law or in
equity against the Lessee for the payment of such amount or taking appropriate
action in a pending action at law against the Lessee pursuant to Section
17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any
such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or
the Owner Participant, as the case may be, shall be subrogated to all the
rights of the Indenture Trustee under the Lease in respect of the payment,
agreement or covenant giving rise to such Event of Default, and any right to
any interest in respect of the same, and shall be entitled to any payment or
other performance upon receipt by the Indenture Trustee; provided that no such
amount shall be paid to the Owner Trustee or the Owner Participant until all
amounts then due and payable to each Certificate Holder hereunder and
thereunder shall have been paid in full and no Indenture Event of Default
shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this
Indenture, and covenants and agrees to perform the same as expressed herein
and agrees to receive and disburse all moneys constituting part of the Trust
Indenture Estate in accordance with the terms hereof.
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an
Indenture Event of Default has occurred and has not been cured or waived, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read in to this Indenture against
the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii)the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts; and
(iii)the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner
Trustee agrees that it will, at the expense of the Lessee, file or cause to be
filed such continuation statements with respect to financing statements
relating to the security interest created hereunder in the Trust Indenture
Estate as may be specified from time to time in written instructions of the
Holders of not less than 25% in aggregate principal amount of Certificates
(which instructions may, by their terms, be operative only at a future date
and which shall be accompanied by the execution form of such continuation
statement so to be filed); provided that, notwithstanding the foregoing, the
Indenture Trustee may execute and file or cause to be filed any financing
statement which it from time to time deems appropriate.
(b) If any Event of Default shall have occurred and be continuing
and, after the latest date on which the Owner Trustee may cure such Event of
Default pursuant to Section 8.03 hereof, on request of the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates and subject
to indemnification, to the extent provided in Sections 7.08 and 9.03 and
Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity
in respect of any such cost or expense under Article XI hereof) promptly take
such action as may be necessary duly to discharge all Indenture Trustee's
Liens on any part of the Trust Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Article 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such
document, instrument, financing or continuation statement as evidencing the
fact that it is properly prepared and presented, provided that the Indenture
Trustee shall promptly correct any error in any such document, instrument,
financing or continuation statement of which a Responsible Officer of the
Indenture Trustee has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have
been furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to prove
or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing to do so by the Majority in Interest
of Certificate Holders; provided that, if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture Trustee
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs,
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Owner Trustee or,
if paid by the Indenture Trustee or any predecessor trustee, shall be
repaid by the Owner Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates, except the Indenture Trustee's
certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Certificates. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Certificates or of the proceeds
thereof.
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and
receive, collect, hold and retain collections from the Owner Trustee with the
same rights it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither
the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee
nor any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be specifically prescribed herein) may, in
the absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on
the part of the Indenture Trustee, shall be full warrant to the Indenture
Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine which has been subject to an
Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine,
as the case may be, shall be replaced in accordance with the provisions of
this Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii)a description of the replacement airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the replacement airframe the Owner Trustee
will be the legal owner of and have good and marketable title to such
replacement airframe free and clear of all Liens except Liens
permitted under Section 6.01 of the Lease, that such replacement
airframe will on such date be in at least as good operating condition
and repair as required by the terms of the Lease, and that such
replacement airframe has been or, substantially concurrently with
such replacement, will be duly registered in the name of the Owner
Trustee under the Aviation Act or under the law then applicable to the
registration of the Airframe subject to the Event of Loss and that an
airworthiness certificate has been duly issued under the Aviation Act
(or such other applicable law) with respect to such replacement
airframe and that such registration and certificate is, or will be,
in full force and effect, and that the Lessee will have the full
right and authority to use such replacement airframe;
(iv)that the insurance required by Article 13 of the Lease is in full
force and effect with respect to such replacement airframe and all
premiums then due thereon have been paid in full;
(v) that the replacement airframe is of the same or an improved make
or model as the Airframe requested to be released from this Indenture;
(vi)that the value of the replacement airframe as of the date of such
certificate is not less than the value of the Airframe requested to
be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii)that no Event of Default has occurred and is continuing or would
result from the making and granting of the request for release and
the addition of a replacement airframe;
(viii)that the release of the Airframe subject to the Event of Loss
will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(ix)that upon such replacement, the Lien of this Indenture will apply
to the replacement airframe and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11.03 of the
Lease with respect to such replacement airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii)a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee will
be the legal owner of such Replacement Engine free and clear of all
Liens except Liens permitted under Section 6.01 of the Lease, and
that such Replacement Engine will on such date be in at least as good
operating condition and repair as required by the terms of the Lease
and will otherwise conform to the requirements set forth in the
definition of "Replacement Engine";
(iv)that the value of the Replacement Engine as of the date of such
certificate is not less than the value of the Engine to be released
(assuming such Engine was in the condition and repair required to be
maintained under the Lease);
(v) that the release of the Engine subject to the Event of Loss will
not impair the security of the Indenture in contravention of any of
the provisions of this Indenture;
(vi)that upon such replacement, the Lien of this Indenture will apply
to the Replacement Engine and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(vii)that each of the conditions specified in Section 10.03, 11.03 or
11.04 of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the replacement airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties, if any, generally available with respect to such replacement
airframe or Replacement Engine, and an Indenture and Security Agreement
Supplement subjecting such replacement airframe or Replacement Engine to the
Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or property
which have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii)the replacement airframe or Replacement Engine has been validly
subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such replacement airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the case may be, have been
duly filed for recordation pursuant to the Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such replacement airframe or Replacement Engine and the
Indenture Trustee would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to such replacement airframe or Replacement
Engine, provided, that such opinion need not be to the effect specified in
the foregoing clause to the extent that the benefits of such Section 1110
would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such substitution
had such Event of Loss not occurred.
Section 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a replacement airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of
the Holders and the Lessee, subject to fulfillment of the conditions precedent
and compliance by the Lessee with its obligations set forth in Section 10.03
or Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided
no Event of Default shall have occurred and be continuing, execute and deliver
to the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the
substitution of a replacement airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such replacement airframe or Replacement
Engine or Engines with the same force and effect as if such replacement
airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees
to pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of its counsel, agents and other persons not regularly in
its employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Lessee, and shall have the right to use or apply any moneys held by it
hereunder in the Trust Indenture Estate toward such payments; provided that,
so long as the Lease is in effect, the Indenture Trustee shall not make any
claim for payment under this Section 9.11 against the Owner Trustee without
first making demand on the Lessee for payment of such claim. The Indenture
Trustee agrees that it shall have no right against any Holder, FSB or the
Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the
Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee
shall deem and treat the Person in whose name such Certificate shall be
registered upon the Register as the absolute owner of such Certificate
(whether or not such Certificate shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
this Indenture, interest on such Certificate and for all other purposes; and
neither the Owner Trustee nor the Indenture Trustee (nor any agent of the
Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Lessee shall be affected by any notice to the contrary. All
such payments so made to any such person, or upon his order, shall be valid,
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Certificate.
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding. In determining whether the Holders of the requisite
aggregate principal amount of Certificates have concurred in any direction,
consent or waiver under this Indenture, Certificates which are owned by the
Owner Trustee, the Owner Participant, FSB, the Lessee or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSB or
the Lessee shall such Certificates be so disregarded; and provided further
that if all Certificates which would be deemed Outstanding in the absence of
the foregoing provision are owned by the Owner Trustee, FSB or the Owner
Participant or by any Affiliate thereof, then such Certificates shall be
deemed Outstanding for the purpose of any such determination. Certificates
so owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Owner Trustee, the Owner Participant, FSB or the Lessee or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Owner Trustee, the Owner Participant, FSB
or the Lessee. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Indenture
Trustee in accordance with such advice, unless the Lessee, the Owner Trustee,
FSB, or the Owner Participant are actually named in the Register. Upon
request of the Indenture Trustee, the Owner Trustee, the Owner Participant,
FSB and the Lessee shall furnish to the Indenture Trustee promptly an
Officers' Certificate listing and identifying all Certificates, if any, known
by the Owner Trustee, the Owner Participant, FSB or the Lessee to be owned or
held by or for the account of any of the above-described persons; and, subject
to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts set
forth therein and of the fact that all Certificates not listed therein are
outstanding for the purpose of any such determination.
Section 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Administration and upon proof of
holding as provided in this Article, revoke such action so far as concerns
such Certificate. Except as aforesaid, any such action taken by the Holder
shall be conclusive and binding upon such Holder and upon all future Holders
and owners of such Certificate and of any Certificates issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Certificate or otherwise. Any action taken by
the Holders of the percentage in aggregate principal amount of the
Certificates specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Holders of all the Certificates.
Section 10.06. ERISA. Any Person who is, or who in acquiring the
Certificates is or may be using the assets of, an employee benefit plan
subject to Title I of ERISA, or an individual retirement account or plan
subject to Section 4975 of the Code, or any trust established under any such
plan or account, may acquire or hold any of the Certificates, if such Person
determines either that an administrative or a statutory exemption from the
prohibited transaction rules under Section 406 of ERISA and Section 4975 of
the Code is applicable to its purchase and holding of the Certificates or that
its purchase and holding of the Certificates will not result in a prohibited
transaction under Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its
services under this Indenture and any taxes excluded from the Lessee's
indemnity obligation under Section 8.01(b) of the Participation Agreement),
claims, actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
agreed to be indemnified against by any other person under any other document)
in any way relating to or arising out of this Indenture, or any other
Indenture Documents or the enforcement of any of the terms of any thereof, or
in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent and other defects, whether
or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration
of the Trust Indenture Estate or the action or inaction of the Indenture
Trustee hereunder, except only (a) in the case of willful misconduct or gross
negligence of the Indenture Trustee in the performance of its duties
hereunder, (b) as may result from the inaccuracy of any representation or
warranty of the Indenture Trustee in the Participation Agreement, (c) as
otherwise provided in Section 9.02(c) hereof or (d) as otherwise excluded by
the terms of Article 8 or Article 9 of the Participation Agreement from the
Lessee's general indemnity or general tax indemnity to the Indenture Trustee
under said Articles; provided that so long as the Lease is in effect, the
Indenture Trustee shall not make any claim under this Article XI for any claim
or expense indemnified by the Lessee under the Participation Agreement without
first making demand on the Lessee for payment of such claim or expense. The
Indenture Trustee shall be entitled to indemnification, from the Trust
Indenture Estate, for any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to
this Article XI to the extent not reimbursed by the Lessee or others, but
without releasing any of them from their respective agreements of
reimbursement; and to secure the same the Indenture Trustee shall have a prior
Lien on the Trust Indenture Estate. The indemnities contained in this Article
XI shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee. Upon payment in full by the Owner Trustee
of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long
as no Indenture Event of Default shall have occurred and be continuing, be
subrogated to the rights of the Indenture Trustee, if any, in respect of the
matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of the Owner Trustee pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice
thereof to the Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each
Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, the Majority in
Interest of the Certificate Holders or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Lessee, the Owner Trustee, the Owner Participant, and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder
thereof of such action in writing, such removal to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In the case
of the resignation or removal of the Indenture Trustee, the Majority in
Interest of the Certificate Holders, or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders, may
appoint a successor Indenture Trustee by an instrument signed by such Holders.
If a successor Indenture Trustee shall not have been appointed within 30 days
after such notice of resignation or removal, the Indenture Trustee, the Owner
Trustee, the Lessee, the Owner Participant, or any Holder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee to
act until such time, if any, as a successor shall have been appointed as
provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 12.03 hereof and shall fail to resign after
written request therefor by the Owner Trustee or by any Holder; or
(ii)the Indenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in
duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of
which instrument shall be delivered to the Indenture Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as provided above
within one year from the date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which
shall be (i)(x) a bank or trust company organized and doing business under the
laws of the United States of America or any state or the District of Columbia
having a combined capital and surplus of at least $100,000,000 or (y) a bank
or trust company whose obligations hereunder are fully guaranteed by a direct
or indirect parent thereof having a combined capital and surplus of at least
$100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to supervision of
examination by Federal, state or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any
time the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Indenture Trustee shall resign immediately in
the manner and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee
an instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Owner Trustee or of the successor trustee, upon
payment of its charges then unpaid, the trustee ceasing to act shall, subject
to Section 14.04 hereof, pay over to the successor trustee all moneys at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Owner Trustee
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear
in the Register, and shall mail a copy of such notice to the Lessee and the
Owner Trustee. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 12.02
hereof.
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Indenture Trustee shall be a party, or any corporation succeeding to
the corporate trust business of the Indenture Trustee, shall be the successor
to the Indenture Trustee hereunder, provided that, anything herein to the
contrary notwithstanding, such corporation shall be eligible under the
provisions of Section 12.03 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Certificates or in this Indenture provided
that the certificate of the Indenture Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Certificates in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any time or
times, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Indenture Estate may at the time be located or
in which any action of the Indenture Trustee may be required to be performed
or taken, the Indenture Trustee, by an instrument in writing signed by it, may
appoint one or more individuals or corporations to act as a separate trustee
or separate trustees or co-trustee, acting jointly with the Indenture Trustee,
of all or any part of the Trust Indenture Estate, to the full extent that
local law makes it necessary for such separate trustee or separate trustees or
co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it, he or they shall be vested with such title to the Trust
Indenture Estate or any part thereof, and with such rights, powers, duties and
obligations, as shall be specified in the instrument of appointment, and such
rights, powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee and
such separate trustee or separate trustees or co-trustee jointly with the
Indenture Trustee subject to all the terms of this Indenture, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument
in writing, constitute the Indenture Trustee its or his attorney-in-fact and
agent with full power and authority to do all acts and things and to exercise
all discretion on its or his behalf and in its or his name. In case any such
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of
the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii)all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional trustee
or trustees and separate trustee or trustees jointly except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees;
(iii)no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent of,
the Indenture Trustee; and
(iv)no trustee hereunder shall be liable either personally or in its
capacity as such trustee, by reason of any act or omission of any other
trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or
separate trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders.
The Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner
Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture
Event of Default permitting the enforcement of all or any of the several
remedies provided herein; provided, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Indenture Event of
Default or may limit the remedies available to the Indenture Trustee upon
such an Indenture Event of Default or may limit the right of not less than
the Majority in Interest of Certificate Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Owner Trustee may deem necessary or desirable and which
shall not adversely affect the interests of the Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject replacement airframe or
Replacement Engines to the Lien of this Indenture in accordance with the
provisions hereof or with the Lease or to release from the Lien of this
Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting replacement
airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates
in coupon form (including Certificates registrable as to principal only)
and to provide for exchangeability of such Certificates with Certificates
issued hereunder in fully registered form, and to make all appropriate
changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture may be executed without the consent of the
Holders of Outstanding Certificates, notwithstanding any of the provisions of
Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders; provided, however, that,
without the consent of each and every Holder, no such amendment of or
supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Certificate or reduce the interest payable on any Certificate (except that
only the consent of the Holder shall be required for any decrease in any
amounts of or the rate of interest payable on such Certificate or any
extension for the time of payment of any amount payable under such
Certificate), or alter or modify the provisions of Article V hereof with
respect to the order of priorities in which distributions thereunder shall be
made as between the Holder and the Owner Trustee or the Owner Participant or
with respect to the amount or time of payment of any such distribution, or
alter or modify the circumstances under which a Make-Whole Premium shall be
payable, or alter the currency in which any amount payable under any
Certificate is to be paid, or impair the right of any Holder to commence legal
proceedings to enforce a right to receive payment hereunder, (c) reduce,
modify or amend any indemnities in favor of any Holder or in favor of or to be
paid by the Owner Participant (except as consented to by each Person adversely
affected thereby), or (d) create or permit the creation of any Lien on the
Trust Indenture Estate or any part thereof prior to or pari passu with the
Lien of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply to
any indenture or indentures supplemental hereto permitted by, and complying
with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance
thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the
provisions of this Section, the Indenture Trustee shall mail a notice thereof
by first-class mail to the Holders at their addresses as they shall appear on
the registry books of the Registrar, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustee as to any matter provided
for by such supplemental indenture. If the Owner Trustee or the Indenture
Trustee shall so determine, new Certificates so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Certificates.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement. Notwithstanding anything contained in
Section 13.02 hereof, no written request or consent of the Indenture Trustee,
any Holder or the Owner Participant pursuant to Section 13.02 hereof shall be
required to enable the Owner Trustee to enter into any supplement to the Lease
with the Lessee in accordance with the terms and conditions of the Lease to
subject a replacement airframe or Replacement Engine thereto or to execute and
deliver an Indenture and Security Agreement Supplement pursuant to the terms
hereof.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trustee shall have paid or
caused to be paid the principal of and interest on all the Certificates
outstanding hereunder, as and when the same shall have become due and payable,
or (b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Certificates theretofore authenticated (other than any
Certificates which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all
such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment
within one year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of prepayment by the Indenture Trustee in the name and at
the expense of the Owner Trustee, and (ii) the Owner Trustee shall have
irrevocably deposited or caused to be deposited with the Indenture Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Indenture Trustee or any paying agent to the Owner Trustee in accordance with
Section 14.04 hereof) or Government obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity all such Certificates not theretofore
delivered to the Indenture Trustee for cancellation, including principal and
interest due or to become due to such date of maturity as the case may be, and
if, in any such case, the Owner Trustee shall also pay or cause to be paid all
other sums then payable hereunder by the Owner Trustee, then this Indenture
shall cease to be of further effect (except in the case of (c) above as to (A)
rights of registration of transfer and exchange, and the Owner Trustee's right
of optional prepayment pursuant to Section 6.02(a)(ii) hereof, (B)
substitution of mutilated, defaced, destroyed, lost or stolen Certificates,
(C) rights of Holders to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (D) the rights, obligations, indemnities and immunities of the
Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them), and the Indenture Trustee, on demand of the
Owner Trustee accompanied by an Officer's Certificate and an Opinion of
Counsel (covering such matters reasonably requested by, and in form and
substance reasonably satisfactory to, the Indenture Trustee) and at the cost
and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs
or expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the
Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates and
provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and
releasing the Indenture Documents from the assignment thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Trustee
to give effect to such release; provided, however, that this Indenture and the
trusts created hereby shall terminate earlier and this Indenture shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property forming a part of the Trust Indenture Estate
and the final distribution by the Indenture Trustee of all moneys or other
property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided, this
Indenture and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
Section 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become
due and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the
Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the
Owner Participant) by the Indenture Trustee or such Paying Agent and the
Holder of such Certificate, as a general unsecured creditor, shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of FSB (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of FSB (or its
permitted successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders.
No Holder shall have legal title to any part of the Trust Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Holder in and to the Trust Indenture Estate
or hereunder shall operate to terminate this Indenture or entitle such Holder
or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding. Any sale or other conveyance of all or any part of the Trust
Indenture Estate by the Indenture Trustee made pursuant to the terms of this
Indenture or of the Lease shall bind the Lessee, the Owner Trustee, the
Holders and the Owner Participant and shall be effective to transfer or convey
all right, title and interest of the Indenture Trustee, the Owner Trustee, the
Owner Participant and such Holders therein and thereto. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application
of any sale or other proceeds with respect thereto by the Indenture Trustee.
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders. Nothing in this Indenture, whether
express or implied, shall be construed to give to any person other than FSB,
the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its
individual capacity, the Owner Participant, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Indenture. Upon
termination of this Indenture pursuant to Article XIV hereof, the Indenture
Trustee in connection with the satisfaction of the Indenture shall return to
the Owner Trustee all property (and related documents and instruments)
constituting or evidencing the Trust Indenture Estate.
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet
possession and enjoyment of the Aircraft by the Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (telephone:
(801) 246-5630, facsimile: (801) 246-5053) (with a copy to the Owner
Participant at the address provided for notice pursuant to Section 14.01 of
the Participation Agreement), (b) if personally delivered to the Indenture
Trustee, addressed to it at its office at Two International Place, 4th Floor,
Boston, Massachusetts 02110 (telephone: (617) 664-5414, facsimile: (617)
664-5371), Attention: Corporate Trust Administration or (c) if to the Owner
Participant or the Lessee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Indenture
Trustee, or, until an address is so furnished, addressed to the address of
such party if any, set forth in Section 14.01 of the Participation Agreement.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trustee
and Holders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
Section 15.07. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officers' Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and
that the proposed action is in conformity with the requirements of this
Indenture, and (b) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or demand as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
Any certificate, statement or opinion of an officer of FSB may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Lessee or FSB, upon the certificate, statement or
opinion of or representations by an officer or officers of the Lessee or FSB,
as the case may be, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
FSB or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the
case may be, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
Section 15.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
Section 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of
such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent
permitted hereby and thereby.
Section 15.11. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 15.12. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed this 23rd day of October, 1996 by their respective officers
thereunto duly authorized and acknowledge that this Indenture has been made
and delivered in the City of New York, and this Indenture shall be effective
only upon such execution and delivery.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as specifically set forth herein
but solely as Owner Trustee,
By_________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee,
By_________________________________
Name:
Title:
Exhibit A
to
Trust Indenture and Security Agreement
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement (Federal Express
Corporation Trust No. N662FE) dated ________, ____, of FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as owner trustee (herein called the "Owner Trustee") under
the Trust Agreement dated as of September 1, 1996 as amended and restated as
of October 15, 1996 (as at any time amended, herein called the "Trust
Agreement") between First Security Bank, National Association and the Owner
Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and delivery
of this Indenture and Security Agreement Supplement which shall particularly
describe the Aircraft and any replacement airframe or Replacement Engine
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N662FE) dated as of September 1, 1996 (herein
called the "Original Indenture") between the Owner Trustee and State Street
Bank and Trust Company, as Indenture Trustee (herein called the "Indenture
Trustee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof which shall particularly describe the
Aircraft (such term and other defined terms in the Indenture being used herein
with the same meanings) and any replacement airframe or Replacement Engine
included in the Trust Indenture Estate, and shall specifically mortgage such
Aircraft, replacement airframe or Replacement Engine, as the case may be, to
the Indenture Trustee.
WHEREAS, the Original Indenture dated as of September 1, 1996 which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N662FE) dated September 23, 1996 (the Original
Indenture being attached to and made a part of such Indenture and Security
Agreement Supplement and filed therewith) have been duly recorded pursuant to
Subtitle VII of Title 49 of the United States Code on September 25, 1996 as one
document and have been assigned Conveyance No. 2A270116.
WHEREAS, the Original Indenture, as amended and restated by the Trust
Indenture and Security Agreement dated as of October 15, 1996 (herein called
the "Indenture"), was duly recorded pursuant to Subtitle VII of Title 49 of
the United States Code on ______________ and assigned Conveyance No. ________;
NOW, THEREFORE, this Supplement witnesseth, that, to secure the prompt
payment of the principal of and Make-Whole Premium, if any, and interest on,
and all other amounts due with respect to, all Outstanding Certificates under
the Indenture and all other amounts due hereunder and the performance and
observance by the Owner Trustee of all the agreements, covenants and
provisions for the benefit of the Holders contained in the Indenture, in the
Lease, in the Participation Agreement and the Certificates, and the prompt
payment of any and all amounts from time to time owing under the Participation
Agreement by the Owner Trustee, the Owner Participant or the Lessee to the
Holders and for the uses and purposes and subject to the terms and provisions
of the Indenture and the Certificates, and in consideration of the premises
and of the covenants contained in the Indenture, and of the purchase of the
Certificates by the Holders, and of the sum of $1 paid to the Owner Trustee by
the Indenture Trustee at or before the delivery of the Indenture, the receipt
of which is hereby acknowledged, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in, and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and confirm,
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and ratable security and benefit of the Holders, in the trust created by the
Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above,
whether the same are now owned by the Owner Trustee or shall hereafter be
acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture,
and subject to all of the terms, conditions, provisions and limitations set
forth in the Indenture, all of the estate, right, title and interest of the
Owner Trustee in, to and under the Lease Supplement (other than Excepted
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
Exhibit B
to
Trust Indenture and Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N662FE)
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N662FE)
dated as of September 1, 1996
as amended and restated as of October 15, 1996
Interest Rate Maturity
First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee
(herein in such capacity called the "Owner Trustee") under that certain Trust
Agreement (Federal Express Corporation Trust No. N662FE) dated as of September
1, 1996 as amended and restated as of October 15, 1996, between the Owner
Participant named therein and First Security Bank, National Association
(herein as such Trust Agreement may be amended or supplemented from time to
time called the "Trust Agreement"), hereby promises to pay to State Street
Bank and Trust Company, as Pass Through Trustee, or its registered assigns,
the principal sum of ________________ _______________ Dollars, payable as set
forth below for the Maturity specified above, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest on the principal
outstanding from time to time, semiannually on each January 30 and July 30, on
said principal sum in like coin or currency at the rate per annum set forth
above from the January 30 or the July 30, as the case may be, next preceding
the date of this Certificate to which interest on the Certificates has been
paid or duly provided for, unless the date hereof is a date to which interest
on the Certificates has been paid or duly provided for, in which case from the
date of this Certificate. Notwithstanding the foregoing, if the date hereof is
after any January 15 or July 15 and before the following January 30 or July
30, as the case may be, this Certificate shall bear interest from such January
30 or July 30; provided that, if the Owner Trustee shall default in the
payment of interest due on such January 30 or July 30, then this Certificate
shall bear interest from the next preceding January 30 or July 30 to which
interest on this Certificate has been paid or duly provided for. The interest
so payable on any January 30 or July 30 will, except as otherwise provided in
the Indenture referred to below, be paid to the person in whose name this
Certificate is registered at the close of business on the January 15 or July
15 preceding such January 30 or July 30, whether or not such day is a Business
Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the
period from and including the date thereof to but excluding the date the same
is paid in full, payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of State Street Bank and Trust Company (the
"Indenture Trustee") maintained for such purpose in immediately available
funds prior to 10:30 A.M. (New York time) on the due date thereof and the
Indenture Trustee shall remit all such amounts received by it to the Holders
at such account or accounts at such financial institution or institutions as
the Holders shall have designated to the Indenture Trustee in writing, in
immediately available funds, such payment to be made if the payment was
received prior to 10:30 A.M. New York time by the Indenture Trustee on any
Business Day, by 12:00 noon New York time on such Business Day; otherwise, the
Indenture Trustee shall make payment promptly, but not later than 11:00 A.M.
New York time on the next succeeding Business Day; provided that, at the
option of the Indenture Trustee or its Paying Agent, interest may be paid by
mailing a check therefor payable to or upon the written order of the
registered holder entitled thereto at his last address as it appears on the
Register. If any amount payable under this Certificate, or under the
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
First Security Bank, National Association and State Street Bank and
Trust Company are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person who is, or who in acquiring the Certificates is or may be
using the assets of, an employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code,
or any trust established under any such plan or account, may acquire or hold
any of the Certificates, if such Person determines either that an
administrative or a statutory exemption from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code is applicable to its
purchase and holding of the Certificates or that its purchase and holding of
the Certificates will not result in a prohibited transaction under Section 406
of ERISA and Section 4975 of the Code.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N662FE) dated as of September 1, 1996
as amended and restated as of October 15, 1996 (herein as amended,
supplemented or modified from time to time called the "Indenture") between the
Owner Trustee and the Indenture Trustee, designated as Equipment Trust
Certificates (Federal Express Corporation Trust No. N662FE) limited in
aggregate initial principal amount to $61,571,000.00 consisting of the
following aggregate principal amounts of Certificates with the interest rates
per annum and Maturities shown:
Initial
Aggregate
Principal
Maturity Amount Interest Rate
January 30, 2012 $43,271,000.00 7.39%
January 30, 2018 $18,300,000.00 7.84%
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its
principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of
this Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as follows. The
Certificates with a Maturity of January 30, 2012 are subject to redemption in
part, pro rata (based on the face amount thereof), commencing on January 30,
1997 and the Certificates with a Maturity of January 30, 2018 are subject to
redemption in part, pro rata (based on the face amount thereof), commencing on
January 30, 2016, in each case through mandatory sinking fund redemptions
providing for the redemption on the Sinking Fund Redemption Dates of the
aggregate principal amounts set forth below, together with interest accrued
thereon to the applicable Sinking Fund Redemption Date, but without Make-Whole
Premium.
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2012 January 30, 2018
--------------- ------------------ -------------------
January 30, 1997 $ 180,349 0
July 30, 1997 1,034,339 0
January 30, 1998 107,795 0
July 30, 1998 1,000,210 0
January 30, 1999 225,066 0
July 30, 1999 969,153 0
January 30, 2000 345,524 0
July 30, 2000 941,400 0
January 30, 2001 469,406 0
July 30, 2001 917,199 0
January 30, 2002 1,528,197 0
July 30, 2002 0 0
January 30, 2003 4,591,438 0
July 30, 2003 0 0
January 30, 2004 862,400 0
July 30, 2004 0 0
January 30, 2005 2,706,376 0
July 30, 2005 0 0
January 30, 2006 2,350,900 0
July 30, 2006 0 0
January 30, 2007 2,531,298 0
July 30, 2007 0 0
January 30, 2008 3,531,727 0
July 30, 2008 0 0
January 30, 2009 4,301,520 0
July 30, 2009 0 0
January 30, 2010 4,631,598 0
July 30, 2010 0 0
January 30, 2011 4,987,006 0
July 30, 2011 0 0
January 30, 2012 5,058,099 0
July 30, 2012 0 0
January 30, 2013 0 0
July 30, 2013 0 0
January 30, 2014 0 0
July 30, 2014 0 0
January 30, 2015 0 0
July 30, 2015 0 0
January 30, 2016 0 5,784,749
July 30, 2016 0 0
January 30, 2017 0 6,131,049
July 30, 2017 0 122,912
January 30, 2018 0 6,261,290
Total $ 43,271,000 $ 18,300,000
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder
or under the Indenture shall be made only from the income and proceeds from
the Lessor's Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such distributions in
accordance with the terms of the Indenture; provided that under the Lease, the
Lessee is obligated to pay or cause to be paid, to the extent such payments
are not required to be made from the assets subject to the Lien of this
Indenture or the income and proceeds received by the Indenture Trustee
therefrom, any net loss arising from the investment of funds held by the
Indenture Trustee which but for an Event of Default would be payable to
Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees
that it will (except as aforesaid) look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as provided above and that neither the Owner Participant, the
Owner Trustee, First Security Bank, National Association nor the Indenture
Trustee is personally liable to the Holder hereof for any amounts payable or
any liability under this Certificate or under the Indenture, except as
expressly provided in the Indenture, in the case of First Security Bank,
National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and the Lessee shall not have revoked
such notice or effected an assumption of the Certificates as provided in
Section 2.12 of the Indenture).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 of the Indenture.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or
Section 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to
the Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is
directed to prepay the Certificates. In the case of a prepayment pursuant to
clause (i) above, the Certificates shall be prepaid on the Loss Payment Date
(as defined in Section 11.02 of the Lease). In the case of a prepayment
pursuant to clause (iii) above, the Certificates shall be prepaid on the date
designated in the notice of prepayment required by Section 8.02 of the
Indenture. In the case of a prepayment of the Certificates pursuant to clauses
(ii) and (iv) above, the Certificates shall be prepaid in full on the
Termination Date. In the case of a prepayment of the Certificates pursuant to
clause (v) above, the Certificates shall be prepaid on the effective date of
the Refinancing. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment
Date, immediately available funds shall be deposited with the Indenture
Trustee in an amount in respect of the Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section
6.02 of the Indenture on or after the applicable Premium Termination Date,
or (ii) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (i) or (iii) above (if clause (i) of
the first sentence of Section 8.02(a) of the Indenture is applicable), the
sum of (A) the aggregate principal amount of such Certificates then
Outstanding, (B) accrued interest on the Certificates to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee under the
Indenture or under the Participation Agreement or the Lease, but excluding
any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (ii), (iii) (if clause (ii) of the
first sentence of Section 8.02(a) of the Indenture is applicable), (iv) or
(v) above, the sum of the amounts specified in clauses (A), (B) and (C) of
the preceding clause (1) plus any Make-Whole Premium payable in respect of
all Certificates with respect to which the Premium Termination Date
therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall (except for prior acts) be released
and discharged from any further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and
be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its
consequences may be waived the Majority in Interest of Holders. Any such
consent or waiver shall be conclusive and binding upon the Holder of this
Certificate and upon all future Holders and owners of this Certificate and any
Certificate that may be issued in exchange or substitution therefor, whether or
not any notation thereof is made upon this Certificate or such other
Certificates. Moreover, if, and only if, an Event of Default shall occur, the
Indenture Trustee may declare the Lease to be in default, and may, to the
exclusion of the Owner Trustee, exercise one or more of the remedies of the
Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing for
more than 180 days or the Certificates shall have been accelerated or (B) an
Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all the
Outstanding Certificates by notifying the Indenture Trustee of such
election and depositing the sum of amounts contemplated by paragraph
"first" under Section 5.03 of the Indenture and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee
for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to the
Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, plus accrued interest on such
amount to the date of purchase and if such purchase occurs prior to
the Premium Termination Date for such Outstanding Certificate (in the
case of a purchase pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture but not in the case of clause (i) of
Section 8.02(a) of the Indenture) any Make-Whole Premium applicable
to each Outstanding Certificate, plus all other sums due any Holder
or the Indenture Trustee under the Indenture, the Participation
Agreement or the Lease.
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long as
any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the Certificates
may be presented for registration of transfer and for exchange as provided in
the Indenture. As provided in the Indenture and subject to certain
limitations therein, this Certificate is transferable, and upon surrender of
this Certificate for registration of transfer at the principal corporate trust
office of the Indenture Trustee, or at the office or agency maintained for such
purposes, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Indenture Trustee duly
executed by, the Holder or his attorney duly authorized in writing, one or
more new Certificates of the same Maturity and interest rate and of authorized
denominations and for the same aggregate principal amount will be issued to
the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee shall deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Federal Express Corporation Trust No. N662FE) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By ___________________________
Name:
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N662FE) referred to in the within mentioned Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY,
not in its individual
capacity, but solely as
Indenture Trustee
By __________________________
Authorized Signatory
SCHEDULE I
[Intentionally left blank.]
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N662FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N662FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N662FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on December 23, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N662FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
September 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N662FE) dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N662FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270116.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270117.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N662FE) between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N662FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of September 1, 1996 and filed with
the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N662FE), dated as of September 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2017, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, as amended and restated as
of October 15, 1996, between the Owner Participant and the Owner Trustee in
its individual capacity, as from time to time modified, amended or
supplemented pursuant to its applicable provisions and in accordance with the
Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE III
DESCRIPTION OF ORIGINAL INDENTURE
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N662FE) dated as of September 1, 1996 between First
Security Bank, National Association, as owner trustee under Trust Agreement
(Federal Express Corporation Trust No. N662FE) dated as of September 1, 1996
between PMCC Leasing Corporation, as owner participant and First Security
Bank, National Association, and State Street Bank and Trust Company, as
indenture trustee, recorded by the Federal Aviation Administration on
September 25, 1996 and assigned Conveyance No. 2A270116, as supplemented by
the following described instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Indenture and Security Agreement
Supplement No. 1
(Federal Express Corporation
Trust No. N662FE) 09/23/96 09/25/96 2A270116
TRUST INDENTURE AND SECURITY AGREEMENT
(Federal Express Corporation Trust No. N667FE)
Dated as of August 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Not in its Individual
Capacity, but solely
As Indenture Trustee,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 771, REGISTRATION NO. N667FE
TABLE OF CONTENTS
Page
----
Initial Recitals......................................................... 1
Granting Clause.......................................................... 2
Habendum Clause.......................................................... 6
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.............................................. 8
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.............. 8
Section 2.02. Execution of Certificates................................ 9
Section 2.03. Certificate of Authentication............................ 9
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest........................ 9
Section 2.05. Payments from Trust Indenture Estate Only................ 11
Section 2.06. Registration, Transfer and Exchange...................... 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates........................................... 13
Section 2.08. Cancellation of Certificates; Destruction Thereof........ 14
Section 2.09. Temporary Certificates................................... 14
Section 2.10. Termination of Interest in Trust Indenture Estate........ 15
Section 2.11. Certificates in Respect of Replacement Aircraft.......... 15
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements................................... 15
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.... 16
Section 3.02. Offices for Payments, etc................................ 16
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee................................................ 16
Section 3.04. Paying Agents............................................ 16
Section 3.05. Covenants of FSB and the Owner Trustee................... 17
Section 3.06. [Intentionally Left Blank.].............................. 18
Section 3.07. Disposal of Trust Indenture Estate....................... 18
Section 3.08. No Representations or Warranties as to Aircraft or
Documents.............................................. 18
Section 3.09. Further Assurances; Financing Statements................. 18
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates.................. 19
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution.................................. 19
Section 5.02. Event of Loss and Replacement; Prepayment................ 20
Section 5.03. Payment After Indenture Event of Default, etc............ 20
Section 5.04. Certain Payments......................................... 21
Section 5.05. Other Payments........................................... 22
Section 5.06. Payments to Owner Trustee................................ 22
Section 5.07. Application of Payments.................................. 22
Section 5.08. Investment of Amounts Held by Indenture Trustee.......... 23
Section 5.09. Withholding Taxes........................................ 23
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity.......................... 24
Section 6.02. Prepayment of Certificates............................... 24
Section 6.03. Notice of Prepayment to Holders.......................... 26
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price.................................................. 26
Section 6.05. Certificates Payable on Prepayment Date.................. 26
Section 6.06. Mandatory Sinking Fund Redemption........................ 27
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default............................... 28
Section 7.02. Remedies................................................. 31
Section 7.03. Return of Aircraft, etc.................................. 33
Section 7.04. Indenture Trustee May Prove Debt......................... 35
Section 7.05. Remedies Cumulative...................................... 37
Section 7.06. Suits for Enforcement.................................... 37
Section 7.07. Discontinuance of Proceedings............................ 37
Section 7.08. Limitations on Suits by Holders.......................... 38
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute
Certain Suits.......................................... 38
Section 7.10. Control by Holders....................................... 38
Section 7.11. Waiver of Past Indenture Default......................... 39
Section 7.12. Notice of Indenture Default.............................. 39
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40
Section 8.02. Owner Participant's Right to Elect to Prepay or Purchase
the Certificates....................................... 43
Section 8.03. Certain Rights of Owner Participant...................... 45
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts..................................... 46
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an
Indenture Event of Default............................. 46
Section 9.03. Certain Rights of the Indenture Trustee.................. 48
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds
Thereof................................................ 50
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc....................................... 50
Section 9.06. Moneys Held by Indenture Trustee......................... 50
Section 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc....................................... 50
Section 9.08. Replacement Airframes and Replacement Engines............ 50
Section 9.09. Indenture and Security Agreement Supplement for
Replacements........................................... 54
Section 9.10. Effect of Replacement.................................... 54
Section 9.11. Compensation............................................. 54
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders..................... 55
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates.......................................... 55
Section 10.03. Holders to Be Treated as Owners......................... 55
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding................................ 56
Section 10.05. Right of Revocation of Action Taken..................... 56
Section 10.06. ERISA................................................... 57
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee....................... 58
Section 12.02. Resignation and Removal of Indenture Trustee; Appointment
of Successor.......................................... 58
Section 12.03. Persons Eligible for Appointment as Indenture Trustee... 60
Section 12.04. Acceptance of Appointment by Successor Trustee.......... 60
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.......................... 61
Section 12.06. Appointment of Separate Trustees........................ 61
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders...... 63
Section 13.02. Supplemental Indentures With Consent of Holders......... 65
Section 13.03. Effect of Supplemental Indenture........................ 66
Section 13.04. Documents to Be Given to Indenture Trustee.............. 66
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures............................................ 66
Section 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement..................... 67
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination of
Indenture............................................. 67
Section 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates............................... 68
Section 14.03. Repayment of Moneys Held by Paying Agent................ 69
Section 14.04. Transfer of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years and Eleven
Months............................................... 69
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting................................ 69
Section 15.02. No Legal Title to Trust Indenture Estate in Holders..... 69
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding............................................... 70
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders................ 70
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease................................................. 70
Section 15.06. Notices................................................. 70
Section 15.07. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein.................... 71
Section 15.08. Severability............................................ 72
Section 15.09. No Oral Modifications or Continuing Waivers............. 72
Section 15.10. Successors and Assigns.................................. 72
Section 15.11. Headings................................................ 72
Section 15.12. Normal Commercial Relations............................. 73
Section 15.13. Governing Law; Counterparts............................. 73
Exhibit A --Form of Indenture and Security Agreement Supplement
Exhibit B --Form of Certificate
Schedule I --[Intentionally Left Blank]
Schedule II --Definitions
Schedule III --Description of Original Indenture
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N667FE) dated as of August 1, 1996, as amended and restated as of
October 15, 1996 (the "Indenture"), between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as otherwise specifically set forth herein (when acting in such
individual capacity, "FSB"), but solely as owner trustee (the "Owner Trustee")
under the Trust Agreement, as defined herein, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Indenture Trustee hereunder (the
"Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and FSB entered into the Original
Trust Agreement whereby, among other things, the Owner Trustee declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of the Original Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee entered into the
Original Indenture for the benefit and security of the Original Loan
Participants and pursuant to which the Owner Trustee issued to the Original
Loan Participants the Original Loan Certificates as evidence of the loan made
by the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, the Original Indenture was recorded by the FAA and
assigned a Conveyance Number as more particularly described on Schedule III
attached hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the parties hereto desire to refinance the Original Loan
Certificates with the proceeds of the Certificates to be issued hereunder;
WHEREAS, in connection with the refinancing of the Original Loan
Certificates, the parties hereto desire to amend and restate the Original
Indenture in its entirety as this Indenture sets forth, in order to provide,
among other things, (i) for the issuance by the Owner Trustee of the
Certificates, as provided in the Participation Agreement, and (ii) for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, among other things, of
certain of the Owner Trustee's right, title and interest in and to the
Aircraft, the Lease and payments and other amounts received hereunder or
thereunder in accordance with the terms hereof (other than Excepted Payments),
as security for the Owner Trustee's obligations to the Holders and for the
ratable benefit and security of such Holders;
WHEREAS, the Owner Participant and FSB, prior to the execution and
delivery of this Indenture, entered into the Trust Agreement whereby the
Original Trust Agreement was amended and restated and pursuant to which, among
other things, the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, all things have been done to make the Certificates, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree that such Original Indenture be and
the same is hereby amended and restated to read in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and
all other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the
Lease contained for the benefit of the Holders of the Certificates, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee, the Owner Participant or the
Lessee to the Holders and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Certificates and of the purchase of
the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a first priority security interest in and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
grant a first priority security interest in and confirm to the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
security and benefit of the Holders from time to time of the Certificates, a
first priority security interest in and first mortgage Lien on all estate,
right, title and interest of the Owner Trustee in, to and under the following
described property, rights and privileges other than Excepted Payments, which
collectively, excluding Excepted Payments but including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by
any Indenture and Security Agreement Supplement or any mortgage supplemental
to this Indenture, are included within the Trust Indenture Estate, subject
always to the rights granted to the Owner Trustee or the Owner Participant
hereunder and to the other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described in the
Indenture and Security Agreement Supplement and any airframe substituted in
replacement thereof pursuant to the provisions of this Indenture; the Engines,
as the same are more particularly described in the Indenture and Security
Agreement Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement, the Purchase Agreement Assignment, the
AVSA Consent and Agreement, the Consent and Agreement, the Consent and
Guaranty, the GTA, the Engine Warranty Assignment and the Engine Consent,
AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty,
the Ancillary Agreements and the Participation Agreement (to the extent of
amounts payable to the Owner Trustee thereunder) (collectively, and together
with the Lease, the Trust Agreement and the Certificates, the "Indenture
Documents"), including all rights of the Owner Trustee to execute any election
or option or to give or receive any notice, consent, waiver or approval under
or in respect of any of the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required
to be subjected to the Lien of this Indenture, and all of the estate, right,
title and interest of the Owner Trustee in and to the same and every part of
said property;
(5) All moneys and securities (including Permitted Investments) now or
hereafter paid or deposited or required to be paid or deposited to or with the
Indenture Trustee by or for the account of the Owner Trustee pursuant to any
term of any Operative Agreement, except the Tax Indemnity Agreement, and held
or required to be held by the Indenture Trustee hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Article 13 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Article 13 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and security
interest of this Indenture and from the Trust Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest
of the Owner Participant in, to and under the Tax Indemnity Agreement and any
moneys due or to become due under the Tax Indemnity Agreement and all rights
to collect and enforce Excepted Payments and (ii) rights granted to or
retained by the Owner Trustee or the Owner Participant hereunder and SUBJECT
TO the following provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted
Payments and to commence an action at law to obtain or otherwise demand, sue
for or receive and enforce the payment of such Excepted Payments, (B) to
exercise any election or option or make any decision or determination or to
give or receive any notice (including notice of Default), consent, waiver or
approval in respect of any such Excepted Payment, (C) to adjust (and make any
decision or determination or give any notice or consent with respect to) Basic
Rent and the percentages relating to Stipulated Loss Value and Termination
Value and the FPO Price as provided in Section 3.04 of the Lease and Section
15.01 of the Participation Agreement, (D) to exercise any election or option to
make any decision or determination, or to give or receive any notice, consent,
waiver or approval, or to take any other action in respect of, but in each
case only to the extent relating to, Excepted Payments (except for, in respect
of any portion of Basic Rent constituting an Excepted Payment, any action
changing the manner by which such Basic Rent is to be paid), (E) to retain the
rights of the "Lessor" with respect to solicitations of bids, and the election
to retain the Aircraft pursuant to Article 10 of the Lease, (F) to retain the
right of "Lessor" to determine the Fair Market Rental or Fair Market Value
pursuant to Article 4 of the Lease, (G) to exercise all other rights of the
Lessor under Articles 4 and 10 of the Lease with respect to the retention or
purchase by the Lessee or the Lessor of the Aircraft or the exercise by the
Lessee of the Lessee's renewal or purchase options, (H) to retain all rights
with respect to insurance maintained for its own account which Section 13.05
of the Lease specifically confers on the "Lessor", (I) to approve appraisers,
lawyers and other professionals and receive notices, certificates, reports,
filings, opinions and other documents, in each case with respect to matters
relating to the Owner Participant's tax position, (J) to approve any
accountants to be used in the verification of any Rent adjustment, and (K) to
exercise, to the extent necessary to enable it to exercise its rights under
Section 8.03 hereof, the rights of the "Lessor" under Section 17.04 of the
Lease;
(ii)whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to
give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in
respect thereof, and (E) the right to consent to changes to the list of
countries on Schedule III to the Participation Agreement;
(iii)(A) so long as no Indenture Event of Default not constituting an
Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
to the exclusion of the Indenture Trustee (or, if an Indenture Event of
Default that is also an Event of Default shall have occurred and be
continuing, acting jointly with and not to the exclusion of the Indenture
Trustee), to exercise all rights, elections and options of the Lessor in
connection with the return of the Aircraft under Article 12 of the Lease (but
not Article 17 thereof, it being understood that the Indenture Trustee shall
have the exclusive right to exercise remedies pursuant to such Article 17,
including in respect of any related return of the Aircraft pursuant to Article
12 of the Lease), including the right to approve as satisfactory any
accountants, engineers, appraisers or counsel to render services for or issue
appraisals, reports, certificates or opinions to the Owner Trustee and to
exercise all rights, elections and options of the Lessor in connection with the
return of the Aircraft pursuant to the express provisions of the Operative
Agreements, and (B) so long as no Indenture Event of Default not constituting
an Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
jointly with the Indenture Trustee (agreement of both not being required), to
further assurances and financial information from the Lessee pursuant to
Section 19.01 of the Lease (other than the right to receive any funds to be
delivered to the "Lessor" under the Lease (except funds delivered with respect
to Excepted Payments) and under the Purchase Agreement;
(iv)at all times the Owner Trustee shall have the right as Lessor,
but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft; and
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section 7.02
hereof.
Notwithstanding the foregoing, but subject always to the provisions of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) (other than
with respect to Excepted Payments) declare the Lease to be in default under
Article 17 thereof or any statute (including, without limitation, Article 2-A
of the Uniform Commercial Code) and (B) subject only to the provisions of this
Indenture, (other than in connection with Excepted Payments) exercise the
remedies set forth in such Article 17 of the Lease any statute (including
without limitation Article 2-A of the Uniform Commercial Code), at law and in
Article 7 hereof.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so
long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, in trust for the equal and ratable benefit and
security of the Holders from time to time of the Certificates, without any
priority of any one Certificate over any other and for the uses and purposes
and subject to the terms and conditions set forth in this Indenture and the
rights of the Owner Trustee and the Owner Participant under this Indenture.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any
of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of
the Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file
any claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture Event of
Default, the Owner Trustee hereby constitutes the Indenture Trustee the true
and lawful attorney of the Owner Trustee, irrevocably, with full power (in the
name of the Owner Trustee or otherwise), subject to the terms and conditions
of this Indenture, to ask, require, demand, receive, compound and give
acquittance for any and all Basic Rent, Supplemental Rent payable to the Owner
Trustee, Stipulated Loss Value and Termination Value payments, insurance
proceeds and any and all moneys and claims for moneys due and to become due
under or arising out of the Lease (subject to Section 8.01 hereof) or the
other Indenture Documents (other than Excepted Payments), to endorse any
checks or other instruments or orders in connection with the same and to file
any claims, take any action or institute any proceeding which the Indenture
Trustee may deem to be necessary or advisable in the premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the
Owner Trustee and all other amounts (other than Excepted Payments not
constituting Basic Rent) which are required to be paid to or deposited with
the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at
such address in the United States of America as the Indenture Trustee shall
specify for application as provided in this Indenture. The Owner Trustee
agrees that if, notwithstanding such provision, it shall have received any
such amounts, promptly on receipt of any such payment, it will transfer to the
Indenture Trustee any and all moneys from time to time received by the Owner
Trustee constituting part of the Trust Indenture Estate for distribution by
the Indenture Trustee pursuant to this Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement (i) any
amounts distributed to it by the Indenture Trustee under this Indenture, and
(ii) any Excepted Payments not constituting Basic Rent.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will, at the
expense of the Lessee, promptly and duly execute and deliver or cause to be
duly executed and delivered any and all such further instruments and documents
as the Indenture Trustee may reasonably deem desirable in obtaining the full
benefits of the assignment hereunder and of the rights and powers herein
granted; provided, however, that the Owner Trustee shall have no obligation to
execute and deliver or cause to be executed or delivered to the Indenture
Trustee any such instrument or document if such execution and delivery would
result in the imposition of additional liabilities on the Owner Trustee or the
Owner Participant or would result in a burden on the Owner Participant's
business activities, unless the Owner Trustee or the Owner Participant, as the
case may be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant
to Section 14.01 hereof, any of its right, title or interest hereby assigned,
to anyone other than the Indenture Trustee, and that it will not, except in
respect of Excepted Payments or otherwise as provided in or permitted by this
Indenture, enter into an agreement amending or supplementing any of the
Indenture Documents, settle or compromise any claim (other than claims in
respect of Excepted Payments) against the Lessee arising under any of the
Indenture Documents, or submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Indenture
Documents, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee
has delivered to the Indenture Trustee executed counterparts of the Trust
Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in
Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
Section 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of this Indenture, and from time to
time thereafter, Certificates in an aggregate principal amount not in excess
of the amount specified in Section 2.04 hereof (except as otherwise provided
in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture
Trustee shall thereupon authenticate and deliver said Certificates to or upon
the oral or written order of the Owner Trustee, signed, if written, by an
authorized officer of the Owner Trustee, without any further action by the
Owner Trustee.
Section 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of FSB. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of FSB who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of
by FSB, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of FSB; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the
execution of such Certificate, shall be the proper officers of FSB, although
at the date of the execution and delivery of this Indenture any such person
was not such an officer. Certificates bearing the facsimile signatures of
individuals who were authorized officers of FSB at the time such Certificates
were issued shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the respective dates of such Certificates.
Section 2.03. Certificate of Authentication. Only such Certificates
as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit B, executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the security
and benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Indenture Trustee upon any Certificate executed by the
Owner Trustee shall be conclusive evidence that the Certificate so
authenticated has been duly authenticated and delivered hereunder and that the
Holder, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. Certificates may differ with respect to Maturity (subject
to Section 15.01(d) of the Participation Agreement) and as to other terms.
The Certificates shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or
in accordance with such plans as the Owner Trustee executing the same may
determine with the approval of the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Refunding Date, and shall be issued in
the Maturities and principal amounts, and shall bear interest at the rates per
annum, specified in the form of Certificate set forth in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Certificates are admitted to trading, or to
conform to general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the
basis of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on
demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Certificates shall be payable at the Corporate Trust Administration of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 10:30
A.M. (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall
have designated to the Indenture Trustee in writing, in immediately available
funds, such payment to be made if the payment was received prior to 10:30 A.M.
New York time by the Indenture Trustee on any Business Day, by 12:00 noon New
York time on such Business Day; otherwise, the Indenture Trustee shall make
payment promptly, but not later than 11:00 A.M. New York time on the next
succeeding Business Day; provided, however, that interest may be payable at the
option of the Indenture Trustee or its Paying Agent, as defined in Section
3.04, by mailing checks for such interest payable to or upon the written order
of the Holders entitled thereto as they shall appear on the Register. If any
amount payable under the Certificates, or under this Indenture, falls due on a
day that is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, without (provided that payment is made on such next
succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect
to any Payment Date shall be entitled to receive the interest if any payable
on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
Section 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof (but only to the extent actually received by
the Indenture Trustee) and only to the extent that the Owner Trustee shall
have sufficient income or proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate (and such other amounts) to enable the
Indenture Trustee to make distributions of the amounts due in respect of the
Certificates in accordance with the terms hereof and thereof. Each Holder by
its acceptance of a Certificate agrees that it will look solely to the income
and proceeds from the Trust Indenture Estate (and such other amounts of the
type described in Section 5.01 hereof but only to the extent actually received
by the Indenture Trustee) to the extent available for distribution to it as
provided herein and that neither the Owner Participant, the Owner Trustee, FSB
nor the Indenture Trustee is personally liable to such Holder for any amounts
payable under this Indenture or such Certificate or for any amounts payable or
liability under any Certificate or this Indenture, except as expressly
provided herein in the case of FSB, the Owner Trustee or the Indenture
Trustee.
FSB is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates,
except as a result of FSB's gross negligence or willful misconduct, or as
otherwise expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of
a debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required,
by reason of the Owner Participant being held to have recourse liability to
the debtor or the trustee of the debtor directly or indirectly, to make
payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Participant under the Participation Agreement, or from
retaining any amount paid by the Owner Participant under Sections 5.01, 8.02
and 8.03 hereof.
Section 2.06. Registration, Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Certificates
as provided in this Article. Such Register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable period of time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees a new Certificate or Certificates of the same Maturity,
principal amount and interest rate and in authorized denominations for an
equal aggregate principal amount; provided, that such Certificate being
transferred shall be cancelled in accordance with Section 2.08 hereof
simultaneously with the issuance of the new Certificate.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Maturity and interest rate but in other authorized
denominations, in an equal aggregate principal amount. Certificates to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner
Trustee and the Indenture Trustee duly executed by the Holder or its attorney
duly authorized in writing and (except in the case of transfers pursuant to
Section 15.01 of the Participation Agreement) the Indenture Trustee may
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Certificates. No
service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of fifteen (15) days immediately
preceding the first mailing of notice of prepayment of such Certificates or
(b) with respect to which notice of prepayment has been given pursuant to
Section 6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request of
any officer of FSB, the Indenture Trustee shall authenticate and deliver, a
new Certificate of like Maturity, principal amount and interest rate as the
Certificate being replaced, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Certificate, or in lieu of and substitution for the Certificate so
apparently destroyed, lost or stolen. In the case of any Certificate so
apparently destroyed, lost or stolen, the applicant for a substitute
Certificate shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith.
In case any Certificate which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of
issuing a substitute Certificate, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated or defaced
Certificate), if the applicant of any Certificate so apparently destroyed,
lost or stolen, for such payment shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as any of them may require to
hold each of them harmless and the applicant shall also furnish to the Owner
Trustee and the Indenture Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered
hereunder. All Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Certificates and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
Section 2.08. Cancellation of Certificates; Destruction Thereof. All
Certificates surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner
Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee
for cancellation or, if surrendered to the Indenture Trustee, shall be
cancelled by it; and no Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Certificates held by it and deliver a
certificate of destruction to the Owner Trustee. If the Owner Trustee shall
acquire any of the Certificates, such acquisition shall not operate as a
prepayment or satisfaction of the indebtedness represented by such
Certificates unless and until the same are delivered to the Indenture Trustee
for cancellation.
Section 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of FSB, the Indenture Trustee shall authenticate
and deliver temporary Certificates (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Indenture
Trustee). Temporary Certificates shall be issuable as registered Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Certificates, all as may be
determined by the Owner Trustee with the concurrence of the Indenture Trustee.
Temporary Certificates may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Certificate shall be
executed by the Owner Trustee and, upon the oral or written request of an
authorized officer of the Owner Trustee, be authenticated by the Indenture
Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Certificates. Without unreasonable delay
the Owner Trustee shall execute and shall furnish definitive Certificates and
thereupon temporary Certificates shall be surrendered in exchange therefor
without charge at any office or agency to be maintained by the Indenture
Trustee for the purpose pursuant to Section 3.02 hereof, and, upon the oral
or written request of an authorized officer of the Owner Trustee, the
Indenture Trustee shall authenticate and deliver in exchange for such
temporary Certificates an equal aggregate principal amount of definitive
Certificates of the same Maturities and interest rates and in authorized
denominations. Until so exchanged, temporary Certificates shall be entitled
to the same security and benefits under this Indenture as definitive
Certificates.
Section 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder shall have been paid in full.
Section 2.11. Certificates in Respect of Replacement Aircraft. Upon
the execution and delivery of an Indenture and Security Agreement Supplement
covering a replacement airframe and/or Replacement Engine, as provided in
Section 9.09 hereof, each Certificate shall be deemed to have been issued in
connection with such replacement airframe and/or Replacement Engine and each
Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such replacement airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction
of the conditions set forth in Section 7.11 of the Participation Agreement,
the Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the
Certificates and all other Operative Agreements (except for any recourse
obligations of the Owner Participant or the Owner Trustee in its individual
capacity with respect to matters arising out of events occurring prior to such
assumption).
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Administration (or such other account
at such other financial institution as the Indenture Trustee may designate for
the purpose). If any amount payable under the Certificates or under this
Indenture falls due on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
Section 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented
for payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
and for prepayment as provided in this Indenture (the "Registrar"). The
Registrar shall keep a register (the "Register") with respect to the
Certificates and their transfer and exchange. The Indenture Trustee may
appoint one or more co-registrars ("Co-Registrars") for the Certificates and
may terminate any such appointment at any time upon written notice. The term
"Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in
the office of Indenture Trustee, will, with the consent of the Lessee,
appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee,
so that there shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its
sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Certificates when the same shall be due
and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to
the provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of FSB and the Owner Trustee.
(a) FSB hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall have
actual knowledge of an Indenture Event of Default, an Indenture Default or
an Event of Loss, the Owner Trustee will give prompt written notice of such
Indenture Event of Default, Indenture Default or Event of Loss to the
Indenture Trustee, the Lessee and the Owner Participant;
(ii)the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice from an insurer or an insurance
broker received pursuant to Article 13 of the Lease, to the extent that the
same shall not have been furnished to the Indenture Trustee;
(iii)the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Indenture Documents; and
(iv)except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Intentionally Left Blank.]
Section 3.07. Disposal of Trust Indenture Estate. At any time and
from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR FSB NOR
THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO
THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that FSB warrants that on the Delivery Date (a) the Owner
Trustee shall have received whatever title was conveyed to it by AVSA, and (b)
the Aircraft shall be free and clear of Lessor's Liens attributable to FSB.
Neither FSB, the Indenture Trustee nor the Owner Participant makes or shall be
deemed to have made any representation or warranty as to the validity,
legality or enforceability of this Indenture, the Trust Agreement, the
Certificates or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of FSB and the Indenture Trustee made under this Indenture or in
the Participation Agreement or of the Owner Participant made under the
Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time
and from time to time, upon the request of the Indenture Trustee or the
Lessee, at the expense of the Lessee, the Owner Trustee shall promptly and
duly execute and deliver any and all such further instruments and documents as
may be specified in such request and as are necessary or advisable to perfect,
preserve or protect the Liens and assignments created or intended to be
created hereby, or to obtain for the Indenture Trustee the full benefit of the
specific rights and powers granted herein, including, without limitation, the
execution and delivery of Uniform Commercial Code financing statements and
continuation statements with respect thereto, or similar instruments relating
to the perfection of the Liens or assignments created or intended to be created
hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than ten (10)
days after each Record Date, as of such Record Date, or at such other times as
the Indenture Trustee may request in writing, a list, in such form and as of
such date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Holders and the amounts and Maturities of the Certificates
held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register
kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided
in Section 5.03 hereof, each installment of Basic Rent, any payment of
interest on overdue installments of Basic Rent and any payment received by the
Indenture Trustee pursuant to Section 8.03(a) hereof shall be distributed by
the Indenture Trustee no later than the time herein provided in the following
order of priority: first, so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on Make-Whole Premium, if any,
interest and other amounts) then due and payable under all Certificates shall
be distributed to the Holders ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due and
payable under each such Certificate bears to the aggregate amount of the
payments then due and payable under all such Certificates, and, second, the
balance if any of such installment or payment remaining thereafter shall be
distributed to the Owner Trustee, or as the Owner Trustee may request, for
distribution pursuant to the Trust Agreement.
Section 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the
case of said Section 11.03(e), subject to the time limits specified therein)
or as the result of, or in connection with any event under the Lease giving
rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably
incurred in connection with such prepayment, second, as provided in clause
"second" of Section 5.03 hereof (but with the payment of Make-Whole Premium in
the particular circumstances provided in Section 6.02(b) hereof), and third,
as provided in clause "third" of Section 5.03 hereof; provided that if a
replacement airframe shall be substituted for an Airframe subject to an Event
of Loss as provided in Section 11.03 of the Lease and Section 9.08 hereof, any
proceeds which result from such Event of Loss and are paid to the Indenture
Trustee shall be held by the Indenture Trustee as part of the Trust Indenture
Estate and, unless otherwise applied pursuant to Section 5.01 or 5.03 hereof,
such proceeds shall be released to the Lessee upon the release of such damaged
Airframe and the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Article 11 or
13 of the Lease as the result of loss or damage not constituting an Event of
Loss (x) with respect to the Aircraft, or as a result of such loss or damage
constituting an Event of Loss if and to the extent that such amounts would at
the time be required to be paid to the Lessee pursuant to said Article 11 or
13 but for the fact that a Payment Default, Bankruptcy Default or an Event of
Default shall have occurred and be continuing or (y) are pledged to the Lessor
as security in connection with an Event of Loss in accordance with Section
11.03(e) of the Lease, shall be held by the Indenture Trustee as security for
the obligations of the Lessee under the Lease and the Participation Agreement
and shall be invested in accordance with the terms of Section 5.08 hereof and
at such time as the conditions for payment to the Lessee specified in said
Article 11 or 13, as the case may be, shall be fulfilled and there shall not
be continuing any Payment Default, Bankruptcy Default or Event of Default,
such amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Lessee to the extent provided in the
Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof,
all payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall
have occurred and so long as such an Indenture Event of Default shall be
continuing, and after the Certificates shall have become due and payable as
provided in Section 7.02(b) or (c) hereof, shall be promptly distributed by
the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to
Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent
not previously reimbursed) (including, without limitation, the expenses of
any sale, taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or advances made
by the Indenture Trustee in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon such Indenture Event of Default) shall be
applied by the Indenture Trustee in reimbursement of such expenses;
second, so much of such payments or amounts as shall be required to
pay in full the aggregate unpaid principal amount of all Outstanding
Certificates, all accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder (other than
Make-Whole Premium), shall be distributed to the Holders, and if the
aggregate amount so to be distributed shall be insufficient to pay all such
amounts in full as aforesaid, then such amount shall be distributed
ratably, without priority of one over the other, in the proportion that the
aggregate unpaid principal amount of all Certificates held by each such
Holder, the accrued but unpaid interest thereon to the date of distribution
and all other amounts due hereunder and thereunder (other than Make-Whole
Premium), bears to the aggregate unpaid principal amount of all Outstanding
Certificates, plus accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder (other than
Make-Whole Premium (it being understood that amounts payable under this
clause second shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
Section 5.04. Certain Payments. (a) Except as otherwise provided
in this Indenture, any payments received by the Indenture Trustee which are to
be applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt, any
Excepted Payment received by it from the Owner Trustee or the Lessee pursuant
to Article 8 or Article 9 of the Participation Agreement or as Supplemental
Rent, directly to the Person (which may include the Indenture Trustee)
entitled thereto.
(c) Notwithstanding anything to the contrary contained herein, any
sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly
to the Person or Persons entitled thereto.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document (including without
limitation Article 9 of the Lease) shall be distributed by the Indenture
Trustee (a) to the extent received or realized at any time prior to the
payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized
at any time after payment in full of all obligations to the Holders, in the
following order of priority: first, in the manner provided in clause "first"
of Section 5.03 hereof and second, in the manner provided in clause "third" of
Section 5.03 hereof.
Section 5.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee
hereby notifies the Indenture Trustee that unless and until the Indenture
Trustee receives notice to the contrary from the Owner Trustee, all amounts to
be distributed to the Owner Trustee hereunder for distribution in accordance
with the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account
of the Owner Participant as may be specified pursuant to Section 2.06 of the
Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of
and interest or other amounts due on each Certificate shall, except as
otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable to the date of such payment, as provided in
such Certificate, as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest and other
amounts due thereunder, second, to the payment of any other amount (other than
the principal of such Certificate) due hereunder to the Holder of such
Certificate or under such Certificate, third, to the payment of the principal
of such Certificate if then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment of the
principal of such Certificate remaining unpaid (provided that such Certificate
shall not be subject to prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that,
solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed
applied in the following order of priority: first, in the manner provided in
clause "first" above, second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and fourth, in the
manner provided in clause "fourth" above.
Section 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment
by the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or
this Section 5.08 shall be invested by the Indenture Trustee from time to time
in securities selected by (i) so long as no Event of Default shall have
occurred and be continuing, the Lessee (and in the absence of written
direction by the Lessee, the Indenture Trustee shall invest such monies in
direct obligations of the United States of America) or (ii) so long as an
Event of Default shall have occurred and be continuing, the Indenture Trustee
and in each case shall be of the type listed in clauses (i) through (iv) of
Section 23.01 of the Lease. Unless otherwise expressly provided in this
Indenture, any income realized as a result of any such investment, net of the
Indenture Trustee's reasonable fees and expenses in making such investment,
shall be held and applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Lessee shall be responsible for and will
promptly pay to the Indenture Trustee or the Lessor, as the case may be, on
demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other costs and expenses, if any,
incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms hereof
or the Lease, as the case may be. The Indenture Trustee shall not be liable
for any loss resulting from any investment made by it or any investment sold
by it under this Indenture in accordance with instructions from the Lessee
other than by reason of its willful misconduct or gross negligence, and any
such investment may be sold (without regard to its maturity) by the Indenture
Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee)
shall be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the
Lessee notifies the Indenture Trustee in writing to the contrary within 30
days of the date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to
the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of
the Participation Agreement, if the Lessee is required to pay any such Tax, or
any interest or penalty thereon, or to indemnify the Owner Participant or the
Owner Trustee with respect thereto pursuant to Section 8.01(c) of the
Participation Agreement, the Lessee shall be entitled to receive any payments
otherwise distributable to the Holder of any Certificate who was subject to
such Tax pursuant to Sections 5.01 to 5.05 hereof until the amounts the Lessee
shall have so paid in respect of any such Tax shall have been recovered in
full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity. Except as provided
in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid
prior to their respective Maturities.
Section 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08
hereof replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and Section 2.12 hereof shall not be
applicable in connection with such purchase), but subject to Section
6.02(c) below.
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof (unless such notice is revoked in
accordance with such Section).
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a refinancing of the Certificates, but subject to Section
6.02(c) below.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Section 15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to Section 6.02(c) hereof)
written notice to the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Certificates shall be
prepaid. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(i) above, the Certificates shall be prepaid in full on the Loss
Payment Date as defined in Section 11.02 of the Lease. In the case of a
prepayment of the Certificates pursuant to Section 6.02(a)(iii) above, the
Certificates shall be prepaid in full on the date so designated in the notice
referred to in Section 8.02 hereof. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(ii) or (iv) above, the Certificates
shall be prepaid in full on the Termination Date. In the case of a prepayment
of the Certificates pursuant to Section 6.02(a)(v) above, the Certificates
shall be prepaid on the effective date of the Refinancing. The day on which
the Certificates are to be prepaid pursuant to this Section 6.01(b) is herein
referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section 6.02
hereof on or after the applicable Premium Termination Date, or (ii) if such
prepayment is made prior to the applicable Premium Termination Date
pursuant to Section 6.02(a)(i) or 6.02(a)(iii) above (if clause (i) of the
first sentence of Section 8.02(a) hereof is applicable), the sum of (A) the
aggregate principal amount of such Certificates then Outstanding, (B)
accrued interest on the Certificates to the Prepayment Date and (C) all
other aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause
(ii) of the first sentence of Section 8.02(a) hereof is applicable),
6.02(a)(iv) or 6.02(a)(v) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole
Premium payable in respect of all Certificates with respect to which the
Premium Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 10.01(f) of the
Lease, no Termination Date shall occur, or if, pursuant to Section 4.02(a) of
the Lease, the Lessee revokes its notice of election to purchase, or if no
refinancing shall occur pursuant to Section 15.01 of the Participation
Agreement, the Lessee shall give notice thereof to the Indenture Trustee, and
the prepayment proposed to be effected in respect thereof shall not occur.
Section 6.03. Notice of Prepayment to Holders. In order to effect
any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee
shall give prompt notice by first class mail of prepayment to each Holder of
an Outstanding Certificate. Any notice of prepayment given by the Owner
Trustee may be revoked by the Owner Trustee at any time on or before the
Prepayment Date by prompt notice to the Holders except as otherwise provided
in the Lease or the Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions hereof,
the Prepayment Price will become due and payable, and that interest
on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price. On the Prepayment Date or the Sinking Fund Redemption Date (as defined
in Section 6.06 hereof), the Owner Trustee shall, to the extent an amount
equal to the Prepayment Price or the Sinking Fund Redemption Price (as defined
in Section 6.06 hereof), as the case may be, shall not then be held in cash or
Permitted Investments (marked-to-market net of all costs and expenses of
liquidation thereof) by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment
Price or the Sinking Fund Redemption Price, as the case may be. If there
shall so be on deposit and/or deposited the applicable Prepayment Price or
Sinking Fund Redemption Price on or prior to a Prepayment Date or Sinking Fund
Redemption Date, interest shall cease to accrue in respect of all or, in the
case of a mandatory sinking fund redemption, the relevant portion being
prepaid of, the Outstanding Certificates on and after such Prepayment Date or
such Sinking Fund Redemption Date.
Section 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of
prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided
in the Lease) become due and payable and from and after such Prepayment Date
(unless there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of
its Certificate for prepayment in accordance with said notice, such Holder
shall be paid the principal amount of its Certificate then outstanding, accrued
interest thereon to the Prepayment Date, all other sums due to such Holder
hereunder, under the Participation Agreement or the Lease, plus, if a
Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Certificate.
If any Certificate called for prepayment shall not be so paid upon
surrender thereof for prepayment, the principal shall, until paid, continue to
bear interest from the Prepayment Date at the interest rate applicable to such
Certificate.
Section 6.06. Mandatory Sinking Fund Redemption. The Certificates
with a Maturity of January 30, 2012 and the Certificates with a Maturity of
January 30, 2018 shall be subject to partial redemption, at the aggregate
principal amount set forth for the Certificates of the respective Maturity, on
a pro rata basis, on each date specified in this Section (a "Sinking Fund
Redemption Date") for such payment on the Certificates of such Maturity. The
Owner Trustee shall deposit funds sufficient to pay the Sinking Fund
Redemption Price with the Indenture Trustee as provided in Section 6.04
hereof. The Indenture Trustee shall pay from the amounts so deposited on each
applicable Sinking Fund Redemption Date to the Holders of each Certificate then
Outstanding on a pro rata basis the aggregate principal amount set forth below,
together with accrued interest to such Sinking Fund Redemption Date, but
without Make-Whole Premium (the "Sinking Fund Redemption Price"):
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2012 January 30, 2018
--------------- ------------------ -------------------
January 30, 1997 $ 328,418 0
July 30, 1997 810,461 0
January 30, 1998 426,114 0
July 30, 1998 667,344 0
January 30, 1999 564,398 0
July 30, 1999 614,977 0
January 30, 2000 705,856 0
July 30, 2000 565,901 0
January 30, 2001 850,727 0
July 30, 2001 520,366 0
January 30, 2002 1,496,269 0
July 30, 2002 0 0
January 30, 2003 5,032,707 0
July 30, 2003 0 0
January 30, 2004 0 0
July 30, 2004 0 0
January 30, 2005 3,525,888 0
July 30, 2005 0 0
January 30, 2006 2,369,468 0
July 30, 2006 0 0
January 30, 2007 2,551,290 0
July 30, 2007 0 0
January 30, 2008 3,516,147 0
July 30, 2008 0 0
January 30, 2009 4,321,172 0
July 30, 2009 0 0
January 30, 2010 4,652,759 0
July 30, 2010 0 0
January 30, 2011 5,009,790 0
July 30, 2011 0 0
January 30, 2012 5,066,948 0
July 30, 2012 0 0
January 30, 2013 0 0
July 30, 2013 0 0
January 30, 2014 0 0
July 30, 2014 0 0
January 30, 2015 0 0
July 30, 2015 0 0
January 30, 2016 0 5,816,635
July 30, 2016 0 0
January 30, 2017 0 5,974,810
July 30, 2017 0 304,051
January 30, 2018 0 6,092,504
Total $ 43,597,000 $ 18,188,000
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii)the failure of the Owner Trustee other than by reason of a Default
or an Event of Default (i) to pay principal, interest or Make-Whole
Premium, if any, on any Certificate when due, and such failure shall have
continued unremedied for ten (10) Business Days after the date when due or
(ii) to pay any other amounts hereunder or under the Certificates when due
and such failure shall have continued unremedied for a period of thirty
(30) days after the Owner Trustee and the Owner Participant shall receive
written demand therefor from the Indenture Trustee or by the Holders of not
less than 25% in aggregate principal amount of Outstanding Certificates; or
(iii)(A) any representation or warranty made by FSB, the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or any
Owner Trustee Guarantor, in any Operative Agreement or in any certificate of
FSB, the Owner Trustee, the Owner Participant, or any Owner Participant
Guarantor furnished to the Indenture Trustee or any Holder in connection
herewith or therewith or pursuant hereto or thereto shall prove to have been
incorrect when made and was and remains in any respect material to the
Holders and if such misrepresentation is capable of being corrected as of a
subsequent date and if such correction is being sought diligently, and such
misrepresentation shall not have been corrected within 30 days following
notice thereof identified as a "Notice of Indenture Event of Default" being
given to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by a Majority in Interest of Holders; or
(B) any (x) covenant made by the Owner Trustee in the fifth paragraph
following the Habendum Clause hereof or Section 3.05(b)(iii) hereof or
Section 7.02(b) or 7.12 of the Participation Agreement shall be breached in
any respect, (y) covenant made by the Owner Participant in Section 7.02(c)
or the last sentence of Section 7.13 of the Participation Agreement shall
be breached in any respect or (z) other covenant made by the Owner Trustee,
in its individual capacity or as Owner Trustee, or by any Owner Trustee
Guarantor, or by the Owner Participant or any Owner Participant Guarantor
in any Operative Agreement shall be breached in any respect and such breach
shall remain unremedied for a period of thirty (30) days after there has
been given to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by Certificate Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates a written notice identified as
a "Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied; or
(iv)the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or any Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(v) an order for relief shall be entered in respect of the Owner
Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate by a court having jurisdiction
in the premises in an involuntary case under the federal bankruptcy laws as
now or hereafter in effect; or the Owner Trustee or any Owner Trustee
Guarantor or the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate shall file any answer admitting or not contesting the
material allegations of a petition filed against the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate in any proceeding referred to in clause
(vi) below or seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, or of all or any
substantial part of its properties; or
(vi)without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered constituting an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or if any such petition shall be filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such petition shall not be dismissed within 60 days,
or if, without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or
any Owner Participant Guarantor or the Lessor's Estate, as the case may be,
or of all or any substantial part of the properties of the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and such
order shall not be dismissed within 60 days; or
(vii)any Owner Trustee Guaranty or any Owner Participant Guaranty
shall cease to be a valid and enforceable obligation of any Owner Trustee
Guarantor or any Owner Participant Guarantor, as the case may be, or
otherwise shall not be in full force and effect.
Section 7.02. Remedies. (a) If an Indenture Event of Default shall
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Article
17 of the Lease; provided that such exercise of remedies shall not occur until
after the latest date on which the Owner Trustee may cure the related Event of
Default pursuant to Section 8.03 hereof. The Indenture Trustee may (subject
to the provisions of the next succeeding paragraph) take possession of all or
any part of the properties covered or intended to be covered by the Lien and
security interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee
and all Persons claiming under any of them wholly or partly therefrom. In
addition, the Indenture Trustee may (subject to the provisions of the next
succeeding paragraph) exercise any other right or remedy in lieu of or in
addition to the foregoing that may be available to it under applicable law, or
proceed by appropriate court action to enforce the terms hereof, of the Lease,
or both, or to rescind the Lease. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of
sale of the Aircraft available to it, even though it shall not have taken
possession of the Aircraft and shall not have possession thereof at the time
of such sale.
Notwithstanding the foregoing, it is understood and agreed that if the
Indenture Trustee shall proceed to foreclose the Lien of this Indenture, it
shall substantially simultaneously therewith, to the extent the Indenture
Trustee is then entitled to do so hereunder and under the Lease, and is not
then stayed or otherwise prevented from doing so, proceed (to the extent it
has not already done so) to declare the Lease in default and commence the
exercise in good faith of one or more of the significant remedies under
Article 17 of the Lease (as the Indenture Trustee determines in its sole
discretion) for the purpose of recovering the Aircraft. It is further
understood and agreed that if the Indenture Trustee is unable to exercise one
or more remedies under Article 17 of the Lease because of any stay or
operation of law or otherwise, the Indenture Trustee shall not be entitled to
foreclose the Lien of this Indenture (A) until the earlier of (i) 60 days from
the date of any such stay or applicable order under Section 1110 of the
Bankruptcy Code plus any extension consented to by the Indenture Trustee or
the Holders of Certificates of such period as permitted under Section 1110(b)
of the Bankruptcy Code and (ii) the date of actual repossession of the
Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to perform
or assume the Lease pursuant to Section 365 or 1110 of the Bankruptcy Code and
no Event of Default (other than as specified in Section 16.01(e), (f) or (g)
of the Lease, or other Event of Default in respect of which the 30-day period
referred to in clause (a)(1)(B)(ii)(I) of Section 1110 of the Bankruptcy Code
shall not yet have expired) shall be continuing. For the avoidance of doubt,
it is expressly understood and agreed that except as aforesaid the
above-described inability of the Indenture Trustee to exercise any right or
remedy under the Lease shall in no event and under no circumstances prevent
the Indenture Trustee from exercising all of its rights, powers and remedies
under this Indenture, including, without limitation, this Article VII. The
Indenture Trustee further agrees that notice of intent to foreclose shall be
given to the Owner Trustee at the earlier of the commencement of any
proceeding or at least 30 days prior to the consummation of foreclosure of the
Lien of this Indenture.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi)
of Section 7.01 hereof shall occur and be continuing, the unpaid principal of
all Outstanding Certificates, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of
Holders of not less than 25% in aggregate principal amount of Outstanding
Certificates, at any time, by written notice to the Owner Trustee, the Owner
Participant and the Lessee, declare the principal of all the Certificates to
be due and payable, whereupon the unpaid principal amount of all Outstanding
Certificates, together with accrued interest thereon and all other amounts due
thereunder, but without Make-Whole Premium, shall immediately become due and
payable without presentment, demand, protest or other notice, all of which are
hereby waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to a credit against
any purchase price bid at such sale by such Holder all or any part of the
unpaid obligations owing to such Holder secured by the Lien of this Indenture.
Section 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify,
to obtain possession of all or any part of the Trust Indenture Estate to which
the Indenture Trustee shall at the time be entitled under this Indenture.
Subject to the foregoing, if the Owner Trustee shall for any reason fail to
execute and deliver such documents after such request by the Indenture
Trustee, the Indenture Trustee may pursue all or part of such Trust Indenture
Estate wherever it may be found and enter any of the premises of the Lessee or
the Owner Trustee wherever such Trust Indenture Estate may be or be supposed
to be and search for such Trust Indenture Estate and take possession of and
remove such Trust Indenture Estate. All expenses of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the
Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, lease, control or manage the Trust
Indenture Estate and to carry on the business and to exercise all rights and
powers of the Owner Participant and the Owner Trustee relating to the Trust
Indenture Estate, as the Indenture Trustee may reasonably deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, insurance, use, operation, storage, leasing, control, management
or disposition of all or any part of the Trust Indenture Estate as the
Indenture Trustee may determine. Further, the Indenture Trustee shall be
entitled to collect and receive directly all tolls, rents (including Rent),
revenues, issues, income, products and profits of the Trust Indenture Estate
other than Excepted Payments, without prejudice, however, to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
all cash held by, or required to be deposited with, the Indenture Trustee
under this Indenture. Such tolls, rents (including Rent), revenues, issues,
income, products and profits shall be applied to pay the expenses of the use,
operation, storage, leasing, control, management, or disposition of the Trust
Indenture Estate, and of all maintenance and repairs, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to make
for any taxes, assessments, insurance or other proper charges upon the Trust
Indenture Estate (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of
Default shall have occurred and be continuing and the Indenture Trustee shall
be entitled to exercise remedies hereunder, and subject to Article VIII
hereof, the Indenture Trustee, either with or without taking possession, and
either before or after taking possession, and without instituting any legal
proceedings whatsoever, may sell, assign, transfer and deliver the whole or,
from time to time, to the extent permitted by law, any part of the Trust
Indenture Estate, or any part thereof, or interest therein, at any private
sale or public auction to the highest bidder, with or without demand,
advertisement or notice, except that in respect of any private sale 30 days
prior written notice by registered mail to the Owner Trustee and the Owner
Participant will be provided, for cash or, with the consent of the Owner
Trustee and the Owner Participant, credit or for other property, for immediate
or future delivery, and for such price or prices and on such terms as the
Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal requirements shall be complied with. Any notice required
pursuant to the terms hereof in the case of a public sale, shall state the
time and place fixed for such sale. Any such public sale shall be held at
such time or times within ordinary business hours as the Indenture Trustee
shall fix in the notice of such sale. At any such sale, the Trust Indenture
Estate may be sold in one lot as an entirety or in separate lots. The
Indenture Trustee shall not be obligated to make any sale pursuant to such
notice. The Indenture Trustee may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for such sale, and any such sale may
be made at any time or place to which the same may be so adjourned without
further notice or publication. The Indenture Trustee may exercise such right
of sale without possession or production of the Certificates or proof of
ownership thereof, and as representative of the Holders may exercise such
right without notice to the Holders or without including the Holders as
parties to any suit or proceedings relating to the foreclosure of any part of
the Trust Indenture Estate. The Owner Trustee shall execute any and all such
bills of sale, assignments and other documents, and perform and do all other
acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Trust Indenture Estate in accordance with this
Section 7.03(c) and to effectuate the transfer or conveyance referred to in
the first sentence of this Section 7.03(c). Notwithstanding any other
provision of this Indenture, the Indenture Trustee shall not sell the Trust
Indenture Estate or any part thereof unless the Certificates shall have been
accelerated.
(d) To the extent permitted by applicable law, and subject to
Section 7.02 hereof, the Indenture Trustee or any Holder may be a purchaser of
the Trust Indenture Estate or any part thereof or any interest therein at any
sale thereof, whether pursuant to foreclosure or power of sale or otherwise.
The Indenture Trustee may apply against the purchase price therefor the amount
then due hereunder or under any of the Certificates secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Certificates held
by such Holder to the extent that such portion of the purchase price as it
would have received had it been entitled to share any distribution thereof.
The Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect
of the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of
the Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Sections 7.02 and 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Owner Trustee or its property, or in case of any other comparable judicial
proceedings relative to the Owner Trustee, or to the creditors or property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the
principal of the Certificates shall then be due and payable as therein or
herein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or property of
the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
the Lessee or to be an acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided, that any sale of any portion of the Trust Indenture Estate
shall be done in accordance with Sections 7.02 and 7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any
right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and all
rights, remedies and powers of the Indenture Trustee and the Holders shall
continue as if no such proceeding had been instituted.
Section 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Indenture Trustee written notice that an
Indenture Event of Default shall then have occurred and be continuing, as
hereinbefore provided, and the Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates shall have made written request
upon the Indenture Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or
more Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Certificate on or after
the respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not
be impaired or affected without the consent of such Holder.
Section 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent
provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders not joining
in the giving of said direction, it being understood that (subject to Section
9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
Section 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other Indenture Default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
all Holders, the Indenture Trustee shall not waive any Indenture Default (a)
in the payment of the principal of or Make-Whole Premium, if any, or interest
on, or other amounts due under, any Certificate then Outstanding, or (b) in
respect of a covenant or provision of this Indenture which, under Article XIII
hereof, cannot be modified or amended without the consent of each Holder.
Section 7.12. Notice of Indenture Default. The Indenture Trustee
shall transmit to the Owner Trustee, the Holders and to the Owner Participant
notice of any Indenture Defaults actually known to a Responsible Officer of
the Indenture Trustee, such notice to be transmitted by mail to the Holders
within 90 days, and to the Owner Trustee and the Owner Participant promptly
after the occurrence thereof, unless such Indenture Default shall have been
cured before the giving of such notice; provided that except in the case of a
default in the payment of the principal of or interest on any Certificate,
under no circumstances shall the Indenture Trustee give such notice to the
Holders until the expiration of a period of 60 days from the occurrence of such
Indenture Default; and provided further that, except in the case of default in
the payment of the principal of or interest on or any other amount due under
any of the Certificates, the Indenture Trustee shall be protected in
withholding such notice to the Holders if and so long as the board of
directors, the executive committee, or a trust committee of directors or
trustees and/or Responsible Officers of the Indenture Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof and the provisions of paragraph (a)
immediately following the Granting Clause hereof, without the consent of a
Majority in Interest of Certificate Holders, the respective parties to the
Indenture Documents may not modify, amend or supplement any of said
agreements, or give any consent, waiver, authorization or approval thereunder,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder; provided, however, that the
actions specified in subsection (b) of this Section 8.01 may be taken without
the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the Lessor and the respective parties to the Indenture Documents, at any
time and from time to time, without the consent of the Indenture Trustee or of
any Holder, may:
(1) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Lease, or give any waiver
with respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Lease shall not modify, amend or
supplement, or give any waiver for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Lease as in effect on the
effective date hereof: Article 2 (except in respect of the Term, if the
result thereof would not be to shorten the Term of the Lease to a period
shorter than the period ending with the Maturity of any Certificate),
Section 3.03 (except to the extent such Section relates to amounts payable
(whether directly or pursuant to this Indenture) to Persons other than
Holders and the Indenture Trustee in its individual capacity), Section
3.05, Section 3.06 (except insofar as it relates to the address or account
information of the Owner Trustee or the Indenture Trustee) (other than as
such Sections 3.03, 3.05 and 3.06 may be amended pursuant to Section 3.04
of the Lease as in effect on the effective date hereof), Section 5.01,
Article 6, Article 10 (except that further restrictions may be imposed on
the Lessee), Article 11 (except that additional requirements may be imposed
on the Lessee), Article 13 (except for Section 13.05 and except that
additional insurance requirements may be imposed on the Lessee), Article 14
(except in order to increase the Lessee's liabilities or enhance the
Lessor's rights thereunder), Article 15 (except in the case of an
assignment by the Lessor in circumstances where the Aircraft shall remain
registrable under the Federal Aviation Act), Section 16.01 (except to
impose additional or more stringent Events of Default), Article 17 (except
to impose additional remedies), Section 19.01 (except to impose additional
requirements on the Lessee), Section 20.01, Article 22, Section 23.01,
Section 26.03 and any definition of terms used in the Lease, to the extent
that any modification of such definition would result in a modification of
the Lease not permitted pursuant to this subsection (b); provided that the
parties to the Lease may take any such action without the consent of the
Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner
Participant's or the Lessee's rights or obligations with respect to,
Excepted Payments (other than the place, time and manner of payment of any
portion of Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement),
or give any consent, waiver, authorization or approval with respect
thereto, in each case only to the extent any such action shall not
materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except
that without compliance with subsection (a) of this Section 8.01 the
parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following provisions
of the Participation Agreement as in effect on the effective date hereof:
Article 6 and Section 10.01(b) (insofar as such Article 6 and Section
10.01(b) relate to the Indenture Trustee, the Pass Through Trustee and the
Holders), Article 7 and Sections 15.01 and 17.11 and Articles 8 and 9
(insofar as such Articles relate to the Indenture Trustee; it being
understood that only the Indenture Trustee's consent in respect thereof
need be obtained) and any definition of terms used in the Participation
Agreement, to the extent that any modification of such definition would
result in a modification of the Participation Agreement not permitted
pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without
the consent of the Holder of each Outstanding Certificate affected thereby,
(1) modify, amend or supplement the Lease in such a way as to extend
the time of payment of Basic Rent, Stipulated Loss Value or any other
amounts payable for the account of the Holders (subject in any event to
Section 3.05 of the Lease) upon the occurrence of an Event of Loss, or
Termination Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3.05 of the Lease) upon
termination of the Lease with respect to the Aircraft payable under, or as
provided in, the Lease as in effect on the effective date hereof, or reduce
the amount of any installment of Basic Rent or Supplemental Rent so that
the same is less than the payment of principal of, and interest on the
Certificates and Make-Whole Premium, if any, as the case may be, to be made
from such installment of Basic Rent or Supplemental Rent, or reduce the
aggregate amount of Stipulated Loss Value, or any other amounts payable
under, or as provided in, the Lease as in effect on the effective date
hereof upon the occurrence of an Event of Loss so that the same is less
than the accrued interest on and the principal as of the Loss Payment Date,
of the Certificates at the time Outstanding or reduce the amount of
Termination Value and any other amounts payable under, or as provided in,
the Lease as in effect on the effective date hereof upon termination of the
Lease with respect to the Aircraft so that the same is less than the
accrued interest on and principal as of the Lease Termination Date and
Make-Whole Premium, if any, of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligations in respect of payment of Basic Rent or Supplemental Rent, or
Stipulated Loss Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3.05 of the Lease) upon the
occurrence of an Event of Loss, or Termination Value and any other amounts
payable for the account of the Holders (subject in any event to Section
3.05 of the Lease) with respect to the Aircraft, payable under, or as
provided in, the Lease as in effect on the effective date hereof, except
for any such assignment pursuant to Section 2.12 hereof, and except as
provided in the Lease as in effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the consent
of the Owner Trustee (at the direction of the Owner Participant) shall be
required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive
compliance by the Lessee with any of its obligations thereunder and (ii) to
grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving
payment of, any Excepted Payment; provided, however, that if the Owner Trustee
is proceeding under the Lease, the Owner Trustee shall proceed pursuant to
Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
Section 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf
of the Owner Participant) may, but shall be under no obligation to, do either
of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable (except as provided below) and shall
designate a Prepayment Date which shall be a Rent Payment Date or monthly
anniversary thereof and which shall be not less than 15 days after the date
of such notice on which the Owner Trustee shall, in the manner provided for
in Section 6.04 hereof, deposit the sum of amounts contemplated by
paragraph "first" under Section 5.03 and the aggregate Prepayment Price
(determined in accordance with Section 6.02(b) hereof) of all such
Certificates with the Indenture Trustee. If such payment by the Owner
Trustee to the Indenture Trustee is made, the Certificates shall cease to
accrue interest from and after the Prepayment Date, and after distribution
of such payment to the Holders, the Indenture Trustee shall release the
Trust Indenture Estate from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable (except
as provided below) and shall designate a date which shall be a Rent Payment
Date or monthly anniversary thereof and which shall be not less than 15
days after the date of such notice on which the Owner Trustee shall pay to
the Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, together with accrued interest on
such amount to the date of purchase, the aggregate amount of any Make-Whole
Premium applicable to each Outstanding Certificate (if such purchase occurs
prior to the Premium Termination Date for such Outstanding Certificate) in
the case of a purchase pursuant to clause (a)(ii) above (but not if such
purchase is pursuant to clause (a)(i) above), plus all other sums due any
Holder or the Indenture Trustee hereunder or under the Participation
Agreement or the Lease. Upon receipt by the Indenture Trustee of such
amount, each Holder will be deemed, whether or not Certificates shall have
been delivered to the Indenture Trustee on such date, to have thereupon
sold, assigned, transferred and conveyed (and shall promptly take such
actions as the Owner Participant shall reasonably request to evidence such
sale, assignment, transfer and conveyance) to the Owner Participant
(without recourse or warranty of any kind except for its own acts), all of
the right, title and interest of such Holder in and to the Trust Indenture
Estate and this Indenture and all Certificates held by such Holder and the
former Holders shall not be entitled to receive any interest on the
principal amount of such Certificates after the purchase date, and the
Owner Participant shall be deemed to have assumed (and shall promptly take
such actions as any Holder shall reasonably request to evidence such
assumption) all of such Holder's obligations under the Participation
Agreement and this Indenture arising subsequent to such sale. If the Owner
Trustee shall so request, such Holder will comply with all the provisions of
Section 2.06 of this Indenture to enable new Certificates to be issued to
the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to
Section 2.06 hereof in connection with the issuance of any such new
Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
(c) Any election to prepay or purchase the Certificates under this
Section 8.02 shall be irrevocable, provided that if on the specified date for
prepayment or purchase, the Event of Default giving rise to such election
shall no longer be continuing under the Lease such election shall be deemed to
be automatically withdrawn.
Section 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such
installment of Basic Rent or of interest on account of such installment's
being overdue shall not constitute or result in an Indenture Event of Default
under this Indenture and any declaration based solely on the same shall be
deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee to exercise any rights
and powers or pursue any remedies pursuant to Article 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it
or them under this Indenture by demanding of the Lessee payment of such
amount, or by commencing an action at law or equity against the Lessee for the
payment of such amount or taking appropriate action in a pending action at law
against the Lessee pursuant to Section 17.01(a)(v), but only said Section
17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to
this Section 8.03, the Owner Trustee or the Owner Participant, as the case may
be, shall be subrogated on an unsecured basis to all the rights of the
Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same,
and shall be entitled to any payment of Basic Rent (or interest thereon)
actually made by the Lessee in respect of such cured payment upon receipt by
the Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to
each Certificate Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
Notwithstanding anything in this Indenture or the Lease to the contrary, the
Owner Participant and the Owner Trustee collectively, shall not be entitled to
cure more than six (6) Events of Default (no more than three (3) of which may
be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after the Owner
Participant's receipt of the written notice of such Event of Default, then
the failure of the Lessee to perform such covenant, condition or agreement,
the observance or performance of which was accomplished by the Owner Trustee
hereunder shall not constitute or result in an Indenture Event of Default under
this Indenture and any declaration based solely on the same shall be deemed to
be automatically rescinded. Nothing contained in the preceding sentence shall
be deemed to entitle the Owner Trustee or the Owner Participant to exercise
any rights and powers or pursue any remedies pursuant to Article 17 of the
Lease or otherwise except as set forth in this Indenture, and except that the
Owner Trustee or the Owner Participant may attempt to recover any amount paid
by it or them in effecting such cure by demanding of the Lessee payment of
such amount, plus any interest due, or by commencing an action at law or in
equity against the Lessee for the payment of such amount or taking appropriate
action in a pending action at law against the Lessee pursuant to Section
17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any
such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or
the Owner Participant, as the case may be, shall be subrogated to all the
rights of the Indenture Trustee under the Lease in respect of the payment,
agreement or covenant giving rise to such Event of Default, and any right to
any interest in respect of the same, and shall be entitled to any payment or
other performance upon receipt by the Indenture Trustee; provided that no such
amount shall be paid to the Owner Trustee or the Owner Participant until all
amounts then due and payable to each Certificate Holder hereunder and
thereunder shall have been paid in full and no Indenture Event of Default
shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this
Indenture, and covenants and agrees to perform the same as expressed herein
and agrees to receive and disburse all moneys constituting part of the Trust
Indenture Estate in accordance with the terms hereof.
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an
Indenture Event of Default has occurred and has not been cured or waived, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read in to this Indenture against
the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii)the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts; and
(iii)the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner
Trustee agrees that it will, at the expense of the Lessee, file or cause to be
filed such continuation statements with respect to financing statements
relating to the security interest created hereunder in the Trust Indenture
Estate as may be specified from time to time in written instructions of the
Holders of not less than 25% in aggregate principal amount of Certificates
(which instructions may, by their terms, be operative only at a future date
and which shall be accompanied by the execution form of such continuation
statement so to be filed); provided that, notwithstanding the foregoing, the
Indenture Trustee may execute and file or cause to be filed any financing
statement which it from time to time deems appropriate.
(b) If any Event of Default shall have occurred and be continuing
and, after the latest date on which the Owner Trustee may cure such Event of
Default pursuant to Section 8.03 hereof, on request of the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates and subject
to indemnification, to the extent provided in Sections 7.08 and 9.03 and
Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity
in respect of any such cost or expense under Article XI hereof) promptly take
such action as may be necessary duly to discharge all Indenture Trustee's
Liens on any part of the Trust Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Article 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such
document, instrument, financing or continuation statement as evidencing the
fact that it is properly prepared and presented, provided that the Indenture
Trustee shall promptly correct any error in any such document, instrument,
financing or continuation statement of which a Responsible Officer of the
Indenture Trustee has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have
been furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to prove
or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing to do so by the Majority in Interest
of Certificate Holders; provided that, if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture Trustee
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs,
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Owner Trustee or,
if paid by the Indenture Trustee or any predecessor trustee, shall be
repaid by the Owner Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates, except the Indenture Trustee's
certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Certificates. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Certificates or of the proceeds
thereof.
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and
receive, collect, hold and retain collections from the Owner Trustee with the
same rights it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither
the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee
nor any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be specifically prescribed herein) may, in
the absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on
the part of the Indenture Trustee, shall be full warrant to the Indenture
Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine which has been subject to an
Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine,
as the case may be, shall be replaced in accordance with the provisions of
this Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii)a description of the replacement airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the replacement airframe the Owner Trustee
will be the legal owner of and have good and marketable title to such
replacement airframe free and clear of all Liens except Liens
permitted under Section 6.01 of the Lease, that such replacement
airframe will on such date be in at least as good operating condition
and repair as required by the terms of the Lease, and that such
replacement airframe has been or, substantially concurrently with
such replacement, will be duly registered in the name of the Owner
Trustee under the Aviation Act or under the law then applicable to the
registration of the Airframe subject to the Event of Loss and that an
airworthiness certificate has been duly issued under the Aviation Act
(or such other applicable law) with respect to such replacement
airframe and that such registration and certificate is, or will be,
in full force and effect, and that the Lessee will have the full
right and authority to use such replacement airframe;
(iv)that the insurance required by Article 13 of the Lease is in full
force and effect with respect to such replacement airframe and all
premiums then due thereon have been paid in full;
(v) that the replacement airframe is of the same or an improved make
or model as the Airframe requested to be released from this Indenture;
(vi)that the value of the replacement airframe as of the date of such
certificate is not less than the value of the Airframe requested to
be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii)that no Event of Default has occurred and is continuing or would
result from the making and granting of the request for release and
the addition of a replacement airframe;
(viii)that the release of the Airframe subject to the Event of Loss
will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(ix)that upon such replacement, the Lien of this Indenture will apply
to the replacement airframe and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11.03 of the
Lease with respect to such replacement airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii)a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee will
be the legal owner of such Replacement Engine free and clear of all
Liens except Liens permitted under Section 6.01 of the Lease, and
that such Replacement Engine will on such date be in at least as good
operating condition and repair as required by the terms of the Lease
and will otherwise conform to the requirements set forth in the
definition of "Replacement Engine";
(iv)that the value of the Replacement Engine as of the date of such
certificate is not less than the value of the Engine to be released
(assuming such Engine was in the condition and repair required to be
maintained under the Lease);
(v) that the release of the Engine subject to the Event of Loss will
not impair the security of the Indenture in contravention of any of
the provisions of this Indenture;
(vi)that upon such replacement, the Lien of this Indenture will apply
to the Replacement Engine and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(vii)that each of the conditions specified in Section 10.03, 11.03 or
11.04 of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the replacement airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties, if any, generally available with respect to such replacement
airframe or Replacement Engine, and an Indenture and Security Agreement
Supplement subjecting such replacement airframe or Replacement Engine to the
Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or property
which have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii)the replacement airframe or Replacement Engine has been validly
subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such replacement airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the case may be, have been
duly filed for recordation pursuant to the Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such replacement airframe or Replacement Engine and the
Indenture Trustee would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to such replacement airframe or Replacement
Engine, provided, that such opinion need not be to the effect specified in
the foregoing clause to the extent that the benefits of such Section 1110
would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such substitution
had such Event of Loss not occurred.
Section 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a replacement airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of
the Holders and the Lessee, subject to fulfillment of the conditions precedent
and compliance by the Lessee with its obligations set forth in Section 10.03
or Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided
no Event of Default shall have occurred and be continuing, execute and deliver
to the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the
substitution of a replacement airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such replacement airframe or Replacement
Engine or Engines with the same force and effect as if such replacement
airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees
to pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of its counsel, agents and other persons not regularly in
its employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Lessee, and shall have the right to use or apply any moneys held by it
hereunder in the Trust Indenture Estate toward such payments; provided that,
so long as the Lease is in effect, the Indenture Trustee shall not make any
claim for payment under this Section 9.11 against the Owner Trustee without
first making demand on the Lessee for payment of such claim. The Indenture
Trustee agrees that it shall have no right against any Holder, FSB or the
Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the
Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee
shall deem and treat the Person in whose name such Certificate shall be
registered upon the Register as the absolute owner of such Certificate
(whether or not such Certificate shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
this Indenture, interest on such Certificate and for all other purposes; and
neither the Owner Trustee nor the Indenture Trustee (nor any agent of the
Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Lessee shall be affected by any notice to the contrary. All
such payments so made to any such person, or upon his order, shall be valid,
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Certificate.
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding. In determining whether the Holders of the requisite
aggregate principal amount of Certificates have concurred in any direction,
consent or waiver under this Indenture, Certificates which are owned by the
Owner Trustee, the Owner Participant, FSB, the Lessee or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSB or
the Lessee shall such Certificates be so disregarded; and provided further
that if all Certificates which would be deemed Outstanding in the absence of
the foregoing provision are owned by the Owner Trustee, FSB or the Owner
Participant or by any Affiliate thereof, then such Certificates shall be
deemed Outstanding for the purpose of any such determination. Certificates
so owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Owner Trustee, the Owner Participant, FSB or the Lessee or
any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Owner Trustee, the Owner Participant, FSB
or the Lessee. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Indenture
Trustee in accordance with such advice, unless the Lessee, the Owner Trustee,
FSB, or the Owner Participant are actually named in the Register. Upon
request of the Indenture Trustee, the Owner Trustee, the Owner Participant,
FSB and the Lessee shall furnish to the Indenture Trustee promptly an
Officers' Certificate listing and identifying all Certificates, if any, known
by the Owner Trustee, the Owner Participant, FSB or the Lessee to be owned or
held by or for the account of any of the above-described persons; and, subject
to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts set
forth therein and of the fact that all Certificates not listed therein are
outstanding for the purpose of any such determination.
Section 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Administration and upon proof of
holding as provided in this Article, revoke such action so far as concerns
such Certificate. Except as aforesaid, any such action taken by the Holder
shall be conclusive and binding upon such Holder and upon all future Holders
and owners of such Certificate and of any Certificates issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Certificate or otherwise. Any action taken by
the Holders of the percentage in aggregate principal amount of the
Certificates specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Holders of all the Certificates.
Section 10.06. ERISA. Any Person who is, or who in acquiring the
Certificates is or may be using the assets of, an employee benefit plan
subject to Title I of ERISA, or an individual retirement account or plan
subject to Section 4975 of the Code, or any trust established under any such
plan or account, may acquire or hold any of the Certificates, if such Person
determines either that an administrative or a statutory exemption from the
prohibited transaction rules under Section 406 of ERISA and Section 4975 of
the Code is applicable to its purchase and holding of the Certificates or that
its purchase and holding of the Certificates will not result in a prohibited
transaction under Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its
services under this Indenture and any taxes excluded from the Lessee's
indemnity obligation under Section 8.01(b) of the Participation Agreement),
claims, actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
agreed to be indemnified against by any other person under any other document)
in any way relating to or arising out of this Indenture, or any other
Indenture Documents or the enforcement of any of the terms of any thereof, or
in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent and other defects, whether
or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration
of the Trust Indenture Estate or the action or inaction of the Indenture
Trustee hereunder, except only (a) in the case of willful misconduct or gross
negligence of the Indenture Trustee in the performance of its duties
hereunder, (b) as may result from the inaccuracy of any representation or
warranty of the Indenture Trustee in the Participation Agreement, (c) as
otherwise provided in Section 9.02(c) hereof or (d) as otherwise excluded by
the terms of Article 8 or Article 9 of the Participation Agreement from the
Lessee's general indemnity or general tax indemnity to the Indenture Trustee
under said Articles; provided that so long as the Lease is in effect, the
Indenture Trustee shall not make any claim under this Article XI for any claim
or expense indemnified by the Lessee under the Participation Agreement without
first making demand on the Lessee for payment of such claim or expense. The
Indenture Trustee shall be entitled to indemnification, from the Trust
Indenture Estate, for any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to
this Article XI to the extent not reimbursed by the Lessee or others, but
without releasing any of them from their respective agreements of
reimbursement; and to secure the same the Indenture Trustee shall have a prior
Lien on the Trust Indenture Estate. The indemnities contained in this Article
XI shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee. Upon payment in full by the Owner Trustee
of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long
as no Indenture Event of Default shall have occurred and be continuing, be
subrogated to the rights of the Indenture Trustee, if any, in respect of the
matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of the Owner Trustee pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice
thereof to the Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each
Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, the Majority in
Interest of the Certificate Holders or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Lessee, the Owner Trustee, the Owner Participant, and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder
thereof of such action in writing, such removal to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In the case
of the resignation or removal of the Indenture Trustee, the Majority in
Interest of the Certificate Holders, or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders, may
appoint a successor Indenture Trustee by an instrument signed by such Holders.
If a successor Indenture Trustee shall not have been appointed within 30 days
after such notice of resignation or removal, the Indenture Trustee, the Owner
Trustee, the Lessee, the Owner Participant, or any Holder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee to
act until such time, if any, as a successor shall have been appointed as
provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 12.03 hereof and shall fail to resign after
written request therefor by the Owner Trustee or by any Holder; or
(ii)the Indenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in
duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of
which instrument shall be delivered to the Indenture Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as provided above
within one year from the date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which
shall be (i)(x) a bank or trust company organized and doing business under the
laws of the United States of America or any state or the District of Columbia
having a combined capital and surplus of at least $100,000,000 or (y) a bank
or trust company whose obligations hereunder are fully guaranteed by a direct
or indirect parent thereof having a combined capital and surplus of at least
$100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to supervision of
examination by Federal, state or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any
time the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Indenture Trustee shall resign immediately in
the manner and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee
an instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Owner Trustee or of the successor trustee, upon
payment of its charges then unpaid, the trustee ceasing to act shall, subject
to Section 14.04 hereof, pay over to the successor trustee all moneys at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Owner Trustee
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear
in the Register, and shall mail a copy of such notice to the Lessee and the
Owner Trustee. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 12.02
hereof.
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Indenture Trustee shall be a party, or any corporation succeeding to
the corporate trust business of the Indenture Trustee, shall be the successor
to the Indenture Trustee hereunder, provided that, anything herein to the
contrary notwithstanding, such corporation shall be eligible under the
provisions of Section 12.03 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Certificates or in this Indenture provided
that the certificate of the Indenture Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Certificates in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any time or
times, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Indenture Estate may at the time be located or
in which any action of the Indenture Trustee may be required to be performed
or taken, the Indenture Trustee, by an instrument in writing signed by it, may
appoint one or more individuals or corporations to act as a separate trustee
or separate trustees or co-trustee, acting jointly with the Indenture Trustee,
of all or any part of the Trust Indenture Estate, to the full extent that
local law makes it necessary for such separate trustee or separate trustees or
co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it, he or they shall be vested with such title to the Trust
Indenture Estate or any part thereof, and with such rights, powers, duties and
obligations, as shall be specified in the instrument of appointment, and such
rights, powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee and
such separate trustee or separate trustees or co-trustee jointly with the
Indenture Trustee subject to all the terms of this Indenture, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument
in writing, constitute the Indenture Trustee its or his attorney-in-fact and
agent with full power and authority to do all acts and things and to exercise
all discretion on its or his behalf and in its or his name. In case any such
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of
the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii)all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional trustee
or trustees and separate trustee or trustees jointly except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees;
(iii)no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent of,
the Indenture Trustee; and
(iv)no trustee hereunder shall be liable either personally or in its
capacity as such trustee, by reason of any act or omission of any other
trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or
separate trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders.
The Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner
Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture
Event of Default permitting the enforcement of all or any of the several
remedies provided herein; provided, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Indenture Event of
Default or may limit the remedies available to the Indenture Trustee upon
such an Indenture Event of Default or may limit the right of not less than
the Majority in Interest of Certificate Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Owner Trustee may deem necessary or desirable and which
shall not adversely affect the interests of the Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject replacement airframe or
Replacement Engines to the Lien of this Indenture in accordance with the
provisions hereof or with the Lease or to release from the Lien of this
Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting replacement
airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates
in coupon form (including Certificates registrable as to principal only)
and to provide for exchangeability of such Certificates with Certificates
issued hereunder in fully registered form, and to make all appropriate
changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture may be executed without the consent of the
Holders of Outstanding Certificates, notwithstanding any of the provisions of
Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders; provided, however, that,
without the consent of each and every Holder, no such amendment of or
supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Certificate or reduce the interest payable on any Certificate (except that
only the consent of the Holder shall be required for any decrease in any
amounts of or the rate of interest payable on such Certificate or any
extension for the time of payment of any amount payable under such
Certificate), or alter or modify the provisions of Article V hereof with
respect to the order of priorities in which distributions thereunder shall be
made as between the Holder and the Owner Trustee or the Owner Participant or
with respect to the amount or time of payment of any such distribution, or
alter or modify the circumstances under which a Make-Whole Premium shall be
payable, or alter the currency in which any amount payable under any
Certificate is to be paid, or impair the right of any Holder to commence legal
proceedings to enforce a right to receive payment hereunder, (c) reduce,
modify or amend any indemnities in favor of any Holder or in favor of or to be
paid by the Owner Participant (except as consented to by each Person adversely
affected thereby), or (d) create or permit the creation of any Lien on the
Trust Indenture Estate or any part thereof prior to or pari passu with the
Lien of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply to
any indenture or indentures supplemental hereto permitted by, and complying
with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance
thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the
provisions of this Section, the Indenture Trustee shall mail a notice thereof
by first-class mail to the Holders at their addresses as they shall appear on
the registry books of the Registrar, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustee as to any matter provided
for by such supplemental indenture. If the Owner Trustee or the Indenture
Trustee shall so determine, new Certificates so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Certificates.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement. Notwithstanding anything contained in
Section 13.02 hereof, no written request or consent of the Indenture Trustee,
any Holder or the Owner Participant pursuant to Section 13.02 hereof shall be
required to enable the Owner Trustee to enter into any supplement to the Lease
with the Lessee in accordance with the terms and conditions of the Lease to
subject a replacement airframe or Replacement Engine thereto or to execute and
deliver an Indenture and Security Agreement Supplement pursuant to the terms
hereof.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trustee shall have paid or
caused to be paid the principal of and interest on all the Certificates
outstanding hereunder, as and when the same shall have become due and payable,
or (b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Certificates theretofore authenticated (other than any
Certificates which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all
such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment
within one year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of prepayment by the Indenture Trustee in the name and at
the expense of the Owner Trustee, and (ii) the Owner Trustee shall have
irrevocably deposited or caused to be deposited with the Indenture Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Indenture Trustee or any paying agent to the Owner Trustee in accordance with
Section 14.04 hereof) or Government obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity all such Certificates not theretofore
delivered to the Indenture Trustee for cancellation, including principal and
interest due or to become due to such date of maturity as the case may be, and
if, in any such case, the Owner Trustee shall also pay or cause to be paid all
other sums then payable hereunder by the Owner Trustee, then this Indenture
shall cease to be of further effect (except in the case of (c) above as to (A)
rights of registration of transfer and exchange, and the Owner Trustee's right
of optional prepayment pursuant to Section 6.02(a)(ii) hereof, (B)
substitution of mutilated, defaced, destroyed, lost or stolen Certificates,
(C) rights of Holders to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (D) the rights, obligations, indemnities and immunities of the
Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them), and the Indenture Trustee, on demand of the
Owner Trustee accompanied by an Officer's Certificate and an Opinion of
Counsel (covering such matters reasonably requested by, and in form and
substance reasonably satisfactory to, the Indenture Trustee) and at the cost
and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs
or expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the
Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates and
provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and
releasing the Indenture Documents from the assignment thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Trustee
to give effect to such release; provided, however, that this Indenture and the
trusts created hereby shall terminate earlier and this Indenture shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property forming a part of the Trust Indenture Estate
and the final distribution by the Indenture Trustee of all moneys or other
property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided, this
Indenture and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
Section 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become
due and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the
Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the
Owner Participant) by the Indenture Trustee or such Paying Agent and the
Holder of such Certificate, as a general unsecured creditor, shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of FSB (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of FSB (or its
permitted successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders.
No Holder shall have legal title to any part of the Trust Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Holder in and to the Trust Indenture Estate
or hereunder shall operate to terminate this Indenture or entitle such Holder
or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding. Any sale or other conveyance of all or any part of the Trust
Indenture Estate by the Indenture Trustee made pursuant to the terms of this
Indenture or of the Lease shall bind the Lessee, the Owner Trustee, the
Holders and the Owner Participant and shall be effective to transfer or convey
all right, title and interest of the Indenture Trustee, the Owner Trustee, the
Owner Participant and such Holders therein and thereto. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application
of any sale or other proceeds with respect thereto by the Indenture Trustee.
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders. Nothing in this Indenture, whether
express or implied, shall be construed to give to any person other than FSB,
the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its
individual capacity, the Owner Participant, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Indenture. Upon
termination of this Indenture pursuant to Article XIV hereof, the Indenture
Trustee in connection with the satisfaction of the Indenture shall return to
the Owner Trustee all property (and related documents and instruments)
constituting or evidencing the Trust Indenture Estate.
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet
possession and enjoyment of the Aircraft by the Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (telephone:
(801) 246-5630, facsimile: (801) 246-5053) (with a copy to the Owner
Participant at the address provided for notice pursuant to Section 14.01 of
the Participation Agreement), (b) if personally delivered to the Indenture
Trustee, addressed to it at its office at Two International Place, 4th Floor,
Boston, Massachusetts 02110 (telephone: (617) 664-5414, facsimile: (617)
664-5371), Attention: Corporate Trust Administration or (c) if to the Owner
Participant or the Lessee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Indenture
Trustee, or, until an address is so furnished, addressed to the address of
such party if any, set forth in Section 14.01 of the Participation Agreement.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trustee
and Holders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
Section 15.07. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officers' Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and
that the proposed action is in conformity with the requirements of this
Indenture, and (b) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or demand as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
Any certificate, statement or opinion of an officer of FSB may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Lessee or FSB, upon the certificate, statement or
opinion of or representations by an officer or officers of the Lessee or FSB,
as the case may be, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
FSB or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the
case may be, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
Section 15.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
Section 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of
such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent
permitted hereby and thereby.
Section 15.11. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 15.12. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed this 23rd day of October, 1996 by their respective officers
thereunto duly authorized and acknowledge that this Indenture has been made
and delivered in the City of New York, and this Indenture shall be effective
only upon such execution and delivery.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as specifically set forth herein
but solely as Owner Trustee,
By_________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee,
By_________________________________
Name:
Title:
Exhibit A
to
Trust Indenture and Security Agreement
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement (Federal Express
Corporation Trust No. N667FE) dated ________, ____, of FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as owner trustee (herein called the "Owner Trustee") under
the Trust Agreement dated as of August 1, 1996 as amended and restated as of
October 15, 1996 (as at any time amended, herein called the "Trust Agreement")
between First Security Bank, National Association and the Owner Participant
named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and delivery
of this Indenture and Security Agreement Supplement which shall particularly
describe the Aircraft and any replacement airframe or Replacement Engine
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N667FE) dated as of August 1, 1996 (herein
called the "Original Indenture") between the Owner Trustee and State Street
Bank and Trust Company, as Indenture Trustee (herein called the "Indenture
Trustee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof which shall particularly describe the
Aircraft (such term and other defined terms in the Indenture being used herein
with the same meanings) and any replacement airframe or Replacement Engine
included in the Trust Indenture Estate, and shall specifically mortgage such
Aircraft, replacement airframe or Replacement Engine, as the case may be, to
the Indenture Trustee.
WHEREAS, the Original Indenture dated as of August 1, 1996 which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N667FE) dated August 28, 1996 (the Original
Indenture being attached to and made a part of such Indenture and Security
Agreement Supplement and filed therewith) have been duly recorded pursuant to
Subtitle VII of Title 49 of the United States Code on August 29, 1996 as one
document and have been assigned Conveyance No. 2A269964.
WHEREAS, the Original Indenture, as amended and restated by the Trust
Indenture and Security Agreement dated as of October 15, 1996 (herein called
the "Indenture"), was duly recorded pursuant to Subtitle VII of Title 49 of
the United States Code on ______________ and assigned Conveyance No. ________;
NOW, THEREFORE, this Supplement witnesseth, that, to secure the prompt
payment of the principal of and Make-Whole Premium, if any, and interest on,
and all other amounts due with respect to, all Outstanding Certificates under
the Indenture and all other amounts due hereunder and the performance and
observance by the Owner Trustee of all the agreements, covenants and
provisions for the benefit of the Holders contained in the Indenture, in the
Lease, in the Participation Agreement and the Certificates, and the prompt
payment of any and all amounts from time to time owing under the Participation
Agreement by the Owner Trustee, the Owner Participant or the Lessee to the
Holders and for the uses and purposes and subject to the terms and provisions
of the Indenture and the Certificates, and in consideration of the premises
and of the covenants contained in the Indenture, and of the purchase of the
Certificates by the Holders, and of the sum of $1 paid to the Owner Trustee by
the Indenture Trustee at or before the delivery of the Indenture, the receipt
of which is hereby acknowledged, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in, and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and confirm,
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and ratable security and benefit of the Holders, in the trust created by the
Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above,
whether the same are now owned by the Owner Trustee or shall hereafter be
acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture,
and subject to all of the terms, conditions, provisions and limitations set
forth in the Indenture, all of the estate, right, title and interest of the
Owner Trustee in, to and under the Lease Supplement (other than Excepted
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
Exhibit B
to
Trust Indenture and Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N667FE)
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N667FE)
dated as of August 1, 1996
as amended and restated as of October 15, 1996
Interest Rate Maturity
First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee
(herein in such capacity called the "Owner Trustee") under that certain Trust
Agreement (Federal Express Corporation Trust No. N667FE) dated as of August 1,
1996 as amended and restated as of October 15, 1996, between the Owner
Participant named therein and First Security Bank, National Association
(herein as such Trust Agreement may be amended or supplemented from time to
time called the "Trust Agreement"), hereby promises to pay to State Street
Bank and Trust Company, as Pass Through Trustee, or its registered assigns,
the principal sum of ________________ _______________ Dollars, payable as set
forth below for the Maturity specified above, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest on the principal
outstanding from time to time, semiannually on each January 30 and July 30, on
said principal sum in like coin or currency at the rate per annum set forth
above from the January 30 or the July 30, as the case may be, next preceding
the date of this Certificate to which interest on the Certificates has been
paid or duly provided for, unless the date hereof is a date to which interest
on the Certificates has been paid or duly provided for, in which case from the
date of this Certificate. Notwithstanding the foregoing, if the date hereof is
after any January 15 or July 15 and before the following January 30 or July
30, as the case may be, this Certificate shall bear interest from such January
30 or July 30; provided that, if the Owner Trustee shall default in the
payment of interest due on such January 30 or July 30, then this Certificate
shall bear interest from the next preceding January 30 or July 30 to which
interest on this Certificate has been paid or duly provided for. The interest
so payable on any January 30 or July 30 will, except as otherwise provided in
the Indenture referred to below, be paid to the person in whose name this
Certificate is registered at the close of business on the January 15 or July
15 preceding such January 30 or July 30, whether or not such day is a Business
Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the
period from and including the date thereof to but excluding the date the same
is paid in full, payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of State Street Bank and Trust Company (the
"Indenture Trustee") maintained for such purpose in immediately available
funds prior to 10:30 A.M. (New York time) on the due date thereof and the
Indenture Trustee shall remit all such amounts received by it to the Holders
at such account or accounts at such financial institution or institutions as
the Holders shall have designated to the Indenture Trustee in writing, in
immediately available funds, such payment to be made if the payment was
received prior to 10:30 A.M. New York time by the Indenture Trustee on any
Business Day, by 12:00 noon New York time on such Business Day; otherwise, the
Indenture Trustee shall make payment promptly, but not later than 11:00 A.M.
New York time on the next succeeding Business Day; provided that, at the
option of the Indenture Trustee or its Paying Agent, interest may be paid by
mailing a check therefor payable to or upon the written order of the
registered holder entitled thereto at his last address as it appears on the
Register. If any amount payable under this Certificate, or under the
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
First Security Bank, National Association and State Street Bank and
Trust Company are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person who is, or who in acquiring the Certificates is or may be
using the assets of, an employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code,
or any trust established under any such plan or account, may acquire or hold
any of the Certificates, if such Person determines either that an
administrative or a statutory exemption from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code is applicable to its
purchase and holding of the Certificates or that its purchase and holding of
the Certificates will not result in a prohibited transaction under Section 406
of ERISA and Section 4975 of the Code.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N667FE) dated as of August 1, 1996 as
amended and restated as of October 15, 1996 (herein as amended, supplemented
or modified from time to time called the "Indenture") between the Owner
Trustee and the Indenture Trustee, designated as Equipment Trust Certificates
(Federal Express Corporation Trust No. N667FE) limited in aggregate initial
principal amount to $61,785,000.00 consisting of the following aggregate
principal amounts of Certificates with the interest rates per annum and
Maturities shown:
Initial
Aggregate
Principal
Maturity Amount Interest Rate
January 30, 2012 $43,597,000.00 7.39%
January 30, 2018 $18,188,000.00 7.84%
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its
principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of
this Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as follows. The
Certificates with a Maturity of January 30, 2012 are subject to redemption in
part, pro rata (based on the face amount thereof), commencing on January 30,
1997 and the Certificates with a Maturity of January 30, 2018 are subject to
redemption in part, pro rata (based on the face amount thereof), commencing on
January 30, 2016, in each case through mandatory sinking fund redemptions
providing for the redemption on the Sinking Fund Redemption Dates of the
aggregate principal amounts set forth below, together with interest accrued
thereon to the applicable Sinking Fund Redemption Date, but without Make-Whole
Premium.
Principal Amount
Certificates Certificates
Sinking Fund with a Maturity of with a Maturity of
Redemption Date January 30, 2012 January 30, 2018
--------------- ------------------ -------------------
January 30, 1997 $ 328,418 0
July 30, 1997 810,461 0
January 30, 1998 426,114 0
July 30, 1998 667,344 0
January 30, 1999 564,398 0
July 30, 1999 614,977 0
January 30, 2000 705,856 0
July 30, 2000 565,901 0
January 30, 2001 850,727 0
July 30, 2001 520,366 0
January 30, 2002 1,496,269 0
July 30, 2002 0 0
January 30, 2003 5,032,707 0
July 30, 2003 0 0
January 30, 2004 0 0
July 30, 2004 0 0
January 30, 2005 3,525,888 0
July 30, 2005 0 0
January 30, 2006 2,369,468 0
July 30, 2006 0 0
January 30, 2007 2,551,290 0
July 30, 2007 0 0
January 30, 2008 3,516,147 0
July 30, 2008 0 0
January 30, 2009 4,321,172 0
July 30, 2009 0 0
January 30, 2010 4,652,759 0
July 30, 2010 0 0
January 30, 2011 5,009,790 0
July 30, 2011 0 0
January 30, 2012 5,066,948 0
July 30, 2012 0 0
January 30, 2013 0 0
July 30, 2013 0 0
January 30, 2014 0 0
July 30, 2014 0 0
January 30, 2015 0 0
July 30, 2015 0 0
January 30, 2016 0 5,816,635
July 30, 2016 0 0
January 30, 2017 0 5,974,810
July 30, 2017 0 304,051
January 30, 2018 0 6,092,504
Total $ 43,597,000 $ 18,188,000
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder
or under the Indenture shall be made only from the income and proceeds from
the Lessor's Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such distributions in
accordance with the terms of the Indenture; provided that under the Lease, the
Lessee is obligated to pay or cause to be paid, to the extent such payments
are not required to be made from the assets subject to the Lien of this
Indenture or the income and proceeds received by the Indenture Trustee
therefrom, any net loss arising from the investment of funds held by the
Indenture Trustee which but for an Event of Default would be payable to
Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees
that it will (except as aforesaid) look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as provided above and that neither the Owner Participant, the
Owner Trustee, First Security Bank, National Association nor the Indenture
Trustee is personally liable to the Holder hereof for any amounts payable or
any liability under this Certificate or under the Indenture, except as
expressly provided in the Indenture, in the case of First Security Bank,
National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and the Lessee shall not have revoked
such notice or effected an assumption of the Certificates as provided in
Section 2.12 of the Indenture).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 of the Indenture.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or
Section 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to
the Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is
directed to prepay the Certificates. In the case of a prepayment pursuant to
clause (i) above, the Certificates shall be prepaid on the Loss Payment Date
(as defined in Section 11.02 of the Lease). In the case of a prepayment
pursuant to clause (iii) above, the Certificates shall be prepaid on the date
designated in the notice of prepayment required by Section 8.02 of the
Indenture. In the case of a prepayment of the Certificates pursuant to clauses
(ii) and (iv) above, the Certificates shall be prepaid in full on the
Termination Date. In the case of a prepayment of the Certificates pursuant to
clause (v) above, the Certificates shall be prepaid on the effective date of
the Refinancing. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment
Date, immediately available funds shall be deposited with the Indenture
Trustee in an amount in respect of the Certificates equal to:
(1) (i) if such prepayment is made under any provision of Section
6.02 of the Indenture on or after the applicable Premium Termination Date,
or (ii) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (i) or (iii) above (if clause (i) of
the first sentence of Section 8.02(a) of the Indenture is applicable), the
sum of (A) the aggregate principal amount of such Certificates then
Outstanding, (B) accrued interest on the Certificates to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee under the
Indenture or under the Participation Agreement or the Lease, but excluding
any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date pursuant to clause (ii), (iii) (if clause (ii) of the
first sentence of Section 8.02(a) of the Indenture is applicable), (iv) or
(v) above, the sum of the amounts specified in clauses (A), (B) and (C) of
the preceding clause (1) plus any Make-Whole Premium payable in respect of
all Certificates with respect to which the Premium Termination Date
therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall (except for prior acts) be released
and discharged from any further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and
be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its
consequences may be waived the Majority in Interest of Holders. Any such
consent or waiver shall be conclusive and binding upon the Holder of this
Certificate and upon all future Holders and owners of this Certificate and any
Certificate that may be issued in exchange or substitution therefor, whether or
not any notation thereof is made upon this Certificate or such other
Certificates. Moreover, if, and only if, an Event of Default shall occur, the
Indenture Trustee may declare the Lease to be in default, and may, to the
exclusion of the Owner Trustee, exercise one or more of the remedies of the
Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing for
more than 180 days or the Certificates shall have been accelerated or (B) an
Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all the
Outstanding Certificates by notifying the Indenture Trustee of such
election and depositing the sum of amounts contemplated by paragraph
"first" under Section 5.03 of the Indenture and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee
for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to the
Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, plus accrued interest on such
amount to the date of purchase and if such purchase occurs prior to
the Premium Termination Date for such Outstanding Certificate (in the
case of a purchase pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture but not in the case of clause (i) of
Section 8.02(a) of the Indenture) any Make-Whole Premium applicable
to each Outstanding Certificate, plus all other sums due any Holder
or the Indenture Trustee under the Indenture, the Participation
Agreement or the Lease.
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long as
any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the Certificates
may be presented for registration of transfer and for exchange as provided in
the Indenture. As provided in the Indenture and subject to certain
limitations therein, this Certificate is transferable, and upon surrender of
this Certificate for registration of transfer at the principal corporate trust
office of the Indenture Trustee, or at the office or agency maintained for such
purposes, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Indenture Trustee duly
executed by, the Holder or his attorney duly authorized in writing, one or
more new Certificates of the same Maturity and interest rate and of authorized
denominations and for the same aggregate principal amount will be issued to
the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee shall deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Federal Express Corporation Trust No. N667FE) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By ___________________________
Name:
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N667FE) referred to in the within mentioned Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY,
not in its individual
capacity, but solely as
Indenture Trustee
By __________________________
Authorized Signatory
SCHEDULE I
[Intentionally left blank.]
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N667FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N667FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N667FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
August 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on November 28, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N667FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of August
1, 1996 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. August 28, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
August 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996, as amended
and restated as of October 15, 1996, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N667FE) dated August 28, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N667FE) dated as of August 1, 1996, as amended and restated as of October 15,
1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August
1, 1996, between the Owner Trustee and the Indenture Trustee, which together
with the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE), dated August 28, 1996 attached thereto was
recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269964.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N667FE), dated August 28, 1996 attached thereto
was recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269965.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of August 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N667FE) between the Lessee and the
Owner Participant as it was originally executed as of August 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N667FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of August 1, 1996 and filed with the
FAA on August 28, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N667FE), dated as of August 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2015, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, as amended and restated as of
October 15, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE III
DESCRIPTION OF ORIGINAL INDENTURE
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N667FE) dated as of August 1, 1996 between First Security
Bank, National Association, as owner trustee under Trust Agreement (Federal
Express Corporation Trust No. N667FE) dated as of August 1, 1996 between PMCC
Leasing Corporation, as owner participant and First Security Bank, National
Association, and State Street Bank and Trust Company, as indenture trustee,
recorded by the Federal Aviation Administration on August 29, 1996 and
assigned Conveyance No. 2A269964, as supplemented by the following described
instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Indenture and Security Agreement
Supplement No. 1
(Federal Express Corporation
Trust No. N667FE) 08/28/96 08/29/96 2A269964
EXHIBIT 4.c
==============================================================================
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
Dated as of April 1, 1996
Amended and Restated as of September 1, 1996 and as further
Amended and Restated as of October 15, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
AMERITECH CREDIT CORPORATION,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
THE CHASE MANHATTAN BANK
COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH),
Original Loan Participants
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48487, REGISTRATION NO. N586FE
==============================================================================
TABLE OF CONTENTS
Page
----
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 16
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 16
Section 6.02. Offering by Lessee....................................... 23
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 31
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate.................................................. 31
Section 7.02. Citizenship, Etc......................................... 32
Section 7.03. Representations, Warranties and Covenants of Owner
Participant............................................. 33
Section 7.04. Representations, Covenants and Warranties of FSB and the
Owner Trustee........................................... 36
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee................................................. 39
Section 7.06. Indenture Trustee's Notice of Default.................... 41
Section 7.07. Releases from Indenture.................................. 41
Section 7.08. Covenant of Quiet Enjoyment.............................. 41
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties.......................... 41
Section 7.10. Survival of Representations, Warranties and Covenants.... 42
Section 7.11. Lessee's Assumption of the Certificates.................. 42
Section 7.12. Indebtedness of Owner Trustee............................ 44
Section 7.13. Compliance with Trust Agreement, Etc..................... 45
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 45
Section 8.02. After-Tax Basis.......................................... 51
Section 8.03. Time of Payment.......................................... 52
Section 8.04. Contests................................................. 52
Section 8.05. Refunds.................................................. 54
Section 8.06. Lessee's Reports......................................... 54
Section 8.07. Survival of Obligations.................................. 55
Section 8.08. Payment of Taxes......................................... 55
Section 8.09. Reimbursements by Indemnitees Generally.................. 55
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 56
Section 9.02. After-Tax Basis.......................................... 59
Section 9.03. Subrogation.............................................. 60
Section 9.04. Notice and Payment....................................... 60
Section 9.05. Refunds.................................................. 60
Section 9.06. Defense of Claims........................................ 61
Section 9.07. Survival of Obligations.................................. 61
Section 9.08. Effect of Other Indemnities.............................. 62
Section 9.09. Interest................................................. 62
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 62
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 65
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 66
Section 12.02. Interest of Holders of Certificates..................... 66
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 67
Section 13.02. Further Assurances...................................... 67
Section 13.03. No Retroactive Application.............................. 67
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 68
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 69
Section 15.02. Reoptimization.......................................... 71
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 73
Section 17.02. [Intentionally Left Blank.]............................. 73
Section 17.03. Counterparts............................................ 73
Section 17.04. No Oral Modifications................................... 73
Section 17.05. Captions................................................ 74
Section 17.06. Successors and Assigns.................................. 74
Section 17.07. Concerning the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee........................... 74
Section 17.08. Severability............................................ 75
Section 17.09. Public Release of Information........................... 75
Section 17.10. Certain Limitations on Reorganization................... 75
Section 17.11. GOVERNING LAW........................................... 75
Section 17.12. Section 1110 Compliance................................. 76
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 76
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N586FE) dated as of April 1, 1996, as amended and restated as of September 1,
1996 and as further amended and restated as of October 15, 1996 (this
"Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"),
AMERITECH CREDIT CORPORATION, a Delaware corporation (herein, together with
its successors and permitted assigns, the "Owner Participant"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, THE CHASE MANHATTAN BANK, COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH), (individually, together with its successors and
permitted assigns, an "Original Loan Participant" and collectively the
"Original Loan Participants"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity as trustee, together with its
successors and permitted assigns, the "Owner Trustee"), STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, not in its individual capacity,
except as otherwise expressly stated herein, but solely as indenture trustee
under the Indenture referred to below (in such capacity as trustee, together
with its successors and permitted assigns, the "Indenture Trustee") and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have heretofore entered
into the Participation Agreement (Federal Express Corporation Trust No.
N586FE), dated as of April 1, 1996 among the Lessee, the Owner Participant,
the Owner Trustee, the Original Loan Participants and the Indenture Trustee,
as was originally executed on April 19, 1996 and amended and restated as of
September 1, 1996 by the Original Participation Agreement;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with FSB in its individual capacity,
pursuant to which FSB agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value, EBO Price and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates and
the payment to the Owner Trustee of the Additional Leverage Amount;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend and restate the Original Ancillary
Agreement I, to amend the Original Tax Indemnity Agreement and to amend and
restate the Original Trust Agreement, each such amendment and restatement to
be executed and delivered simultaneously with the purchase of the Certificates
by the Pass Through Trustee for the Pass Through Trusts and the Refinancing in
full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the terms defined in Schedule
II hereto are incorporated herein for all purposes of this Agreement and shall
be equally applicable to both the singular and the plural forms of the terms
so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent (as a prepayment of
the portion of Basic Rent allocable to the period from the Closing Date
through the Refunding Date) in the amount of all accrued and unpaid
interest on the Original Loan Certificates to but excluding the Refunding
Date, which transfer shall constitute the payment of all such accrued and
unpaid interest;
(ii)the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii)for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv)the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable (A) by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates and
(B) by wire transfer in favor of the Owner Participant on behalf of the
Owner Trustee in the amount of the Additional Leverage Amount;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi)the Owner Trustee shall cause the Certificates to be delivered to
the applicable Pass Through Trustee in accordance with Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass Through
Trustee, upon the request of the Owner Trustee, the Certificates as provided
in Section 2.02 hereof. The Owner Participant hereby requests and directs the
Owner Trustee to execute and deliver this Agreement and, subject to the terms
hereof, to take the actions specified herein. The Original Loan Participants
by their execution and delivery hereof, request and direct the Indenture
Trustee to execute and deliver this Agreement and concurrently with the events
specified in clauses (iii) through (v) of this Section 2.01(b) and subject to
the terms and conditions hereof to take the actions contemplated herein. The
parties hereto, including, without limitation, the Original Loan Participants,
confirm that, as provided in Section 2.06 of the Original Indenture, upon
payment in full of the principal amount, Breakage Costs, if any, and interest
on the Original Loan Certificates and all other sums then payable to the
Original Loan Participants under the Original Agreements to the extent
specified in subsection (c) below, the Original Loan Participants shall have
no further interest in, or other right or obligation with respect to, the
Trust Indenture Estate, the Original Agreements or the Operative Agreements
(it being understood that the foregoing shall not limit or detract from any
claim that any Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participants
shall, until the payment in full of such amounts to the Agent on behalf of the
Original Loan Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and shall, upon such payment and thereafter, be governed by this Agreement.
The Lessee hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before November 30, 1996, then the rights and
obligations of the parties to the Original Participation Agreement, including,
without limitation, the Original Loan Participants, shall be governed by the
Original Participation Agreement and the other Operative Agreements
contemplated thereby or in effect immediately prior to the effectiveness of
this Agreement and this Agreement shall be of no further force and effect,
except that the Lessee shall be obligated hereby to pay all fees and expenses
of the Original Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Lessee, the Indenture Trustee and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee for
each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of the
Pass Through Trustee on behalf of such Pass Through Trust, in the principal
amounts, Maturity, bearing the interest rate and the other economic terms
specified in the Series Supplements and otherwise as provided in Section
2.04 of the Indenture. The Pass Through Certificates shall be registered
under the Securities Act, any applicable state securities laws shall have
been complied with, and the Pass Through Agreement shall have been qualified
under the Trust Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee or their special counsel, would
make it illegal for the Owner Participant, the Lessee, the Owner Trustee,
the Pass Through Trustee or the Indenture Trustee, and no change in
circumstances outside the control of the Owner Participant shall have
occurred which would otherwise make it illegal for the Owner Participant,
the Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, to participate in the transactions to be consummated on the
Refunding Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee or the Pass Through Trustee is not
frivolous, nor shall any order have been issued or proposed to be issued by
any court, or governmental authority or agency, as of the Refunding Date,
to set aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other Operative
Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the
Owner Participant, as the case may be, of such documents shall have been
delivered to the Owner Participant, the Lessee, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of each of the Lease, the Lease Supplement and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Ancillary Agreement I; and
(vi) the Ancillary Agreement II.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participants, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its counsel) shall have
received the following, in each case in form and substance satisfactory to
it:
(i) a copy of the certificate of incorporation and by-laws of
the Lessee, certified by the Secretary or an Assistant Secretary of
the Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Refunding Date, and a
copy of the resolutions of the sole stockholder of the Owner
Participant, certified as such as of the Refunding Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which the Owner
Participant is or is to be a party and each other document to be
executed and delivered by the Owner Participant in connection with
the transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws
and other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of each
of the Original Agreements to which it is party, this Agreement, the
Indenture and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Indenture Trustee in connection with the transactions
contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws
and other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant
as the Indenture Trustee, the Pass Through Trustee or the Owner
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Supplement
covering the Aircraft;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1996 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Report on Form 10-Q for
the fiscal quarter ended August 31, 1996) and (ii) in the Lessee's
Current Reports on Form 8-K dated June 7, 1996 and August 16, 1996,
as to which such officer will make no certification concerning the
liability of the Lessee (if any), or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, no material adverse change has occurred in
the financial condition, business or operations of the Lessee from
that shown in the unaudited consolidated financial statements of the
Lessee as of August 31, 1996 and nothing has occurred which will, in
the judgment of such officer, materially adversely affect the ability
of the Lessee to carry on its business or to perform its obligations
under this Agreement and each other Operative Agreement to which it
is or is to be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant. On the Refunding
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Refunding Date,
stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party and in any
certificate delivered pursuant hereto or thereto, are true and
correct on and as of the Refunding Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or inaction on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSB and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSB and SSB, respectively, dated the
Refunding Date, stating with respect to FSB and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSB in its
individual capacity and as Owner Trustee, of SSB in its individual
capacity and as Indenture Trustee and of SSB in its individual
capacity and as Pass Through Trustee contained in this Agreement, the
Lease, the Trust Agreement and the Indenture and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSB in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSB and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participants, the Underwriters, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participants, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) George W. Hearn, Vice President - Law of the Lessee, in
the form of Exhibit A(1)(a) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Owner Trustee, the Pass Through Trustee and the Indenture Trustee;
(ii) Winston & Strawn, special New York counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and Bruce B. Howat,
counsel for the Owner Participant, in the form of Exhibit A(2)(b)
hereto, each addressed to the Agent, the Original Loan Participants,
the Underwriters, the Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(vi) Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee; and
(vii) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(6) hereto and addressed to
the Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee.
(m) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(n) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement.
(q) Material Adverse Change. There shall not have occurred any
material adverse change in the consolidated financial condition, business
or operations of the Lessee from that set forth in its financial statements
as of August 31, 1996 referred to in Section 6.01(l) hereof.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to
(i) the due recording of such documents and the documents identified in
Section 4.01(i) of the Original Participation Agreement and (ii), subject to
customary qualifications, the lack of any intervening documents with respect
to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l)(ii), (iii), (iv),
(v), (vi) and (vii) of Section 4.01 hereof and the Underwriters and the Owner
Participant shall have made available the amounts required to be paid by them
pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Report on Form 10-Q for the fiscal
quarter ended August 31, 1996) and (ii) in the Lessee's Current Reports on
Form 8-K dated June 7, 1996 and August 16, 1996, as to which no
representation is made concerning the Lessee's liability (if any) or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, if adversely determined,
would materially and adversely affect the consolidated financial condition,
business or operations of the Lessee, or (C) if adversely determined would
adversely affect the ability of the Lessee to perform its obligations under
the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Transportation Code of the Indenture, the Trust Agreement
and the Lease, (B) the filing of the financing statements referred to in
Section 4.01(f) hereof and (C) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document, is necessary or advisable in order (i) to establish the Owner
Trustee's title to and interest in the Aircraft and the Lessor's Estate as
against the Lessee and any third parties, or (ii) to perfect the first
security interests in and mortgage Lien on the Trust Indenture Estate in
favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1996 and its Quarterly Report on Form 10-Q for
the fiscal quarter ended August 31, 1996, and of the audited consolidated
balance sheet of the Lessee for the fiscal year ended May 31, 1996 and the
unaudited consolidated balance sheet of the Lessee as of August 31, 1996,
and the related consolidated statements of income, changes in common
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, except as therein noted, by Arthur Andersen LLP,
independent public accountants; said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position of the
Lessee as of such dates and the results of its operations and cash flows
for such periods and such Annual Report, Quarterly Report and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as hereinafter defined) nor
their related trusts have been terminated in a distress termination
pursuant to Section 4041(c) of ERISA or by the PBGC (as hereinafter
defined) pursuant to Section 4042 of ERISA, nor have any actions been
taken to so terminate any Pension Plan or related trust and neither
the Lessee nor any ERISA Affiliate (as hereinafter defined) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the imposition
of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
non-exempt transaction which is prohibited by Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section
4975 of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets (within the meaning of ERISA and
any applicable rules and regulations) of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code.
As used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is (or, solely for purposes of
clause (i) of this Section 6.01(m), within the preceding 5 calendar years
has been) maintained, or contributed to, by the Lessee or any ERISA
Affiliate; the term "PBGC" means Pension Benefit Guaranty Corporation and
any successor agency or instrumentality thereto; and the term "ERISA
Affiliate" means any entity which together with the Lessee would be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Refunding Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in material
default in the performance of any term or condition of the Engine Warranty
Assignment, the Modification Agreement and the GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof and there are no other broker's fees payable in connection with
such transactions other than those of D'Accord Financial Services, Inc.;
(y) neither the Lessee nor any Affiliate of the Lessee has any
agreement, arrangement or understanding other than as set forth in,
permitted by or described in the Lessee Documents, the Underwriting
Agreement, or in the other Operative Agreements or in any agreement,
document or instrument contemplated thereby with any Person regarding the
transactions contemplated by the Operative Agreements; and
(z) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 3 other institutional investors.
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will promptly take, or cause to be taken, at
the Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary or requested
by the Indenture Trustee to maintain the perfection of the first security
interest and the Lien created by the Indenture, and the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate as against
the Lessee and any third parties or if the Lessee cannot take, or cause to
be taken, such action, will furnish to the Indenture Trustee and the Owner
Trustee timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be
required to enable either of them to take such action at the Lessee's cost
and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in Section
7.01 of the Lease and shall cause the Aircraft to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if, at any time after December 31, 2003, the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate, in the name of the
Lessee or a sublessee as a "lessee" or a "sublessee"), at the Lessee's
expense, in a country listed in Schedule III hereto with which the United
States then maintains normal diplomatic relations, the Owner Participant,
upon receipt by the Owner Participant, the Owner Trustee and the Indenture
Trustee of the assurances and opinion described below, shall not
unreasonably withhold their consent to such change in registration (it
being agreed, without limitation, that the inability of the Lessee to
deliver such assurances and opinion shall constitute reasonable grounds to
withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received, all at the Lessee's cost and
expense:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) that the Owner Trustee's right, title and interest in and
to the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry and that the new jurisdiction of registry
will give effect to the title and registry of the Aircraft therein
substantially to the same extent as does the Government;
(C) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(D) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided for
under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(E) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(F) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity, and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity, and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry and if the sublessee, if any, is a
government or governmental body, such sublessee shall have
effectively waived any rights to sovereign immunity;
(G) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee is not
required to indemnify the Owner Participant, the Indenture Trustee,
the Owner Trustee (or any successor, assign or Affiliate thereof) and
the Trust Estate pursuant to Article 8 hereof or for which the Lessee
has not agreed to indemnify such parties in a manner satisfactory to
such parties;
(H) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change of
registry, including any reasonable attorneys' fees and expenses;
(I) that the Lessee shall maintain the registration of the
Aircraft under the laws of such country unless and until the
registration of the Aircraft is changed as provided herein, and shall
cause to be done at all times all other acts (including, if
applicable, the filing, recording and delivery of any document or
instrument and the payment of any sum) necessary or, by reference to
prudent industry practice in such country, advisable in order to
create, preserve and protect the interests of the Lessor and the
Indenture Trustee as against the Lessee or any third parties in such
jurisdiction;
(J) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(K) that appropriate deregistration powers of attorney in
favor of the Owner Trustee and the Indenture Trustee have been
executed and delivered by the Lessee and any sublessee and, if
necessary or desirable for the effectiveness thereof, filed with the
relevant aeronautics authority.
(ii)a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal, valid,
binding and enforceable in such jurisdiction against the Lessee, any
sublessee, the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(C)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than such tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction (i) will not impair
the rights of the Lessor in and to the Aircraft and (ii) (unless the
Lessee shall have agreed to provide insurance reasonably satisfactory
to the Indenture Trustee and the Owner Participant covering the risk
of requisition of use of the Aircraft by the government of registry
of the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft therein
substantially to the same extent as does the Government, and that the
Lien of the Indenture shall continue as a first priority, duly
perfected lien on the Aircraft;
(G) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(H) that the rights of the Lessor in and to the Aircraft will
not be impaired in such new jurisdiction of registry; and
(I) to such further effect with respect to such other matters
as the Owner Participant, the Owner Trustee or the Indenture Trustee
may reasonably request.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its business judgment, is no longer necessary or desirable
in the conduct of its business and (ii) the loss of which will not
materially adversely affect or diminish the rights of the Holders or the
Owner Participant or the ability of the Lessee to perform its obligations
under the Operative Agreements.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Trustee and the
Owner Participant all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
counsel to the Lessee which counsel shall be reasonably satisfactory to the
Owner Participant and the Indenture Trustee and which opinion shall be
reasonably satisfactory to the Owner Participant and the Indenture Trustee,
and an officer's certificate, each stating that such merger, consolidation,
conveyance, transfer or lease and the instrument noted in clause (iv) above
comply with this Section 6.03(g), that such instrument is a legal, valid
and binding obligation of, and is enforceable against, such survivor or
Person (except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally), and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to a Default not capable of
cure within the applicable grace period therefor or an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the Lessor
and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any officer of the Lessee obtaining knowledge of any
condition or event which constitutes a Default or an Event of
Default, an officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is taking
or proposes to take with respect thereto;
(F) promptly, notice of all legal or arbitral proceedings,
and of all proceedings by or before any governmental or regulatory
authority or agency, and of any material development in respect of
such legal or other proceedings affecting the Lessee, which in each
case specified above, if adversely determined, would, in the Lessee's
reasonable judgment, materially impair the ability of the Lessee to
perform its obligations under the Operative Agreements or consummate
the transactions contemplated hereby and thereby; and
(G) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an officer reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or Event of Default or
if a Default or an Event of Default exists or did exist, specifying the nature
thereof, the period of existence thereof and what action the Lessee has taken
or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust
Agreement, at all times be within its control and the foregoing representation
shall neither expand nor limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant further represents and warrants that neither the Owner Participant
nor anyone else authorized to act on its behalf has directly or indirectly
offered any interest in the Lessor's Estate or the Trust Agreement, or in any
similar security, for sale to, or solicited any offer to acquire any of the
same from, anyone. The Owner Participant further represents and warrants that
neither it nor anyone authorized to act on its behalf has made or will make any
offer, solicitation or sale of any interest in the Lessor's Estate or the
Trust Agreement in violation of the provisions of Section 5 of the Securities
Act of 1933, as amended. No representation in this Section 7.01(b) shall
include any action or inaction of the Lessee, the Agent, First Chicago Leasing
Corporation or the Underwriters whether or not purportedly on behalf of the
Owner Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any Certificates or any interest in the Lessor's Estate, or
in any similar security, for sale to, or solicited any offer to acquire any of
the same from anyone (other than the Owner Participant) and (ii) shall own
Certificates.
Section 7.02. Citizenship, Etc. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall cease to be a Citizen of the United
States, it will resign immediately as the Owner Trustee if such citizenship is
necessary under the Transportation Code as in effect at such time or, if it is
not necessary under the Transportation Code as in effect at such time, if it
is informed in writing by the Lessee or the Owner Participant that such lack
of United States citizenship would have any adverse effect on the Lessee or
the Owner Participant. The Owner Trustee, in its individual capacity, further
covenants that if at any time it appears reasonably probable that it will
cease to be a Citizen of the United States based on information that is (i)
known to a Responsible Officer or (ii) generally known to the public, it will
promptly so notify, to the extent permitted by law, all parties to this
Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee and the Indenture Trustee,
that if at any time when the Aircraft is registered or the Lessee proposes to
register the Aircraft in the United States (i) it shall fail to be a Citizen
of the United States and the Aircraft shall or would therefore become
ineligible for registration in the name of the Owner Trustee under the
Transportation Code and regulations then applicable thereunder, then the Owner
Participant shall give notice thereof to the Lessee and the Indenture Trustee
and shall (at its own expense and without any reimbursement or indemnification
from the Lessee) promptly but in any event within ten (10) Business Days (x)
effect a voting trust or other similar arrangement, (y) transfer in accordance
with the terms of this Agreement and the Trust Agreement all its rights, title
and interest in and to such Trust Agreement, the Lessor's Estate and this
Agreement, or (z) take any other alternative action that would prevent any
deregistration, or maintain or permit the United States registration, of the
Aircraft; or (ii) it determines that there is a reasonable likelihood that it
will in the future fail to qualify as a Citizen of the United States, and the
Aircraft would as a result thereof become ineligible for registration in the
name of the Owner Trustee under the Transportation Code, then the Owner
Participant shall give notice of such determination to the Lessee and the
Indenture Trustee and shall (at its own expense and without reimbursement or
indemnification from the Lessee and on such timetable as shall be reasonable
under the circumstances and consistent with its obligations under this Section
7.02(c)) prepare such documentation and establish such procedures as shall be
required to effect the voting trust, arrangements, transfer or other action
referred to in the preceding clause (i) in each case to be effective on the
date upon which the Owner Participant fails to qualify as a Citizen of the
United States (but in no event later than (10) Business Days after such date)
so as to prevent any deregistration of and to maintain or permit the
registration of, the Aircraft. It is agreed that the Owner Participant shall
be liable to pay promptly on request (A) to each of the other parties hereto
any damages actually incurred by any such other party as the result of the
representation and warranty of the Owner Participant in the first sentence of
Section 7.02(a) hereof proving to be untrue as of the Refunding Date; and (B)
to the Lessee, the Indenture Trustee or the Pass Through Trustee for any
damages actually incurred by the Lessee, the Indenture Trustee and the Pass
Through Trustee as a result of the Owner Participant's failure to comply with
its obligations pursuant to the first sentence of this Section 7.02(c);
provided, that, the foregoing shall not restrict the Pass Through Trustee or
the Indenture Trustee from asserting against the Owner Participant any damages
actually incurred by the holders of any Pass Through Certificates. Each other
party hereto agrees, upon the request and at the sole expense of the Owner
Participant, to cooperate with the Owner Participant in making any filings
required in order for the Owner Participant to comply with its obligations
under the provisions of the first sentence of this Section 7.02(c), but
without any obligation on the part of such other party to take any action
believed by it in good faith to be burdensome to such party or adverse to its
business interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that, on the
date hereof:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement;
(ii)the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary action on its part and, assuming the accuracy of the Lessee's
representations in Section 6.01(o) hereof, do not require any governmental
approvals that would be required to be obtained by the Owner Participant;
(iii)based on the representations, warranties and covenants contained
in Sections 6.01(m)(viii), 6.02 and 7.09 hereof and compliance with Section
10.06 of the Indenture, neither the execution, delivery or performance by
the Owner Participant of the Original Agreements to which it is a party,
this Agreement, the Tax Indemnity Agreement, and the Trust Agreement nor
compliance with the terms and provisions hereof or thereof, conflicts or
will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under any law, governmental rule or regulation applicable to
the Owner Participant, or the charter documents, as amended, or bylaws, as
amended, of the Owner Participant, or any order, writ, injunction or decree
of any court or governmental authority against the Owner Participant, or by
which it or any of its Properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Owner Participant is
a party or by which it or any of its Properties is bound, or constitutes or
will constitute a default thereunder or results or will result in the
imposition of any Lien upon any of its Properties;
(iv)the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have an adverse effect on the ability of the Owner Participant to
perform its obligations under the Original Agreements to which it is a
party, this Agreement and the other Operative Agreements to which it is or
is to be a party;
(vi)there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against or affecting the Owner Participant or any of its Property before or
by any court or administrative agency which (A) involve the Aircraft or (B)
if adversely determined would adversely affect the ability of the Owner
Participant to perform its obligations under any of the Original Agreements
to which it is a party, this Agreement and the other Operative Agreements
to which it is or is to be a party;
(vii)neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is nor the performance of its obligations hereunder
or thereunder requires the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any governmental authority or agency that would be required to be obtained
or taken by the Owner Participant except for filings contemplated by this
Agreement;
(viii)no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix)it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and if it shall at any time cease to be such a "U.S. Person", it shall
furnish to each Certificate Holder an indemnity, in form and substance
reasonably satisfactory to such Certificate Holder, for any Taxes that may
be imposed on such Holder as a result of the Owner Participant's failure to
be such a "U.S. Person"; and
(x) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, other than
such laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable aviation law and the other matters set
forth in Section 7.02(c) hereof.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it or
any of its Affiliates against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it or any such Affiliate against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it or any such Affiliate on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Indenture
Trustee, the Owner Trustee and the Pass Through Trustee that the Owner
Participant will, at its own cost and expense, take such action as may be
necessary (by bonding or other appropriate actions, so long as neither the
Lessee's operation and use of the Aircraft nor the validity and priority of
the Lien of the Indenture is impaired) to duly discharge and satisfy in full,
promptly and in any event within 30 days after the same first becomes known to
the Owner Participant, any Lessor's Lien against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to
the Owner Participant or any such Affiliate, provided, however, that the Owner
Participant shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Owner Participant in good faith and by
appropriate proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Aircraft or the
Lessor's Estate or the Trust Indenture Estate or any interest in any thereof
or otherwise materially adversely affect the validity or priority of the Lien
of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant or any of its
Affiliates and required to be discharged as described in Section 7.03(b)
hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSB and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSB represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that, on the date hereof:
(i)it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to execute,
deliver and perform this Agreement, the Original Agreements to which it is
a party and the Operative Agreements to which it is or is to be a party;
(ii)the execution, delivery and performance by FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the other
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSB, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSB's performance of or compliance with
any of the terms and provisions thereof will violate any Federal or state
or local law or regulation governing FSB's banking or trust powers;
(iii)(A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSB in its individual capacity, constitute the legal, valid
and binding obligation of FSB in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSB in its individual capacity of
any of its obligations thereunder does not contravene any lease, regulation
or contractual restriction binding on FSB in its individual capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv)there are no pending or, to its knowledge, threatened actions or
proceedings against FSB before any court or administrative agency which
would materially and adversely affect the ability of FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi)neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSB in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii)on the Refunding Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by the Lessee on the
Delivery Date, the Aircraft shall be free of Lessor's Liens attributable to
FSB in its individual capacity and FSB in its individual capacity and as
Owner Trustee is a Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) Lessor's Liens. FSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSB, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSB, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSB to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents that, on the date hereof:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii)the Indenture and this Agreement, the Original Agreements to
which it is a party and the other Operative Agreements to which it is or is
to be a party, and the authentication of the Certificates to be delivered
on the Refunding Date, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or Massachusetts law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii)each of the Indenture and this Agreement, the Original
Agreements to which it is a party and the other Operative Agreements to
which it is or is to be a party, has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(iv)neither the execution and delivery by it of the Indenture and this
Agreement, the Original Agreements to which it is a party and the other
Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or state governmental authority or agency governing its banking and
trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi)the Indenture Trustee holds the original counterparts of the
Original Lease, the Lease Supplement, Ancillary Agreement I and the
Warranty Bill of Sale.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days, after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Payment Default
promptly upon a Responsible Officer of the Indenture Trustee having actual
knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release.
Section 7.08. Covenant of Quiet Enjoyment. The Indenture Trustee,
the Pass Through Trustee and the Owner Trustee covenants and agrees as to
itself only that, so long as no Event of Default under the Lease has occurred
and is continuing, neither the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee nor any Person lawfully claiming through the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee shall interfere
with the Lessee's right to quietly enjoy the Aircraft during the Term without
hindrance or disturbance by the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee, provided, however, that the Owner Trustee shall not be
liable for any act or omission of the Indenture Trustee or any other Person
claiming through the Indenture Trustee or the Pass Through Trustee.
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii)the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iii)each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Default or
Event of Default shall have occurred and be continuing then, upon compliance
with the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) but subject to the Lien of the Indenture,
all of the Owner Trustee's right, title and interest in and to the Aircraft,
and if the Lessee, in connection with such purchase, elects pursuant to
Section 4.02(a)(A), (D) or (E) of the Lease to assume the obligations of the
Owner Trustee to the Indenture Trustee and the Holders under the Indenture,
the Certificates and hereunder, then the Owner Trustee shall so notify the
Indenture Trustee (such notice to be given at least 30 and not more than 60
days prior to the effective date of such assumption), and each of the parties
shall execute and deliver appropriate documentation permitting the Lessee to
assume such obligations on the basis of full recourse to the Lessee,
maintaining for the benefit of the Holders the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions of
this Section 7.11, such documentation shall become effective and the Owner
Participant and the Owner Trustee shall be released from all obligations in
respect of the Certificates, the Indenture, this Agreement and all other
Operative Agreements, except any obligations which shall have arisen (or with
respect to events which shall have occurred) prior to such assumption, and
take all such other actions, at the Lessee's expense, as are reasonably
necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Indenture Trustee and the Holders, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Delivery Date with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each opinion
described in clause (A) or (B) above, covering such additional matters as
the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSB and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would adversely
affect such party without the prior written consent of such party. The Owner
Trustee confirms for the benefit of the Lessee, the Indenture Trustee and the
Pass Through Trustee that it will comply with the provisions of Article 2 of
the Trust Agreement. Notwithstanding anything else to the contrary in the
Trust Agreement, so long as the Lease or the Indenture remains in effect, the
Owner Participant agrees not to terminate or revoke the trust created by the
Trust Agreement without the consent of the Lessee (except in connection with
the exercise of remedies pursuant to Article 17 of the Lease) or, if the Lien
of the Indenture shall not have been discharged, the Indenture Trustee. The
Owner Trustee and the Owner Participant agree that no co-trustee or separate
trustee shall be appointed pursuant to Section 3.14 of the Trust Agreement if
such appointment would adversely affect the priority of the Lien of the
Indenture. The Indenture Trustee agrees that it shall not take any action
under this Section 7.13 except as instructed pursuant to Section 8.01 of the
Indenture.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with
any assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part or the Lessor's Estate, the Trust
Indenture Estate, Rent, the Certificates or otherwise), by any Federal, state
or local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority, upon or with respect to,
based upon or measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, control, purchase, improvement,
maintenance, manufacture, acquisition, financing, refinancing, mortgaging,
ownership, delivery, nondelivery, acceptance, rejection, leasing,
subleasing, transport, insuring, inspection, registration, reregistration,
assembly, abandonment, repossession, redelivery, installment, preparation,
possession, use, operation, return, presence, storage, repair, transfer of
title, modification, rebuilding, export, import, alteration, replacement,
substitution, assignment, overhaul, transfer of registration or title,
imposition of any Lien, sale or other disposition of the Aircraft,
Airframe, any Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or Original
Agreements;
(iv) the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, or the income or other
proceeds received with respect to such Property, held by the Owner Trustee
under the Trust Agreement or by the Indenture Trustee under the Indenture;
(v) the Operative Agreements or the Original Agreements or otherwise
with respect to or by reason of the transactions described in or
contemplated by the Operative Agreements or the Original Agreements;
(vi) the payment of the principal or interest or other amounts
payable with respect to the Original Loan Certificates, the Pass Through
Certificates or the Certificates or the right thereto as it accrues;
(vii) the Original Loan Certificates, the Pass Through Certificates
or the Certificates or the issuance, sale, acquisition, reamortization or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof; or
(viii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, capital, franchise, net worth or conduct of business or other
similarly-based Taxes of such Indemnitee (other than any Taxes in the
nature of sales, use, transfer, excise, rental, license, ad valorem,
property or other similarly based Taxes) (the "Income Taxes"); provided,
however that the provisions of this paragraph (b)(i) shall not exclude from
the indemnity described in Section 8.01(a) hereof, any Income Taxes to the
extent such Income Taxes are imposed by any jurisdiction in which the
Indemnitee would not be subject to such Income Taxes but for, or would be
subject to such Income Taxes solely as a result of, (x) the operation,
registration, location, presence, or use of the Aircraft, Airframe, any
Engine or any Part thereof, in such jurisdiction or (y) the place of
incorporation or principal office or the activities of the Lessee or any
sublessee in such jurisdiction (it being understood that (A) any such
indemnity would be payable only to the extent of the net harm incurred by
the Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax jurisdiction resulting from payment of
such Income Taxes and (B) this sentence would require indemnification in a
jurisdiction in which the Indemnitee is already subject to an Income Tax
(an "Existing Income Tax") only if an event set forth in Clause (x) or (y)
of this sentence causes the Indemnitee to be subject to an Income Tax in
that jurisdiction (a "New Income Tax") other than an Existing Income Tax,
and such New Income Tax would have been imposed even if the activities
contemplated by the Operative Agreements or the Original Agreements were the
Indemnitee's sole nexus to the jurisdiction); provided, further, that the
provisions of this paragraph (b)(i) relating to Income Taxes shall not
exclude from the indemnity described in Section 8.01(a) hereof any Income
Taxes for which the Lessee would be required to indemnify an Indemnitee (x)
so that any payment under the Operative Agreements or the Original
Agreements, otherwise required to be made on an After-Tax Basis, is made on
an After-Tax Basis or (y) pursuant to the last sentence of Section 8.02,
8.05, 9.02 or 9.05 of this Agreement;
(ii)With respect to an Original Loan Participant, Income Taxes (other
than in the case of a Non-U.S. Person, U.S. federal withholding taxes on
amounts payable with respect to such Original Loan Participant's Loan
Certificate) except to the extent such Income Tax is imposed (including by
way of increase) by any jurisdiction in which the Indemnitee is subject to
tax (A) as a result of the operation, registration, location, presence,
basing or use of the Aircraft, Airframe, any Engine or any Part thereof, in
such jurisdiction (it being understood that (I) the incremental Income
Taxes described in this clause (A) shall not include any U.S. Federal
income taxes and (II) that to the extent such incremental Income Taxes give
rise to any incremental current Tax benefit in another tax jurisdiction,
that such incremental benefit shall offset and decrease the incremental
Income Taxes determined under this clause (A)) or (B) solely as a result of
the place of incorporation, principal office, corporate domicile or the
activities of the Lessor, Owner Participant, the Owner Trustee, the
Indenture Trustee, the Lessee or any sublessee in such jurisdiction (it
being understood that to the extent that any Income Taxes described under
this clause (B) give rise to any incremental current Tax benefit in another
tax jurisdiction or another tax period, that such incremental Tax benefit
shall offset and decrease the Income Taxes determined under this clause
(B)); provided, however, that the provisions of this paragraph (b)(ii)
relating to Income Taxes shall not exclude from the indemnity described in
Section 8.01(a) any Income Taxes for which the Lessee would be required to
indemnify an Indemnitee (x) so that any payment under the Operative
Agreements, otherwise required to be made on an After-Tax Basis, is made on
an After-Tax Basis or (y) pursuant to the last sentence of Section 8.02 of
this Agreement;
(iii)Taxes arising out of or measured by acts, omissions, events or
periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring, or fines,
penalties or interest resulting from any such act, omission or event having
occurred, contemporaneously with or prior to) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Original Loan Certificates in the case of an
Original Loan Participant, the Indenture Trustee or the Trust Indenture
Estate if the Lessee shall have assumed the Certificates pursuant to
Section 7.11 of this Agreement or Section 2.12 of the Indenture), and the
earliest of (x) the expiration of the Term of the Lease and return of the
Aircraft in accordance with Article 12 of the Lease, (y) the termination of
the Lease in accordance with the applicable provisions of the Lease and
return of the Aircraft in accordance with the Lease, or (z) the termination
of the Lease in accordance with the applicable provisions of the Lease and
the transfer of all right, title and interest in the Aircraft to the Lessee
pursuant to its exercise of any of its purchase options set forth in
Section 4.02(a) of the Lease, except that, notwithstanding anything in this
Section 8.01(b) to the contrary, Taxes incurred in connection with the
exercise of any remedies pursuant to Article 17 of the Lease following the
occurrence of an Event of Default and while it is continuing shall not be
excluded from the indemnity described in Section 8.01(a);
(iv)As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements
or the Original Agreements) or the breach by such Indemnitee of any
representation, warranty or covenant contained in the Operative Agreements
or the Original Agreements or any document delivered in connection
therewith (unless attributable to a breach of representation, warranty or
covenant of the Lessee), provided that in the case of a breach by the Owner
Participant or the Owner Trustee of any representation, warranty or
covenant, timely written notice requesting compliance was received by the
Owner Participant or the Owner Trustee as the case may be;
(vi) Taxes imposed on any Indemnitee or any successor, assign or
Affiliate thereof which became payable by reason of any voluntary or
involuntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including revocation by such Indemnitee of the trust created
by the Trust Agreement, of any interest in some or all of the Aircraft,
Airframe, Engines or Parts thereof, of any interest in a Loan Certificate,
or its interest in the Lessor's Estate, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition, (B) transfers pursuant to the Lessor's exercise of remedies
under the Lease, (C) with respect to a Loan Participant, any actual or
deemed transfer pursuant to Section 7.11 hereof or Section 2.13 or 2.18 of
the Indenture or as a consequence of a refinancing under Article 15 hereof,
or any actual or deemed transfer of a Loan Certificate that as part of a
refinancing under Article 15 hereof is not retired, but only to the extent
the Taxes attributable to such transfer exceed the amount of indemnifiable
Taxes that would have been imposed on such transferor if the debt had
instead been retired, or (D) Taxes (other than Income Taxes) that result
from any transfer or disposition pursuant to Section 4.02 (other than
clauses B or C thereof) or Article 7, 8, 9, 10, 11, or 13 of the Lease;
(vii)Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii)Notwithstanding anything herein to the contrary, Taxes imposed
on a successor, assign or other transferee (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) of
any Person which on the Delivery Date is an Indemnitee (for purposes of
this clause (viii), an "original Indemnitee") to the extent that such Taxes
exceed the amount of Taxes that would have been imposed (in the case of an
Original Loan Participant, immediately after giving effect to such
succession, assignment or other transfer) and would have been indemnifiable
pursuant to Section 8.01(a) had there not been a succession, assignment or
other transfer by such original Indemnitee of any such interest of such
Indemnitee in the Aircraft or any part thereof, any interest in or under any
Operative Agreement, or any proceeds thereunder, the trust created by the
Original Trust Agreement, the Original Loan Certificates or otherwise;
provided, however, that the exclusion provided by this clause (viii) shall
not apply in the case of a succession, transfer or disposition (A) while an
Event of Default under the Lease has occurred and is continuing at the time
of such transfer, (B) which is an actual or deemed transfer pursuant to
Section 7.11 hereof or Section 2.13 or 2.18 of the Indenture or as a
consequence of a Refinancing under Section 15.01 hereof, or any actual or
deemed transfer of an Original Loan Certificate that as part of a
Refinancing under Section 15.01 hereof is not retired, but only to the
extent the Taxes attributable to such transfer exceed the amount of Taxes
that would have been imposed on such transferor if the debt had instead
been retired, (C) to the extent necessary to make payments with respect to
such Taxes on an After-Tax Basis, (D) in the case of the Lessor or Owner
Participant, to any Tax other than an Income Tax or (E) to the extent such
Taxes are directly attributable to the failure of the Lessee to take
administrative actions as have been reasonably requested of it in writing
in a timely manner and which will result in no after-tax cost or expense to
the Lessee;
(ix)[Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price;
(xi) Any Taxes which would not have been imposed on the Owner
Participant but for a Lessor's Lien attributable to the Owner Participant;
and
(xii) Taxes imposed on the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA and Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Loan Certificate (A) in connection with which
purchase or holding the Owner Participant or any Affiliate thereof is
acting as the investment manager, advisor or discretionary trustee and is
making or directing such purchase or holding (other than in the capacity of
a custodian, directed trustee or other similar nondiscretionary capacity),
or (B) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or a plan subject to Section 4975 of the Code with respect to which
the Owner Participant (or any Affiliate thereof) is the "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA, provided, however, that in
the event of a Refinancing of the Certificates described in Section
15.01(d)(viii) hereof, the exception under this clause (xii) shall not be
applicable.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from withholding on interest claimed by
such holder of a Pass Through Certificate. The Indenture Trustee shall
withhold any Taxes required to be withheld on any payment to a Holder pursuant
to Section 5.09 of the Indenture. If the Indenture Trustee or the Pass
Through Trustee fails to withhold a Tax required to be withheld with respect
to any Holder of a Certificate or any holder of a Pass Through Certificate or
any claim is otherwise asserted by a taxing authority against the Owner
Trustee or Owner Participant for or on account of any amount required to be
withheld from a payment in respect of a Certificate, the Lessee will indemnify
(after taking into account any payments made by a Holder to or for the benefit
of the Owner Participant or the Owner Trustee pursuant to the preceding
sentence) the Owner Trustee and the Owner Participant (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis against
any Taxes required to be withheld and any interest, penalties and additions to
tax with respect thereto, along with any other costs (including attorneys'
fees) incurred in connection with any such claim. The Indenture Trustee or
the Pass Through Trustee, as the case may be, in its individual capacity (and
without recourse to the Trust Indenture Estate), shall indemnify the Lessee on
an After-Tax Basis for any payment the Lessee shall have made pursuant to the
preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a Tax benefit by reason of
the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee to the extent such Tax benefit was
not previously taken into account in computing such payment an amount equal to
the lesser of (x) the sum of such Tax benefit plus any other Tax benefit
actually realized by such Indemnitee that would not have been realized but for
any payment made by such Indemnitee pursuant to this sentence and not already
paid to the Lessee, and (y) the amount of the payment required to be made
under Sections 8.01 and 8.02 by the Lessee to such Indemnitee plus the amount
of any other payments by the Lessee to such Indemnitee theretofore required to
be made under Sections 8.01 and 8.02 (and the excess, if any, of the amount
described in clause (x) above over the amount described in clause (y) above
shall be carried forward and applied to reduce pro tanto any subsequent
obligations of the Lessee to make payments pursuant to Sections 8.01 and
8.02); provided, however, that notwithstanding the foregoing portions of this
sentence, such Indemnitee shall not be obligated to make any payment to the
Lessee pursuant to this sentence as long as a Payment Default, Bankruptcy
Default or an Event of Default shall have occurred and be continuing under the
Lease. The Lessee shall reimburse on an After-Tax Basis such Indemnitee for
any payment of a Tax benefit pursuant to the preceding sentence (or a Tax
benefit otherwise taken into account in calculating the Lessee's indemnity
obligation hereunder) to the extent that such Tax benefit is disallowed or
reduced subsequent to such payment (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that in the case of amounts
which are being contested by the Lessee in good faith or by the Indemnitee in
either case pursuant to Section 8.04 hereof, such amount shall be payable 30
days after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee may be liable for a
payment or indemnity hereunder, such Indemnitee shall promptly give the Lessee
notice in writing of such claim and shall furnish the Lessee with copies of
any requests for information from any taxing authority relating to such Taxes
with respect to which the Lessee may be required to indemnify hereunder;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice. The Indemnitee shall in good faith, with due diligence and at the
Lessee's expense, if timely requested in writing by the Lessee, contest (or,
at the Indemnitee's option, require the Lessee to contest in the name of the
Lessee, if permitted by law) the validity, applicability or amount of such
Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien not permitted under
Section 6.01 of the Lease on the Aircraft, Airframe or any Engine or any
risk of criminal liability; or
(ii)if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes;
provided, however, that if the Indemnitee determines in its sole discretion
that such participation will not adversely affect such Indemnitee's contest of
any Taxes not indemnified hereunder, the Lessee shall have the right to
participate in such contest, including, among other rights, the right to attend
governmental or judicial conferences (to the extent unrelated issues are not
discussed) concerning such claim and the right to review and approve all
submissions to any governmental or other authority insofar as they relate to
the Tax for which indemnification is sought. Notwithstanding the preceding
sentences of this Section 8.04, such Indemnitee shall not be required to take
or continue any action unless the Lessee shall have (i) agreed in writing to
pay and shall pay the Indemnitee on demand and on an After-Tax Basis for any
liability or expense which such Indemnitee may incur as a result of contesting
such Taxes including without limitation (y) attorneys' and accountants' fees
and (z) the amount of any interest, penalty or additions to tax which may
ultimately be payable as the result of contesting such Taxes, (ii) delivered
to the Indemnitee a written acknowledgment of the Lessee's obligation to such
Indemnitee pursuant to this Agreement to the extent that the contest is not
successful and of the inapplicability of any exclusion or defenses thereto,
provided, however, that such acknowledgement shall not preclude the Lessee
from raising defenses to liability under this Agreement if a decision in such
contest is rendered which clearly articulates the cause of such Tax and the
cause, as so articulated, is not one for which the Lessee is responsible to
pay an indemnity hereunder, (iii) made all payments and indemnities (other
than contested payments and indemnities) then due to the Indemnitee hereunder
or with respect to any of the transactions contemplated by or under the
Operative Agreements. In no event shall such Indemnitee be required or the
Lessee permitted to contest pursuant to this Section 8.04 the imposition of
any Tax for which the Lessee is obligated to indemnify any Indemnitee
hereunder unless (i) such Indemnitee shall have received an opinion of
independent tax counsel, at the Lessee's expense, selected by such Indemnitee
and reasonably satisfactory to the Lessee ("Tax Counsel") to the effect that a
reasonable basis exists for contesting such claim, (ii) if an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iii)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (iv) such Indemnitee shall have
determined that such contest will not result in any material risk of loss,
sale or forfeiture of, or the creation of any Lien not permitted under Section
6.01 of the Lease on, the Aircraft or any part thereof or interest therein or
in a risk of criminal liability and (v) the issue shall not be the same as an
issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received, at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel, to the effect that the applicable law has changed and, in light
thereof, there is substantial authority within the meaning of Section 6662 of
the Code (if applicable), as interpreted by the Treasury regulations
thereunder, or under similar principles of state or foreign law (as the case
may be) for contesting such claim and (v) the amount of such claim (without
taking into account any amount necessary to indemnify on an After-Tax Basis),
when aggregated with related and correlative claims, is at least $50,000.
The Indemnitee shall not be required to appeal any judicial decision
unless it receives an opinion of Tax Counsel to the effect that it is more
likely than not that such appeal will be successful.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Bankruptcy Default, Payment Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Event of Default shall have been cured), such Indemnitee
shall pay to the Lessee an amount equal to the amount of such refund less
Taxes imposed with respect to the accrual or receipt thereof, including
interest received attributable thereto, plus any Tax benefit actually realized
by such Indemnitee as a result of any payment by such Indemnitee made pursuant
to this sentence; provided, however, that such amount shall not be payable (a)
before such time as the Lessee shall have made all payments or indemnities
then due and payable to such Indemnitee under this Article 8 and (b) to the
extent that the amount of such payment would exceed (i) the amount of all
prior payments by the Lessee to such Indemnitee pursuant to this Article 8
less (ii) the amount of all prior payments by such Indemnitee to the Lessee
pursuant to this Article 8, with any such excess to be carried forward and
applied to reduce any future obligation of the Lessee under this Article 8.
Any subsequent loss of such refund or Tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8
(without regard to Section 8.01(b) (i), (iii) or (viii) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Tax for which Lessee is obligated to
indemnify under this Article 8, the Lessee shall make such report or return,
except for any such report or return that the Indemnitee has notified the
Lessee that it intends to file, in such manner as will show the ownership of
the Aircraft in the Owner Trustee and shall send a copy of the applicable
portions of such report or return to the Indemnitee and the Owner Trustee or
will notify the Indemnitee of such requirement and make such report or return
in such manner as shall be satisfactory to such Indemnitee and the Owner
Trustee. The Lessee will provide such information reasonably available to the
Lessee as the Indemnitee may reasonably require from the Lessee to enable the
Indemnitee to fulfill its tax filing requirements with respect to the
transactions contemplated by the Operative Agreements (without duplication of
the requirements of Section 3 of Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Indemnitee will provide
such information (other than copies of any of its tax returns) as the Lessee
may reasonably require from such Indemnitee to enable the Lessee to fulfill
its tax filing requirements with respect to the transactions contemplated by
the Operative Agreements and any audit information request arising from such
filing. The Lessee shall hold the Indemnitee harmless from and against any
liabilities, including penalties, additions to tax, fines and interest,
imposed upon such Indemnitee to the extent directly attributable to any
insufficiency or inaccuracy in any return, statement, or report prepared by
the Lessee or information supplied by the Lessee, or directly attributable to
the Lessee's failure to supply reasonably available information to such
Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
state, local or foreign law, the Lessee shall pay such Tax directly to the
relevant Taxing authority and file any returns or reports required with
respect thereto and if such direct payment is not permitted or feasible under
the circumstances, pay an amount equal to such Tax to the Indemnitee at least
2 Business Days prior to the time such Indemnitee pays such Tax; provided,
however, that the Lessee shall not make any statements or take any action
which would indicate that the Lessee or any Person other than the Owner Trust
or the Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or would otherwise be inconsistent with the terms of the
Lease (including the Purchase Price being equal to the fair market value of
the Aircraft on the Delivery Date) and the position thereunder of the Owner
Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. If, for any
reason, the Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including legal fees and expenses and all
costs and expenses relating to amendments, supplements, adjustments, consents,
refinancings and waivers under the Operative Agreements and the Original
Agreements except as otherwise provided in Section 10.01(d)(i) or Article 15
hereof) of every kind and nature (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Pass Through Agreement, the Bills of
Sale or any other Operative Agreement or any amendment to any Operative
Agreement or any other document entered into in connection herewith or any
sublease or transfer or any transactions contemplated hereby or thereby;
(ii)the operation, possession, ownership, use, non-use, maintenance,
storage, delivery, non-delivery, control, testing, overhaul or repair of
the Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, ownership,
use, non-use, maintenance, storage, delivery, non-delivery, control,
testing, overhaul or repair is in compliance with the terms of the Lease,
including without limitation, claims for death, personal injury or property
damage or other loss or harm to any Person whatsoever and claims relating
to any laws, rules or regulations;
(iii)the manufacture, design, purchase, condition, repair,
modification, airworthiness, return, lease, sale, acceptance, rejection,
servicing, rebuilding, registration, alteration, merchantability,
substitution, replacement, fitness for use, transfer or sublease of any
Airframe, Engine, or Part under the Lease, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part, latent or other defects
whether or not discoverable, strict tort liability, and any claims for
patent, trademark or copyright infringement;
(iv)any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi)the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to securities), or
the action or inaction of the Owner Trustee or Indenture Trustee as
trustees, in the manner contemplated by this Agreement, the Original
Participation Agreement, the Indenture, the Original Indenture, the
Indenture and Security Agreement Supplement, the Trust Agreement or the
Original Trust Agreement and in the case of the Owner Participant, its
obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby or by the other Operative
Agreements and the Original Agreements), and such Expense does not fall within
any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee:
(i) to the extent attributable to the willful misconduct or gross
negligence of such Indemnitee;
(ii)in respect of the Aircraft to the extent attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or leased under the Lease or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor shall be entitled to
exercise remedies under such Article 17), or to acts or events which occur
after return of possession of the Aircraft by the Lessee in accordance with
the provisions of the Lease but in any such case only to the extent not
fairly attributable to acts or omissions of the Lessee prior to expiration
of the Term, including without limitation the Lessee's failure to fully
discharge all of its obligations under the Lease, the other Operative
Agreements or the Original Agreements;
(iii)which is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv)which is a cost or expense expressly required to be paid by the
Owner Participant or its permitted transferees (and not by the Lessee)
pursuant to this Agreement or any other Operative Agreement;
(v) to the extent that such Expenses would not have been incurred by
such Indemnitee if such Indemnitee had not been in breach of its
representations or warranties, or had not defaulted in the observance and
performance of the terms and provisions required to be observed and
performed by it, in this Agreement, the Engine Warranty Assignment, the
Lease, the Indenture, the Trust Agreement, the Original Agreements or any
other Operative Agreement to which it is a party unless such breach or
default shall be a result of the breach or default of any of the foregoing
by the Lessee or another Indemnitee;
(vi)[Intentionally Left Blank];
(vii)in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of FSB, Lessor's
Liens to the extent attributable to FSB; and in the case of the Indenture
Trustee, Indenture Trustee's Liens;
(viii)in the case of the Owner Participant or the Owner Trustee, to
the extent attributable to the offer or sale by such Indemnitee after the
Delivery Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest (including an offer or sale
resulting from bankruptcy or other proceedings for the relief of debtors in
which such Indemnitee is the debtor), unless in each case such offer or
sale shall occur (w) in connection with a Refinancing, (x) during a period
when an Event of Default has occurred and is continuing, (y) during a
period when an Event of Loss has occurred or (z) in connection with the
termination of the Lease or action or direction of the Lessee pursuant to
Section 4.02 of the Lease or Article 10 of the Lease; or
(ix)in the case of the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant, as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Loan Certificate (or any funded participation
therein) (i) over which purchase or holding the Owner Participant or any
Affiliate thereof (other than in the capacity of a directed trustee or
custodian or similar nondiscretionary capacity) has discretion or control,
or (ii) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or individual retirement account or plan subject to Section 4975 of
the Code with respect to which the Owner Participant (or any Affiliate
thereof) is a "plan sponsor", within the meaning of Section 3(16)(B) of
ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as any Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing. Any Taxes that are imposed
on any Indemnitee as a result of the disallowance or reduction of such Tax
benefit referred to in the next preceding sentence in a taxable year
subsequent to the year of allowance and utilization by such Indemnitee
(including the expiration of any tax credit carryovers or carrybacks of such
Indemnitee that would not otherwise have expired) shall be indemnifiable
pursuant to the provisions of Section 8.01 hereof (without regard to Section
8.01(b)(i), (iii) or (viii) hereof).
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default,
Bankruptcy Default or an Event of Default (in which case payment shall not be
made to the Lessee until such Payment Default, Bankruptcy Default or Event of
Default shall have been cured) such Indemnitee shall pay to the Lessee, within
ten (10) Business Days of receipt thereof by such Indemnitee, the amount of
any such recovery, including interest received with respect to the recovery,
net of any Taxes paid or payable as a result of the receipt of the recovery
and interest, plus any net additional permanent income Tax benefits actually
realized by Indemnitee as the result of any payment made pursuant to this
sentence less any reasonable costs and expense of any Indemnitee not
reimbursed by the Lessee; provided, however, that such amount shall not be
payable (a) before such time as the Lessee shall have made all payments or
indemnities then due and payable to such Indemnitee under this Article 9 or
(b) to the extent that the amount of such payment would exceed the amount of
all prior payments by the Lessee to such Indemnitee pursuant to this Article
9, less the amount of all prior payments by such Indemnitee to the Lessee
pursuant to this Article 9. Any subsequent loss of such recovery or Tax
benefit shall be subject to indemnification under Article 8 or this Article 9,
as the case may be.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim. The Lessee
shall not enter into any settlement or compromise which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment,
the Lease and the other Operative Agreements but, as to such indemnities, only
with respect to losses, liabilities, obligations, damages, penalties, claims,
actions, suits, costs, Expenses and disbursements caused by events occurring
or existing prior to or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or
(ii) the termination of the Lease or the Indenture or, if later, the return of
the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate and an Indemnitee who obtains a recovery under
Section 9.05 hereof that is required to be paid to the Lessee shall pay to the
Lessee on demand, interest on any amount not paid to the Lessee when due
pursuant to such Section 9.05, until the same shall be paid, at the Past Due
Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement (other than clause
(v) thereof) all fees and expenses of the following persons relating to the
public offering of the Pass Through Certificates contemplated by the
Underwriting Agreement and related to the transactions contemplated hereby:
(i) the fees and expenses of counsel for the Owner Participant; (ii) the fees
and expenses of the transaction documentation counsel and counsel for the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Original
Loan Participants and the Underwriters (other than those fees, expenses and
disbursements payable by the Underwriters pursuant to the Underwriting
Agreement); (iii) the fees and expenses of Daugherty, Fowler & Peregrin; (iv)
any initial fees and expenses of the Pass Through Trustee and the fees and
expenses of the Owner Trustee and the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Underwriters pursuant to the
Underwriting Agreement; (vi) the fees, if any, incurred in printing the Pass
Through Certificates; (vii) the fees and expenses incurred in connection with
printing any amendment to the Registration Statement on Form S-3 bearing
Registration No. 333-07691, printing any Preliminary Prospectus or Prospectus
(as such terms are defined in the Underwriting Agreement) for the offering of
the Pass Through Certificates; (viii) the fees and expenses of Arthur Andersen
LLP; (ix) the fees and expenses of Moody's and S&P; and (x) the fees and
expenses of First Chicago Leasing Corporation. The fees and expenses
described in clauses (ii) through (x) of this paragraph shall be allocable to
the Owner Participant under this Agreement (1) to the extent incurred
specifically with respect to the Owner Participant or the refunding of the
Original Loan Certificates, and (2) to the extent such fees and expenses are
incurred but are not specifically attributable to the Owner Participant or the
refunding of the Original Loan Certificates, in the proportion that the
principal amount of the Certificates bears to the total amount of the Pass
Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, EBO Price, Stipulated Loss Value and
Termination Value set forth in the Lease have been prepared assuming the
aggregate amount payable by the Owner Participant pursuant to the preceding
paragraph and Section 10.01 of the Original Participation Agreement is 1.46%
of the Purchase Price (the "Estimated Expense Amount"); provided, however,
that in no event shall the sum of (i) the Owner Participant's Commitment (as
such term is defined in the Original Participation Agreement), (ii) the
Transaction Costs to be paid by the Owner Participant pursuant to Section 2.03
of the Original Participation Agreement and (iii) the Transaction Costs to be
paid by the Owner Participant pursuant to Section 10.01 hereof, exceed
$22,700,000.00. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $22,700,000.00, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom or (b) the
negotiation of any restructuring or "work-out" (whether or not
consummated), or the obligations of the Lessee hereunder or under the other
Operative Agreements and the enforcement of this Section 10.01, including,
without limitation, the entering into or giving or withholding of any
amendments or supplements or waivers or consents (whether or not
consummated), including without limitation, any amendment, waiver,
modification or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under the Original Agreements, this Agreement, the Lease, the Indenture,
the Certificates, the Tax Indemnity Agreement, the Engine Warranty
Assignment or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for fees
and expenses of the other parties hereto incurred in connection with the
offer, sale or other transfer (whether pursuant to Article 5 of the Trust
Agreement or otherwise) by the Owner Participant or the Owner Trustee after
the Refunding Date of any interest in the Aircraft, the Lessor's Estate,
the Beneficial Interest, the Trust Agreement or any similar interest (and
the Owner Participant shall be responsible for all such fees and expenses),
unless such offer, sale or transfer shall occur (A) during a period when an
Event of Default has occurred and is continuing under the Lease, (B) during
a period following an Event of Loss or (C) in connection with the
termination of the Lease or action or direction of the Lessee pursuant to
Section 4.02 or Article 10 of the Lease; and
(ii)to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed under the Trust Agreement only in accordance with the
provisions of Section 3.11 of the Trust Agreement and the provisions of
paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii)Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii)Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv)Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the Engine
Warranty Assignment, the Indenture, the Indenture Supplement and any other
Operative Agreement to which the Owner Trustee is a party and agrees to be
bound by all the terms of such documents applicable to the Owner Trustee and
makes the representations and warranties contained in Section 7.04 hereof
(except that it may be duly incorporated, validly existing and in good
standing under the laws of the United States of America or any State
thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease
or any other Operative Agreement to which the Owner Participant is a party and
the Owner Participant shall not be liable for the performance by any party
hereto of such other party's obligations or duties hereunder. Under no
circumstances shall the Owner Participant as such be liable to the Lessee, nor
shall the Owner Participant be liable to any Holder, for any action or
inaction on the part of the Owner Trustee or the Indenture Trustee in
connection with this Agreement, the Indenture, the Lease, the Bills of Sale,
the Trust Agreement, the Engine Warranty Assignment, any other Operative
Agreement, any Original Agreement, the ownership of the Aircraft, the
administration of the Lessor's Estate or the Trust Indenture Estate or
otherwise, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that prior to the occurrence and
continuance of an Event of Default, no section of the Indenture or the Trust
Agreement shall be amended or modified in any manner materially adverse to the
Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service or other means, when
received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 2550 West Golf
Road, Rolling Meadows, Illinois 60008, Attention: R. Scott Horsley;
telephone (847) 290-5010, facsimile (847) 290-9290; or to such other
address as the Owner Participant may from time to time designate in writing
to the Lessee and the Indenture Trustee; and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to two refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date), in whole but not in
part, of the Certificates prior to the end of the Basic Term (each a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets in the United States and shall be denominated in United States
dollars, and shall be on terms reasonably satisfactory to the Owner Participant
and shall not materially adversely affect the Owner Participant. The Owner
Participant agrees to negotiate promptly in good faith to conclude an
agreement with the Lessee as to the terms of any such refinancing transaction
(including the terms of any debt to be issued in connection with such
refinancing and the documentation to be executed in connection therewith).
Without the prior written consent of the Owner Participant, the prospectus and
other offering materials relating to any Refinancing in the form of a public
offering shall not identify the Owner Participant and shall not include any
financial statements of the Owner Participant or any Affiliate thereof. In
connection with any such Refinancing in the form of a public offering, the
Lessee shall indemnify the Owner Participant for any liabilities under
federal, state or foreign securities laws resulting from such offering. With
the exception of the refinancing contemplated by this Agreement on the
Refunding Date, the aggregate principal amount of the new Certificates issued
in connection with each Refinancing shall be the same as the aggregate
principal amount outstanding on the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice of the scheduled closing
date of such Refinancing, the Owner Participant shall have been provided such
longer period required for a reasonable opportunity to review the relevant
documentation and the Owner Participant shall have determined in good faith
that neither it nor the Owner Trustee shall suffer any loss or expense or bear
any increased risk as a result of such Refinancing (including, without
limitation, any risk with respect to taxes or other adverse consequences to
the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code and the Treasury Regulations promulgated
thereunder) for which (in the case of such loss, expense or tax) it has not
been or will not have been indemnified in connection with such Refinancing by
the Lessee in a manner satisfactory in all respects to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values, and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken, at the Lessee's
sole cost and expense, all requested action, including, without limitation,
the execution and delivery of any documents and instruments, including,
without limitation, amendments or supplements to the Lease, which may be
reasonably necessary or desirable to effect such Refinancing, including, in
the case of the Owner Participant, direction to the Owner Trustee by the Owner
Participant to prepay the Certificates then outstanding; provided, however,
that such Refinancing shall be subject to the satisfaction of each of the
following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii)Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii)Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel and reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof satisfactory in form and
substance to the Owner Participant), certificates and other documents as
it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv)All authorizations, approvals and consents which in the reasonable
judgment of the Owner Participant are necessary for such Refinancing shall
have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi)The satisfaction or waiver by each other party to this Agreement
of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii)No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit
the Lessee to place the Refinancing loan certificates with an ERISA Plan.
The Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Section 8 hereof, or
Expenses, within the meaning of Section 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates at the time of such prohibited transaction. If such
exemption is not available or is not valid, then the Lessee shall indemnify
the Owner Participant pursuant to, and to the extent provided for, under
Section 8 and 9 hereof for Taxes and Expenses arising under or in
connection with any "prohibited transaction", within the meaning of Section
406 of ERISA or Section 4975 of the Code, resulting from such placement.
(e) Any debt to be issued in connection with a Refinancing shall have
an interest rate that is fixed for the entire term of such debt and shall
not include any debt whose fixed interest rate is reset at any time during
the term of such debt.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii)the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and (C) replacement Refinancing Certificates; and
(iii)in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that for Federal income tax purposes the Owner
Participant will be the owner of the Aircraft and the Lessee will be the
lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement, the
Indenture Trustee and its successors as Indenture Trustee (and any additional
indenture trustee appointed) under the Indenture and the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional pass through
trustee appointed).
Section 17.07. Concerning the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee. Each of FSB and SSB is entering into this
Agreement solely in their respective capacities (except to the extent
otherwise expressly indicated), in the case of FSB, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, in the case of
SSB, not in its individual capacity but solely as Indenture Trustee under the
Indenture and as Pass Through Trustee under the Pass Through Agreement, and
except as otherwise expressly provided in this Agreement or in the Lease, the
Indenture, the Pass Through Agreement or the Trust Agreement, neither FSB, nor
SSB, shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of FSB and SSB accepts the benefits running to it
under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens
and (g) taxes, fees or other charges on, or based on, or measured by, any
fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee agrees that, if (i) the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to such reorganization
provision, the Owner Participant is held to have recourse liability to the
debtor or the trustee of the debtor directly or indirectly on account of any
amount payable as principal, interest or premium on the Certificates, and
(iii) the Indenture Trustee actually receives any Recourse Amount which
reflects any payment by the Owner Participant on account of (ii) above, then
the Indenture Trustee, as the case may be, shall promptly refund to the Owner
Participant such Recourse Amount. For purposes of this Section 17.10,
"Recourse Amount" means the amount by which the portion of such payment by the
Owner Participant on account of clause (ii) above received by the Indenture
Trustee exceeds the amount which would have been received by the Indenture
Trustee if the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section shall
prevent the Indenture Trustee from enforcing any individual obligation (and
retaining the proceeds thereof) of the Owner Participant under this Agreement
or any other Operative Agreement to the extent herein or therein provided, for
which the Owner Participant has expressly agreed by the terms of this
Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 17.12. 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 from time to time with respect to the
right to repossess the Airframe, the Engines and any Parts as provided herein,
and in any circumstances where more than one construction of the terms and
conditions of this Agreement is possible, a construction which would preserve
such benefits shall control over any construction which would not preserve
such benefits or would render them doubtful.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 17th day of October, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
AMERITECH CREDIT CORPORATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as an Original Loan Participant
By:__________________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:__________________________________________
Name:
Title:
COMMERZBANK AG, ATLANTA AGENCY
By:__________________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-B1
Federal Express Corporation Trust No. N586FE
Interest Rate: 7.39%
Maturity: January 30, 2013
Principal Amount: $51,049,000.00
2. Federal Express Corporation Pass Through Trust, 1996-B2
Federal Express Corporation Trust No. N586FE
Interest Rate: 7.84%
Maturity: January 30, 2015
Principal Amount: $11,723,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Additional Leverage Amount. An amount equal to 5.506252521% of the
outstanding principal amount of the Original Loan Certificates to be
refinanced on the Refunding Date.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed
to have been received by a Person 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. In the case of
amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe)
together with three Engines (whether any of which is an initial Engine or a
Replacement Engine) whether or not any of such initial or Replacement Engines
may from time to time be installed on such Airframe or may be installed on any
other airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any replacement airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N586FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N586FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N586FE), dated the Refunding Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant on the Delivery Date pursuant to Section
4.01(n) of the Original Participation Agreement.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent for the Interim Term and
the Basic Term payable for the Aircraft throughout the Basic Term pursuant to
Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on March 22, 2017, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the
Warranty Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N586FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
EBO Date. As defined in Section 4.02(a)(F) of the Lease.
EBO Price. Has the meaning specified in Section 4.02(a)(F) of the
Lease.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N586FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
due to theft or disappearance for a period in excess of 30 days (or such
longer period not to exceed 60 days from the end of such 30 day period if and
so long as the location of such property is known and the Lessee is pursuing
the recovery thereof) or to the end of the Term, if less, unless such event
constitutes an Event of Loss under clause (i)(B) or clause (ii) below, or (B)
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by the government of Canada, France, Germany, Japan,
the Netherlands, Sweden, Switzerland or the United Kingdom, or instrumentality
or agency of any such foreign government, for a period in excess of 180 days,
(B) by a foreign government (other than any such government referred to in the
immediately preceding clause (A)), or instrumentality or agency of any such
foreign government, or any purported government or instrumentality or agency
thereof, or (C) by the Government for a period extending beyond the Term
provided that no Event of Loss shall be deemed to have occurred, and the Term
shall be extended automatically for a period of up to six months beyond the
end of the Term in the event that the Aircraft or the Airframe or any Engine
is requisitioned by the Government pursuant to an activation as part of the
CRAF Program described in Section 7.02(a)(iv) of the Lease; or (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited for a period of six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward all steps which are necessary and desirable to
permit the normal use of the Aircraft or Airframe provided, however, that an
Event of Loss shall be deemed to have occurred if (x) the Lessee fails to
continue diligently carrying forward all such steps or (y) the use of the
Aircraft or the Airframe in the normal course of air transportation of cargo
shall have been prohibited for a period of an additional 12 months following
such 6 month period or (z) unless waived by the Lessor, the Term shall have
expired. The date of such Event of Loss shall be (t) the 30th day or the 90th
day, as the case may be, following loss of such property or its use due to
theft or disappearance; (u) the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal
use; (v) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (w) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (x) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
and the date of such condemnation, confiscation, seizure or requisition in the
case of any other foreign government or instrumentality or agency thereof; (y)
the last day of the Term in the case of requisition for use of such property
by the Government or (z) the last day of the 6 month or additional 12 month
period, referred to in clause (iv) above. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
of expenses paid or payable by the Lessee in respect of the Owner Participant,
the Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to Article 8, 9, or 10 and Section 15.01 of the
Participation Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to
Section 7.01(e), Article 9 or Section 11.03(a) of the Lease or Section 15.01
of the Participation Agreement, (ii) proceeds of public liability insurance
(or government indemnities in lieu thereof) in respect of the Aircraft payable
as a result of insurance claims paid for the benefit of, or losses suffered
by, the Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained with
respect to the Aircraft by the Owner Participant (whether directly or through
the Owner Trustee) maintained in accordance with the provisions of but not
required under Article 13 of the Lease, (iv) all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to
the Owner Participant or the Owner Trustee in its individual capacity, after
the release thereof from the Lien of the Indenture, (vi) subject to Section
3.05 of the Lease, payments constituting increases in Basic Rent attributable
to payments arising pursuant to Section 5 of the Tax Indemnity Agreement,
(vii) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (vi) above and (viii)
any payments in respect of interest to the extent attributable to the payments
referred to in clauses (i) through (vi) above.
Exempt Recipient. A person described in Section 6049(b)(4) of the
Code.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
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 the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Joseph International Sales Corporation, a United States
Virgin Islands corporation.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, except for purposes of Section 17.01 of the
Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft pursuant to such
Section 17.01, in which case an appraiser shall not be appointed and such Fair
Market Rental shall be deemed to be zero.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease, it shall be assumed that the Aircraft is in at
least the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease. For
purposes of Section 17.01 of the Lease, such determination shall be made on an
"as is, where is" basis by a qualified independent appraiser selected by the
Lessor and the costs and expenses of the appraisal shall be borne by the
Lessee, unless the Lessor has not obtained possession of the Aircraft free and
clear of all Liens and unencumbered by the Lease pursuant to such Section
17.01, in which case an appraiser shall not be appointed and such Fair Market
Value shall be deemed to be zero.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, and any successor (including any trustee which may succeed to
the Lessor's interest under the Lease), Affiliate, assign, officer, director,
employee, agent and servant of any of the foregoing, the Lessor's Estate and
the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N586FE), dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N586FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N586FE), dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, the
GTA, the Engine Warranty Assignment, the Engine Consent, any Ancillary
Agreement, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of either the Owner Trustee in its individual capacity or the
Owner Participant) and requisition, indemnity or other payments of any kind
for or with respect to the Aircraft (except amounts owing to the Owner
Participant or to the Owner Trustee in its individual capacity, or to any of
their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) "Lessor's Estate" shall include all property intended to be subjected to
the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, the Owner Participant or any
Affiliate of the Owner Participant, in each case not related to the
transactions contemplated by the Operative Agreements, (ii) acts or omissions
of the Lessor in its individual capacity or as Owner Trustee, and, in the case
of the Lessor in its individual capacity, arising from its gross negligence or
willful misconduct either not related to the transactions contemplated by or
expressly prohibited under the Operative Agreements and any act or omission of
the Owner Participant or any Affiliate of the Owner Participant which is not
related to the transactions contemplated by the Operative Agreements or is in
violation of any of the terms of the Operative Agreements, (iii) Taxes or
Expenses imposed against the Lessor, in its individual capacity or as Owner
Trustee, or the Owner Participant or any Affiliate of the Owner Participant,
the Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 10 or 11 of the Lease and other than a transfer
pursuant to the exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. McDonnell Douglas Corporation, a Maryland
corporation, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Modification Agreement. The Aircraft Modification Agreement dated
as of December 1, 1995 between the Lessee and the Manufacturer providing for
the refurbishing and reconfiguration of the Aircraft including any warranties
relating thereto, as originally executed or as modified, supplemented, amended
or supplemented in accordance with the terms thereof, but only to the extent
that the foregoing relates to the Aircraft, to the extent assigned to the
Owner Trustee pursuant to the Warranty Bill of Sale.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident
of the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, if any, the Owner Trustee Guaranty, if any, any Ancillary Agreement
entered into by or with the written consent of the Indenture Trustee, which by
its terms is an Operative Agreement, the Certificates outstanding at the time
of reference, the Indenture, the Indenture and Security Agreement Supplement,
the Engine Consent and the Tax Indemnity Agreement, each as amended from time
to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N586FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012951.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N586FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012952.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to
the Original Participation Agreement and their successors and assigns (other
than any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N586FE), dated as of April 1, 1996, as
amended and restated as of September 1, 1996, among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N586FE), between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996, between the Owner Participant and the Owner
Trustee as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996, and filed with the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i)Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of
the Indenture; provided, that if such Certificates are to be
prepaid, notice of such prepayment has been duly given pursuant to
the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Interim Term and
the Basic Term, utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N586FE), dated as of April 1, 1996, as amended
and restated as of September 1, 1996 and as further amended and restated as of
October 15, 1996, among the Lessee, the Original Loan Participants, the Owner
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as owner trustee, the Owner Participant, the Indenture
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as indenture trustee and the Pass Through Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as pass through trustee, as amended, modified or supplemented, or the
terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or,
prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series B1 or 1996 Pass Through Certificates, Series B2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-B1 or Federal Express Pass Through Trust, 1996-B2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 30 and July 30 commencing on January
30, 1997.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates having
a Maturity in 2013, October 23, 2006 and with respect to the Certificates
having a Maturity in 2015, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. The amount specified as such in Ancillary
Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term
with respect to which the Lessee has exercised its option to renew the Lease
pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 30 and July 30 commencing on
January 30, 1997, and continuing thereafter during the Term.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-B2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent and, accordingly, no further
accrual or credit shall be required whenever Stipulated Loss Value is to be
calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Factors."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to FSB, the Lessor, the Owner Participant,
the Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, EBO Price and amounts calculated by reference to
Termination Value, and all amounts required to be paid by Lessee under the
agreements, covenants and indemnities contained in the Lease or in the
Participation Agreement or the Tax Indemnity Agreement or any other Operative
Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term, the Basic Term and any Renewal Term unless
the Lease is terminated earlier pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after the seventh anniversary of the Commencement Date in the case of
Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the
Lease, July 30, 2013, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, July 30, 2011.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Termination Value is to be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996,
between the Owner Participant and the Owner Trustee in its individual
capacity, as from time to time modified, amended or supplemented pursuant to
its applicable provisions and in accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October
17, 1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Japan
Austria Luxembourg
Belgium Mexico
Canada Netherlands
Denmark New Zealand
Finland Norway
France Philippines
Germany Singapore
Iceland Sweden
Ireland Switzerland
United Kingdom
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996
(the "Participation Agreement"), among Federal, as Lessee, Ameritech Credit
Corporation, as Owner Participant, Morgan Guaranty Trust Company of New York,
Bank of America National Trust & Savings Association, The Chase Manhattan
Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as
Original Loan Participants, First Security Bank, National Association, a
national banking association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement, State
Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture and State Street Bank and Trust Company, as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for the
refinancing in full of the Original Loan Certificates evidencing the Original
Loan Participants' participation in the payment of the Purchase Price of one
McDonnell Douglas MD-11F aircraft (the "Aircraft"), using the proceeds from
the public offering of the Pass Through Certificates. Two Series of Pass
Through Certificates will be issued by two Pass Through Trusts formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N586FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996, as supplemented by the related Indenture and Security Agreement
Supplement ("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined or
caused to be examined by attorneys under my supervision, executed counterparts
of the Operative Agreements, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
Certificate of Incorporation or By-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which are
required to be performed on or prior to the Refunding Date and which shall
have been accomplished on or prior to the Refunding Date) the registration
with, or the taking of any other action in respect of, the Aeronautics
Authority, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (i)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (ii) compliance with the securities laws of each
applicable state, and (iii) the filing of the Indenture, the Lease and the
Trust Agreement with the FAA, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) (i) is expected to
have a material adverse effect on (A) except for the matters described under
"Legal Proceedings" in Federal's Annual Report on Form 10-K for the fiscal
year ended May 31, 1996 (as updated by Note 7 to the financial statements
included in Federal's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996) and in Federal's Current Reports on Form 8-K dated June
7, 1996 and August 16, 1996, as to which I can express no opinion at this time
concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and valid
title to the Aircraft free and clear of all Liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease. Pursuant to the
Original Participation Agreement the Aircraft was duly delivered to the Owner
Trustee. Federal, as Lessee, duly accepted the Aircraft under the Original
Lease and the Lease Supplement and the Term commenced on the Delivery Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation ("Federal Express"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996
(the "Participation Agreement"), among Federal Express, as Lessee, Ameritech
Credit Corporation, as Owner Participant, Morgan Guaranty Trust Company of New
York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as the Original Loan Participants, First Security Bank, National Association,
not in its individual capacity but solely as Owner Trustee under the Trust
Agreement, State Street Bank and Trust Company, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture, and State Street Bank and Trust Company, as Pass Through
Trustee, relating to the Aircraft. This opinion is being delivered pursuant
to Section 4.01(l)(viii) of the Participation Agreement. Capitalized terms
not otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one McDonnell Douglas MD-11F Aircraft which was
purchased by the Owner Trustee pursuant to the Bills of Sale, subjected to the
Lien of the Original Indenture and leased to Federal Express under the
Original Lease. The Participation Agreement provides, among other things, for
the refinancing of the Original Loan Certificates using the proceeds from the
public offering of the Pass Through Certificates. Two Series of Pass Through
Certificates will be issued by separate Pass Through Trusts, each formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery of
the Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificates are delivered by the Original Loan Participants
to the Indenture Trustee for cancellation and are cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank, National Association in its individual or trust capacity
in the State of New York not related to the transactions contemplated by the
Transaction Agreements. We have assumed that First Security Bank, National
Association has made the filings necessary to comply with Section 131.3 of the
Banking Law of the State of New York, however we express no opinion as to
whether First Security Bank, National Association is required to comply with
said Section 131.3.
6. All the properties which are part of the Trust Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in paragraph
2 above, neither the execution and delivery by Federal Express of the
Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, the Securities and
Exchange Commission or any other Federal or New York State governmental
authority.
10. It is not necessary, in connection with the creation of the
beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States Bankruptcy
Code will apply to the Aircraft for the benefit of the Lessor, as lessor under
and by reason of the Lease. The Lease, including the rights under Section
1110 of the United States Bankruptcy Code, has been assigned to the Indenture
Trustee pursuant to the Indenture as part of the collateral for the
Certificates and, as assignee, the Indenture Trustee has the benefit of
Section 1110.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty, Fowler &
Peregrin and George W. Hearn, Vice President - Law of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
(e) We rendered an opinion dated September 23, 1996 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(a)
[Letterhead of Winston & Strawn]
[Refunding Date]
To Each of the Addressees Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
We have acted as special counsel for Ameritech Credit Corporation, a
Delaware corporation (the "Owner Participant"), in connection with the
transactions contemplated by (a) the Participation Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996, as further amended and restated as of
October 15, 1996 (the "Participation Agreement"), among Federal Express
Corporation, as Lessee (the "Lessee"), the Owner Participant, Morgan Guaranty
Trust Company of New York, Bank of America National Trust and Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as the Original Loan Participants (the "Original
Loan Participants"), First Security Bank, National Association, not in its
individual capacity, except as otherwise expressly set forth therein, but
solely as Owner Trustee (the "Owner Trustee") and State Street Bank and Trust
Company, as Indenture Trustee (the "Indenture Trustee") and State Street Bank
and Trust Company, as Pass Through Trustee (the "Pass Through Trustee"), (b)
the Trust Agreement (Federal Express Corporation Trust No. N586FE), dated as
of April 1, 1996, as amended and restated as of September 1, 1996, as
further amended and restated as of October 15, 1996 (the "Trust Agreement")
between the Owner Participant and the Owner Trustee, (c) the Tax Indemnity
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, as amended by Amendment No. 1 to the Tax Indemnity
Agreement dated as of October 15, 1996 (the "Indemnity Agreement"), between
the Owner Participant and the Lessee, (d) the Ancillary Agreement I
(Federal Express Corporation Trust No. N586FE), dated September 23, 1996,
as amended and restated on the date hereof (the "Ancillary Agreement I")
among the Lessee, the Owner Participant, the Owner Trustee, and the
Indenture Trustee, and (e) the Ancillary Agreement II (Federal Express
Corporation Trust No. N586FE), dated the date hereof (the "Ancillary
Agreement II"), among the Lessee, the Owner Participant, the Owner Trustee
and the Indenture Trustee. This opinion is delivered pursuant to Section
4.01(l)(ii) of the Participation Agreement. Unless otherwise defined
herein, all capitalized terms used herein shall have the respective defined
meanings set forth in the Participation Agreement.
In connection with our opinions herein, we have examined executed
counterparts of the Participation Agreement, the Trust Agreement, the
Indenture, the Indemnity Agreement, Ancillary Agreement I and Ancillary
Agreement II (collectively, the "Documents"). We have further examined and
relied upon the accuracy of original, certified, conformed, photographic or
telecopied copies of such records, agreements, certificates and other
documents as we have deemed necessary or appropriate to enable us to render
the opinions expressed herein. In all such examinations, we have assumed the
genuineness of signatures on original documents and the conformity to such
original documents of all copies submitted to us as certified, conformed,
photographic or telecopied copies, and as to certificates and telegraphic and
telephonic confirmations given by public officials, we have assumed the same
to have been properly given and to be accurate. As to various questions of
fact material to our opinions, we have relied solely upon the accuracy of the
statements, representations and warranties made in the Documents, and we have
made no independent investigation or inquiry with respect to such factual
matters.
With your consent, and for purposes of this opinion, we have assumed
the accuracy of the following matters, but we have not made any independent
investigation or inquiry with respect thereto and we render no opinion on such
matters:
(a) The Participation Agreement, the Indemnity Agreement, the Trust
Agreement, Ancillary Agreement I and Ancillary Agreement II, at the time of
execution and delivery by the Owner Participant will have been duly and
validly executed and delivered by all parties thereto other than the Owner
Participant and will constitute the legal, valid and binding obligations of
such parties, enforceable against such parties in accordance with their
terms, except as the enforceability thereof may be limited by (i)
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(b) The parties to the Participation Agreement, the Indemnity
Agreement, the Trust Agreement, Ancillary Agreement I and Ancillary
Agreement II other than the Owner Participant, at the time of execution and
delivery by the Owner Participant, have obtained, and there are in full
force and effect at such time, any and all required consents, permits,
and approvals required by or from any and all federal, state, local or
foreign governmental agencies and authorities in connection with the
transactions contemplated thereby, to the extent necessary for the
legality, validity, binding effect or enforceability of the
Participation Agreement, the Indemnity Agreement, the Trust Agreement,
Ancillary Agreement I or Ancillary Agreement II.
We have been retained as special counsel to the Owner Participant in
connection with transactions contemplated by the Participation Agreement and
have not generally represented the Owner Participant in its business
activities and are not familiar with the nature and extent of such activities.
Accordingly, we also have assumed without investigation that such activities
are not of such a nature as to cause the transactions contemplated by the
Participation Agreement to be governed by laws or regulations of the State of
New York or the United States of America applicable only because of such
activities (such as laws relating specifically to the banking, securities,
insurance or utility industries) and not applicable to business corporations
generally.
Based upon the foregoing but subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
1. The Participation Agreement, the Indemnity Agreement, Ancillary
Agreement I and Ancillary Agreement II constitute legal, valid and binding
obligations of the Owner Participant, enforceable against the Owner
Participant in accordance with their respective terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).
2. Neither the execution and delivery of the Participation Agreement, the
Trust Agreement, the Indemnity Agreement, Ancillary Agreement I or Ancillary
Agreement II by the Owner Participant nor the consummation by the Owner
Participant of any of the transactions therein contemplated, or the
fulfillment of, or compliance with, the terms and provisions of any
thereof, (A) requires for its validity that the Owner Participant obtain
the consent or approval of, give notice to, register with, or take any
other action with respect to, any governmental authority or agency of the
State of New York or the Federal government of the United States, or (B)
contravenes any law, governmental rule or regulation of the State of New
York or the Federal government of the United States or any governmental
authority or agency thereof.
In rendering the foregoing opinions, we have relied, with your
consent, on the opinion of even date herewith of Bruce B. Howat, Esq., counsel
for the Owner Participant, as to the matters set forth therein and our
opinions are subject to the same limitations and exceptions set forth
therein.
The foregoing opinions are subject, however, to the qualification
that we express no opinion as to matters relating to the title to or
sufficiency of description of any property or collateral described in the
Documents or the perfection or relative priority of any lien or security
interest created with respect to such property or collateral thereunder. In
addition, we express no opinion as to matters governed by (i) any tax laws,
(ii) the Transportation Code, or by any other laws, statutes, rules or
regulations of the United States particularly relating to the acquisition,
ownership, registration, leasing, use or sale of the Aircraft, the Airframe or
the Engines other than such laws relating to personal property generally,
(iii) any securities laws or (iv) laws pertaining to the Owner Participant
solely because of the business activities of the Owner Participant and which
are not applicable to business corporations generally. Further, we express no
opinion as to the severability of any provision of any documents.
We are licensed to practice law in the State of New York and we
express no opinions herein as to the laws of any state or jurisdiction other
than the laws of the State of New York and the laws of the United States of
America.
This opinion is furnished by us at your request and at the Owner
Participant's request for your sole benefit, and we agree that you may rely on
the opinions expressed herein. No other person or entity shall be entitled to
rely on the opinion expressed herein without our express prior written
consent. This opinion is limited to the matters stated herein, and no opinion
is implied or may be inferred beyond the matters expressly stated herein.
This opinion is of the date hereof and we undertake no, and disclaim any,
obligation to advise you of any changes in any matters set forth herein.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Winston & Strawn
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(b)
[Letterhead of Ameritech Corporation]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
I have acted as counsel to Ameritech Credit Corporation, a Delaware
corporation (the "Owner Participant"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996
(the "Participation Agreement"), among Federal Express Corporation, as Lessee
(the "Lessee"), the Owner Participant, Morgan Guaranty Trust Company of New
York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as Original Loan Participants (the "Original Loan Participants"), First
Security Bank, National Association, not in its individual capacity, except as
otherwise expressly set forth therein, but solely as Owner Trustee under the
Trust Agreement (the "Owner Trustee"), State Street Bank and Trust Company,
not in its individual capacity, except as otherwise expressly set forth
therein, but solely as Indenture Trustee under the Indenture (the "Indenture
Trustee") and State Street Bank and Trust Company, not in its individual
capacity, except as otherwise expressly set forth therein, but solely as Pass
Through Trustee (the "Pass Through Trustee"). For the purposes of this
opinion, all terms defined in the Participation Agreement, but not defined
herein shall have the same meanings when used herein.
In connection with the opinion, I have examined the Participation
Agreement, the Trust Agreement, the Amendment No. 1 to the Tax Indemnity
Agreement, Ancillary Agreement I and Ancillary Agreement II and I have
examined originals, or copies certified or otherwise identified to my
satisfaction, of such records, documents, certificates and other instruments
as in my judgment are necessary or appropriate for purposes of this opinion.
In such examination I have assumed the genuineness of all signatures (other
than on behalf of the Owner Participant) and the authenticity of all documents
submitted to me as originals and the conformity with the originals of all
documents submitted to me as copies. As to any facts material to my opinions
expressed below, I have relied upon the representations and warranties
contained in or made pursuant to the Participation Agreement, the Trust
Agreement, the Amendment No. 1 to the Tax Indemnity Agreement, Ancillary
Agreement I and Ancillary Agreement II and upon originals, or copies
authenticated to my satisfaction, of such certificates of the Owner
Participant, or public officials and such corporate records, documents and
other instruments as in my judgment are necessary or appropriate to enable me
to render the opinions expressed below. I have assumed, except with regard to
the Owner Participant, that the Participation Agreement, the Trust Agreement,
the Amendment No. 1 to the Tax Indemnity Agreement, Ancillary Agreement I and
Ancillary Agreement II have been duly authorized, executed and delivered by the
parties thereto and that they constitute the legal, valid and binding
obligations of each party thereto enforceable against each such party in
accordance with their respective terms.
Based upon the foregoing, I advise you that, in my opinion:
1. The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has or had, on the date of execution thereof, the full corporate power and
authority to execute, deliver and perform its obligations under the
Participation Agreement, the Trust Agreement, the Amendment No. 1 to the
Tax Indemnity Agreement, the Ancillary Agreement I and the Ancillary
Agreement II.
2. Each of the Participation Agreement, the Trust Agreement, the
Amendment No. 1 to the Tax Indemnity Agreement, the Ancillary Agreement I
and Ancillary Agreement II has been duly authorized, executed and delivered
by the Owner Participant.
3. Neither the execution and delivery by the Owner Participant of the
Participation Agreement, the Trust Agreement, the Amendment No. 1 to the Tax
Indemnity Agreement, the Ancillary Agreement I or the Ancillary Agreement
II nor the consummation by the Owner Participant of any of the transactions
contemplated thereby (a) requires the consent or approval of, the giving of
notice to, the registration with, the recording or filing of any document
with, or the taking of any other action with respect to any governmental
authority or agency of the State of Illinois or of the federal government
of the United States; or (b) violates any law, governmental rule or
regulation of the State of Illinois or of the federal government of the
United States.
4. Neither the execution and delivery by the Owner Participant of the
Participation Agreement, the Trust Agreement, the Amendment No. 1 to the Tax
Indemnity Agreement, the Ancillary Agreement I or the Ancillary Agreement
II nor the consummation by the Owner Participant of any of the transactions
contemplated thereby, conflicts with, results in a breach of or violates
any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-laws of the Owner Participant, (ii) any order, writ,
injunction or decree known to me after due internal inquiry, of any court
or governmental authority against the Owner Participant or by which the
Owner Participant or any of its properties is bound or (iii) any indenture,
mortgage or contract or other material agreement or instrument known to me
after due internal inquiry, to which the Owner Participant is a party or
by which it or any of its properties is bound or constitutes a default
thereunder or results in the imposition of any lien upon any of its
properties.
5. There are no actions, suits or proceedings pending or, to the
best of my knowledge, threatened against or affecting the Owner Participant
before any court, administrative agency or other governmental body or
arbitration board or tribunal which, if adversely determined, would
materially and adversely affect the Owner Participant's ability to perform
its obligations under the Participation Agreement, the Trust Agreement, the
Amendment No. 1 to the Tax Indemnity Agreement, the Ancillary Agreement I
or the Ancillary Agreement II.
I am authorized to practice law in the State of Illinois and do not
hold myself out as an expert on the law of any state other than the State of
Illinois and the Delaware General Corporation Law. Consequently the
foregoing opinions are limited to the federal laws of the United States of
America, the laws of the State of Illinois and the Delaware General
Corporation Law, and I express no opinion as to the laws of any other state or
jurisdiction. Further, I have made no investigation and express no opinion,
as to the Federal Aviation Act or other laws, statutes, rules or regulations
applicable due to the particular nature of the aircraft and other equipment
subject to the Lease, and I express no opinion as to securities laws.
This opinion is rendered to you pursuant to Section 4.01(l)(ii) of the
Participation Agreement and is solely for your benefit in the transactions
contemplated by the Participation Agreement. This opinion may not be relied
upon by you for any other purpose, or relied upon by any other person for any
purpose without my prior written consent.
I rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Bruce B. Howat
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Indenture") between First Security Bank, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee") and the
Indenture Trustee, in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N586FE), dated as of April 1, 1996, as amended and restated as of September 1,
1996 and as further amended and restated as of October 15, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee (the
"Lessee"); Ameritech Credit Corporation, as Owner Participant (the "Owner
Participant"); Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Loan Participants (the
"Original Loan Participants"); the Owner Trustee; and the Indenture Trustee.
This opinion is being delivered pursuant to Section 4.01(l)(iii) of the
Participation Agreement. Except as otherwise defined herein, all capitalized
terms used herein shall have the respective meanings set forth in Schedule II
to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Indenture Trustee, as the case may be, is a party (collectively, the
"Indenture Trustee Documents"), the Certificate of the Massachusetts
Commissioner of Banks relating to State Street and originals, or copies
certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates, or other instruments as we have
deemed necessary or advisable for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Indenture Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such agreement is
the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Refunding Date and to perform its other
obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee Documents by
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, and compliance by State Street or the Indenture Trustee, as the case
may be, individually or as Indenture Trustee, as the case may be, with all of
the provisions thereof do not and will not contravene any Massachusetts or
Federal law, rule or regulation governing the banking or trust powers of State
Street or the Indenture Trustee, or any order or judgment known to us, of any
Massachusetts or Federal court or governmental authority applicable to or
binding on State Street, individually or as Indenture Trustee, or contravene
the provisions of, or constitute a default under, or result in the creation
of a Lien on any property of State Street or the Indenture Trustee under, its
charter documents or By-Laws or any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement, in
each case known to us, or any other agreement or instrument, in each case
known to us, to which State Street, individually or as Indenture Trustee, is a
party or by which it or any of its property may be bound or affected, other
than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document
constitutes a legal, valid and binding obligation of State Street, in its
individual capacity or as Indenture Trustee, as the case may be, enforceable
against State Street, in its individual capacity or as Indenture Trustee, as
the case may be, in accordance with its terms.
5. The Certificates issued and dated the Refunding Date have been
duly authenticated and delivered by the Indenture Trustee pursuant to the
terms of the Indenture.
6. There are no fees, taxes or other governmental charges payable
by the Owner Trustee, the Indenture Trustee (except taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof in connection with the execution, delivery or
performance of any of the Operative Agreements or in connection with the
issuance and acquisition of the Certificates by the Certificate Holders or the
beneficial interest of the Certificate Holders in the Trust Indenture Estate
solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
Neither the Indenture Trustee nor the trust created under the Indenture will
be subject to any fee, tax or other governmental charge (except for taxes
imposed on fees payable to the Indenture Trustee in its individual capacity)
under the laws of the Commonwealth of Massachusetts or any political
subdivision thereof in existence on the date hereof, on, based on or measured
by, directly or indirectly, the gross receipts, net income or value of the
Trust Indenture Estate solely because the Indenture Trustee in its individual
capacity (a) is incorporated under the laws of the Commonwealth of
Massachusetts, (b) has its principal place of business in the Commonwealth of
Massachusetts, (c) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee Documents in the
Commonwealth of Massachusetts, and (d) engages in any activities unrelated to
the transactions contemplated by the Indenture Trustee Documents in the
Commonwealth of Massachusetts. There is no fee, tax or other governmental
charge (except for taxes imposed on fees payable to the Indenture Trustee in
its individual capacity) under the laws of the Commonwealth of Massachusetts
or any political subdivision thereof in existence on the date hereof, on,
based on or measured by any payments under the Certificates by reason of the
creation of the trust under the Indenture solely because the Indenture Trustee
in its individual capacity (a) is incorporated under the laws of the
Commonwealth of Massachusetts, (b) has its principal place of business in the
Commonwealth of Massachusetts, (c) performs (in its individual capacity or as
Indenture Trustee) any or all of its duties under the Indenture Trustee
Documents in the Commonwealth of Massachusetts, and (d) engages in any
activities unrelated to the transactions contemplated by the Indenture Trustee
Documents in the Commonwealth of Massachusetts. We express no opinion as to
whether or not any fees, taxes or other charges are now or hereafter may be
payable by the Original Loan Participants or the Owner Participant to the
Commonwealth of Massachusetts or any political subdivision thereof in
connection with (a) the execution, delivery, or performance by any of the
Indenture, the Participation Agreement or any of the other Operative
Agreements and (b) the making by the Owner Participant of its investment in
the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Indenture Trustee, to perform its obligations under the Indenture Trustee
Documents.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(l)(iv) of
the Participation Agreement (Federal Express Corporation Trust No. N586FE),
dated as of April 1, 1996, as amended and restated as of September 1, 1996 and
as further amended and restated as of October 15, 1996 (the "Participation
Agreement") among Federal Express Corporation, as lessee (the "Lessee"),
Ameritech Credit Corporation, as owner participant (the "Owner Participant"),
Morgan Guaranty Trust Company of New York, Bank of America National Trust &
Savings Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency
and NationsBank, N.A. (South), as original loan participants (the "Original
Loan Participants"), First Security Bank, National Association, as owner
trustee (the "Owner Trustee"), State Street Bank and Trust Company, as
indenture trustee (the "Indenture Trustee"), and State Street Bank and Trust
Company, as pass through trustee (the "Pass Through Trustee"), which
Participation Agreement amends and restates that certain Participation
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996 (the "Original Participation Agreement") among the Lessee,
the Owner Participant, the Original Loan Participants, the Owner Trustee and
the Indenture Trustee, with respect to that portion of Subtitle VII of Title
49 of the United States Code relative to the recordation of instruments and
the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined, have
the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No. N586FE)
dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of
October 15, 1996 (the "Trust Agreement") between the Owner
Participant and the Owner Trustee, which Trust Agreement amends
and restates the Original Trust Agreement, which Trust
Agreement was filed at ____ _.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N586FE) dated as of September 1, 1996, as
amended and restated as of October 15, 1996 (the "Indenture")
between the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture, which
Indenture was filed at ____ _.m., C._.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No. N586FE)
dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Lease") between the Owner Trustee, as
lessor, and the Lessee, as lessee, which Lease amends and
restates the Original Lease, with the Indenture attached
thereto, which Lease with the Indenture attached was filed at
____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture as containing confidential
financial information.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated September 23, 1996 (the
"FAA Bill of Sale") from the Lessee, as seller, conveying title to
the Airframe to the Owner Trustee has been duly recorded by the FAA
on September 23, 1996 and assigned Conveyance No. P08256;
2. the Indenture and the Lease with the Indenture attached are in due
form for recordation by and have been duly filed for recordation with
the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly filed
with the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on September
23, 1996 pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded by the
FAA pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44107;
6. the Original Lease with the Lease Supplement, the Original Indenture
and the Indenture and Security Agreement Supplement attached was duly
filed with and duly recorded by the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the security
interest created by the Original Indenture, as amended and restated
by the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, and (ii) the rights of the parties under the
Original Lease, as amended and restated by the Lease, as supplemented
by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Indenture, as
supplemented by the Indenture and Security Agreement Supplement,
constitutes a duly perfected first priority security interest in the
Aircraft and a duly perfected first assignment of all the right,
title and interest of the Owner Trustee in, to and under the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been duly
effected) are necessary in order to perfect in any applicable
jurisdiction in the United States (A) the Owner Trustee's title to
the Airframe or (B) such security interest and assignment (insofar as
such assignment affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the validity,
priority or enforceability of such security interest and assignment
under local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is required
for the valid authorization, delivery and performance of the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement, the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, or the Original Trust Agreement, as amended and
restated by the Trust Agreement, except for such filings as are
referred to in our opinion dated September 23, 1996 (which have been
duly effected) and the filings referred to in clauses (a), (b) and
(c) above; and,
11. neither the authorization, issuance and delivery of the Certificates,
the execution and delivery by the parties thereto of the Original
Trust Agreement, the Trust Agreement, the Original Indenture, the
Indenture, the Indenture and Security Agreement Supplement, the
Original Participation Agreement, the Participation Agreement, the
FAA Bill of Sale, the Original Lease, the Lease and the Lease
Supplement or the performance by the parties thereto of: (i) the
Original Trust Agreement, as amended and restated by the Trust
Agreement; (ii) the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security Agreement
Supplement; (iii) the Original Participation Agreement, as amended and
restated by the Participation Agreement; and (iv) the Original Lease,
as amended and restated by the Lease, as supplemented by the Lease
Supplement, in accordance with the provisions thereof, nor the
consummation by the parties thereto of any of the transactions
contemplated thereby, requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of any
other action in respect of, the FAA except for the filings, the
recordations and the filings for recordations specified elsewhere in
this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have actual notice. In rendering this opinion we
are assuming that there are no documents with respect to the Aircraft which
have been filed for recording under the recording system of the FAA but have
not yet been listed in the available records of such system as having been so
filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated October ___, 1996 and
have continued to rely upon the opinion of the Assistant Chief Counsel of the
Aeronautical Center dated September 16, 1996, copies of which are attached
hereto.
Very truly yours,
Robert M. Peregrin
For the Firm
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48487 and U.S. Registration No. N586FE (the "Airframe") and
three (3) General Electric CF6-80C2-D1F aircraft engines bearing
manufacturer's serial numbers 702-656, 702-468 and 702-786 (the "Engines")
(the Airframe and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N586FE) dated
as of April 1, 1996 as amended and restated as of September 1, 1996 between
Ameritech Credit Corporation, as owner participant, and First Security Bank,
National Association, as owner trustee, which was filed with the FAA on
September 23, 1996.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N586FE) dated as of September 1, 1996 between First
Security Bank, National Association, as owner trustee, and State Street Bank
and Trust Company, as indenture trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on September 24, 1996 and assigned
Conveyance No. HH012951.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N586FE) dated September 23, 1996 between First Security
Bank, National Association, as owner trustee, and State Street Bank and Trust
Company, as indenture trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N586FE) dated
as of September 1, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, which
together with the Lease Supplement (as hereinafter defined), the Original
Indenture and the Indenture and Security Agreement Supplement attached thereto
was recorded as one instrument by the FAA on September 24, 1996 and assigned
Conveyance No. HH012952.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No. N586FE)
dated September 23, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, with
respect to the Aircraft, which was attached to and recorded by the FAA as one
instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) Basic Rent (Schedule II),
(ii) the Stipulated Loss Values (Schedule III), (iii) the Termination Values
(Schedule IV), (iv) the Purchase Option Schedule (Schedule V) omitted from the
FAA filing counterpart thereof as containing confidential financial
information; and (v) the purchase price under Section 4.02(a)(F) of the Lease
set forth in Ancillary Agreement II, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Trust Agreement (Federal Express Corporation Trust No. N586FE), dated
as of April 1, 1996, as amended and restated as of September 1, 1996 and as
further amended and restated as of October 15, 1996 (the "Trust Agreement"),
between First Security and Ameritech Credit Corporation, a Delaware
corporation (the "Owner Participant"). Pursuant to the Participation
Agreement (Federal Express Corporation Trust No. N586FE), dated as of April 1,
1996, as amended and restated as of September 1, 1996 and as further amended
and restated as of October 15, 1996 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee, the Owner Participant, Morgan Guaranty
Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants, First Security, not
in its individual capacity except as otherwise expressly set forth therein but
solely as Owner Trustee (the "Owner Trustee") under the Trust Agreement, State
Street Bank and Trust Company, as Indenture Trustee and State Street Bank and
Trust Company, as Pass Through Trustee, one McDonnell Douglas MD-11F aircraft
bearing U.S. Registration No. N586FE (the "Aircraft") is being refinanced.
This opinion is furnished pursuant to Section 4.01(l)(vii) of the
Participation Agreement. Capitalized terms used herein and not otherwise
defined are used as defined in the Participation Agreement, except that
references herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1 dated
September 23, 1996;
(e) The Lease;
(f) The Ancillary Agreement I;
(g) The Ancillary Agreement II:
(h) The Lease Supplement dated September 23, 1996 (each of the
documents identified in paragraphs (a) through (h) being
collectively referred to as the "Owner Trustee Documents"); and
(h) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other documents,
such corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Owner Trustee Documents.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly organized
and validly existing under the laws of the United States of America holding
a valid certificate to do business as a national banking association, with
banking and trust powers, is a Citizen of the United States within the
meaning of Section 40102(a)(15) of the Transportation Code, and each of
First Security and the Owner Trustee, as the case may be, has or had, on
the date of execution thereof, full corporate power, authority and legal
right to execute, deliver and perform each of the Owner Trustee Documents
to which it is or is to be a party and to issue, execute, deliver and
perform the Certificates.
2. Each of First Security and the Owner Trustee, as the case may be,
has duly authorized, executed and delivered each Owner Trustee Document to
which it is a party; each such document constitutes a legal, valid and
binding obligation of the Owner Trustee (and, to the extent set forth in
the respective Owner Trustee Document, of First Security) enforceable
against the Owner Trustee (and, to the extent set forth in the respective
Owner Trustee Document, against First Security) in accordance with its
terms; and assuming the Trust Agreement was properly authorized, executed
and delivered by the Owner Participant and that the terms of the Trust
Agreement are not in violation of any laws, documents, judgments,
regulations or other provisions applicable to the Owner Participant, the
Trust Agreement constitutes, under the laws of the State of Utah, a legal,
valid and binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with its terms. The Certificates have
been duly issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and constitute the legal,
valid and binding obligations of the Owner Trustee enforceable against the
Owner Trustee in accordance with their terms and the terms of the
Indenture; and the Certificates are entitled to the benefits and security
afforded by the Indenture in accordance with their terms and the terms of
the Indenture.
3. On the Delivery Date, the Owner Trustee received from the Lessee
such title to the Aircraft as the Lessee conveyed to the Owner Trustee,
subject to the rights of the Owner Trustee and the Lessee under the
Original Lease and the security interest created pursuant to the Original
Indenture and the Indenture Supplement; and to our knowledge, there exist
no Liens affecting the title of the Owner Trustee to the Lessor's Estate
resulting from claims against First Security not related to the ownership
of the Lessor's Estate or the administration of the Lessor's Estate or any
other transaction pursuant to the Indenture or any document included in the
Trust Indenture Estate.
4. Under the laws of the State of Utah, all of the properties which
are part of the Trust Indenture Estate have been pledged and mortgaged with
the Indenture Trustee as part of the Trust Indenture Estate and the
beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the Indenture,
to the Lien of the Indenture in favor of the holders of the Certificates
issued and to be issued under the Indenture.
5. To the extent that the Uniform Commercial Code of the State of
Utah (the "UCC") is applicable, except for the Indenture Trustee's taking
possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including the
filing or recording of any document, is necessary (i) to create under the
UCC the security interest in the Trust Indenture Estate (including the
grant and assignment unto the Indenture Trustee of the security interest in
all estate, right, title and interest of the Owner Trustee in, to and under
the Lease, the Lease Supplement and the Participation Agreement), which the
Indenture by its terms purports to create in favor of the Indenture
Trustee, and (ii) to perfect in the State of Utah such security interest,
except for the filing of a UCC financing statement complying with the
formal requisites of Section 9-402 of the UCC in the office of the Division
of Corporations and Commercial Code of the State of Utah with respect to
the security interest, which filing has been duly effected, and the filing
of continuation statements with respect thereto required to be filed at
periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Utah law, the trust created by the Trust Agreement has been duly created
and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the interest in
the properties referred to in Section 1.02 of the Trust Agreement which the
Trust Agreement by its terms purports to create, which interest is subject
and subordinate to the security interests created by the Indenture to the
extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the Owner
Trustee or First Security, as the case may be, of the Owner Trustee
Documents, nor the issuance, execution and delivery by the Owner Trustee of
the Certificates nor the fulfillment or compliance by the Owner Trustee or
First Security with the respective terms and provisions thereof nor the
consummation of any of the transactions by the Owner Trustee or First
Security, as the case may be, contemplated thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Utah or the United States
of America governing the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is not
physically located in Utah at the commencement or termination of the Term
or during such Term, (ii) in connection with any sale of the Aircraft, such
Aircraft will not be physically delivered in Utah to a buyer nor be shipped
from a point within Utah to a buyer, and (iii) the trust created by the
Trust Agreement is treated as a grantor trust for federal income tax
purposes within the contemplation of Sections 671 through 678 of the
Internal Revenue Code of 1986, there are no fees, taxes, or other charges
(except taxes imposed on fees payable to the Owner Trustee) payable to the
State of Utah or any political subdivision thereof in connection with the
execution, delivery or performance by the Owner Trustee, the Indenture
Trustee, the Lessee or the Owner Participant, as the case may be, of the
Owner Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of the
beneficial interest in the Lessor's Estate or in connection with the
issuance and acquisition of the Certificates, and neither the Owner
Trustee, the Lessor's Estate nor the trust created by the Trust Agreement
will be subject to any fee, tax or other governmental charge (except taxes
on fees payable to the Owner Trustee) under the laws of the State of Utah
or any political subdivision thereof on, based on or measured by, directly
or indirectly, the gross receipts, net income or value of the Lessor's
Estate solely by reason of the creation or continued existence of the trust
under the terms of the Trust Agreement pursuant to the laws of the State of
Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. The execution, delivery and performance by the Owner Trustee or
First Security, as the case may be, of each of the Owner Trustee Documents
and the issuance, execution, delivery and performance of the Certificates
by the Owner Trustee are not or were not, on the date of execution thereof,
in violation of the charter or by-laws of First Security or of any law,
governmental rule, or regulation of the State of Utah or the United States
of America governing the banking or trust powers of First Security or, to
our knowledge, of any indenture, mortgage, bank credit agreement, note or
bond purchase agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or, to our
knowledge, of any judgment or order of the State of Utah or the United
States of America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the laws
of the State of Utah or any political subdivision thereof in existence on
the date hereof on, based on or measured by any payments under the
Certificates or the beneficial interests in the Lessor's Estate, by reason
of the creation of the trust under the Trust Agreement, pursuant to the
laws of the State of Utah or the Owner Trustee's performance of its duties
under the Trust Agreement, within the State of Utah, which would not have
been imposed if First Security did not have its principal place of business
and did not perform its obligations under the Owner Trustee Documents in
the State of Utah.
11. Neither a Utah court nor a federal court applying federal law or
Utah law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the
Trust Agreement, except in accordance with its terms or with the consent of
the Indenture Trustee, as long as the Lien of the Indenture on the Trust
Estate has not been released or payment of the principal of, and Make-Whole
Premium, if any, and interest on, the Certificates have not been made in
full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively, the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the
rights of such Owner Participant under the Trust Agreement or in the
Trust Estate, and do not have, and may not through the enforcement of
such Creditor's rights acquire, any greater rights than such Owner
Participant with respect to the Trust Agreement or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its properties
in any court or before any administrative agency or arbitrator, which, if
adversely determined, would materially adversely affect the ability of
First Security or the Owner Trustee, as the case may be, to perform its
obligations under any of the Owner Trustee Documents, and there are no
pending or, to our knowledge, threatened actions or proceedings before any
court, administrative agency or tribunal involving First Security or the
Owner Trustee, as the case may be, in connection with the transactions
contemplated by any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the
banking and trust powers of First Security and Title II of the United States
Code entitled "Bankruptcy". In addition, we express no opinion with respect
to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as
amended (except with respect to the opinion set forth in paragraph 1 above
concerning the citizenship of First Security) and (iii) state securities or
blue sky laws. Insofar as the foregoing opinions relate to the validity
and enforceability in the State of Utah of the Certificates and the other
Owner Trustee Documents expressed to be governed by the laws of the State
of New York, we have assumed that the laws of New York are identical to the
laws of Utah in all material respects, and that the Certificates and such
other Owner Trustee Documents constitute legal, valid, binding and
enforceable documents or instruments under such laws (as to which we
express no opinion). No opinion is expressed as to the priority of any
security interest or as to title to any part of the Trust Estate.
B. The foregoing opinions regarding enforceability of any document or
instrument, except for the opinions set forth in paragraphs 11 and 12 above,
are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery by
each of the parties thereto, other than First Security and the Owner Trustee,
of the Owner Trustee Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Vice President, the facts set forth
in which we have not independently verified.
E. We have assumed the due authentication of the Certificates by the
Indenture Trustee.
F. We have assumed that all signatures (other than those of the Owner
Trustee or First Security) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express any
opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment conveyed to the Owner
Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(6)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N586FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of June 1, 1996 (the "Pass Through Trust
Agreement"), as supplemented by the Series Supplements dated the date hereof
between Federal Express Corporation and the Pass Through Trustee, designated
as Series Supplement 1996-B1 and 1996-B2, respectively (the "Series
Supplements") and in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N586FE), dated as of April 1, 1996, as amended and restated as of September 1,
1996 and as further amended and restated as of October 15, 1996 (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee"); Ameritech Credit Corporation, as Owner Participant (the "Owner
Participant"); Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants; First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement; State Street, not in its individual capacity but solely
as Indenture Trustee under the Indenture; and State Street, not in its
individual capacity, except as otherwise stated therein, but solely as Pass
Through Trustee. This opinion is being delivered pursuant to Section
4.01(l)(ix) of the Participation Agreement. Except as otherwise defined
herein, all capitalized terms used herein shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Pass Through Trustee, as the case may be, is a party, the Pass Through Trust
Agreement and the Series Supplements (collectively, the "Pass Through Trustee
Documents"), the Certificate of the Massachusetts Commissioner of Banks
relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Pass Through Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Pass Through Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such agreement
is the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the Pass
Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
In rendering the opinion set forth below in paragraph 6 as to certain
Massachusetts tax matters, we have assumed that, for Federal income tax
purposes, the trusts created by the Series Supplements are not classified as
associations taxable as corporations and that the trusts created by the Series
Supplements are grantor trusts under subpart E, Part I of Subchapter J of
Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Pass Through Trustee
Documents and, in its capacity as Pass Through Trustee, to authenticate the
Pass Through Certificates delivered on the Refunding Date.
2. The execution and delivery of the Pass Through Trustee Documents
(other than the Pass Through Trust Agreement) by State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not and will not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the Pass
Through Trustee, or any order or judgment known to us, of any Massachusetts or
Federal court or governmental authority applicable to or binding on State
Street, individually or as Pass Through Trustee, or contravene the provisions
of, or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Pass Through Trustee under, its charter
documents or By-Laws or any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, in each case
known to us, or any other agreement or instrument, in each case known to us,
to which State Street, individually or as Pass Through Trustee, is a party or
by which it or any of its property may be bound or affected, other than the
Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than the Pass
Through Trust Agreement) has been duly authorized, executed and delivered by
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, and each such document constitutes a legal, valid and binding
obligation of State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, enforceable against State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, in
accordance with its terms.
5. The Pass Through Certificates have been duly authorized and
validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates are enforceable against the
Pass Through Trustee and the holders thereof are entitled to the benefits of
the Pass Through Trust Agreement and the related Series Supplements.
6. There are no fees, taxes or other governmental charges ("Taxes")
payable under the laws of the Commonwealth of Massachusetts with respect to the
execution and delivery by State Street, in its individual capacity or as Pass
Through Trustee, as the case may be, of any of the Pass Through Trustee
Documents (except for Taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts. Neither State Street, in its individual capacity or as the
Pass Through Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trusts created by the Series Supplements will, as a result of
the transactions contemplated thereby, be subject to any Taxes under the laws
of the Commonwealth of Massachusetts or any political subdivision thereof
(except for Taxes on any fees payable to State Street in its individual
capacity) which would not have been imposed if State Street did not have its
principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts, and there are no Taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for Taxes on any
fees payable to State Street in its individual capacity) upon or with respect
to the Aircraft or any Engine or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession, presence, use,
operation, condition, storage, maintenance, modification, alteration, repair,
sale, return, transfer or other disposition of the Aircraft which would not
have been imposed if State Street did not have its principal place of business
in Massachusetts or did not perform its administrative duties under the Pass
Through Trustee Documents in Massachusetts. We express no opinion as to
whether or not any fees, tax or other charges are now or hereafter may be
payable by the Owner Participant to the Commonwealth of Massachusetts or any
political subdivision thereof in connection with (a) the execution, delivery,
or performance of the Series Supplements, the Participation Agreement or any
of the other Operative Agreements and (b) the making by the Owner Participant
of its investment in the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Pass Through Trustee, to perform its obligations under the Pass Through
Trustee Documents.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.e]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.b.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.d]
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
PMCC LEASING CORPORATION,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
THE CHASE MANHATTAN BANK
COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH),
Original Loan Participants
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 761, REGISTRATION NO. N662FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 6
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 16
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 16
Section 6.02. Offering by Lessee....................................... 22
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 30
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate.................................................. 31
Section 7.02. Citizenship.............................................. 31
Section 7.03. Representations, Warranties and Covenants of Owner
Participant............................................. 32
Section 7.04. Representations, Covenants and Warranties of FSB and the
Owner Trustee........................................... 37
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee................................................. 40
Section 7.06. Indenture Trustee's Notice of Default.................... 42
Section 7.07. Releases from Indenture.................................. 42
Section 7.08. Covenant of Quiet Enjoyment.............................. 42
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties.......................... 42
Section 7.10. Survival of Representations, Warranties and Covenants.... 43
Section 7.11. Lessee's Assumption of the Certificates.................. 43
Section 7.12. Indebtedness of Owner Trustee............................ 45
Section 7.13. Compliance with Trust Agreement, Etc..................... 46
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 46
Section 8.02. After-Tax Basis.......................................... 52
Section 8.03. Time of Payment.......................................... 53
Section 8.04. Contests................................................. 53
Section 8.05. Refunds.................................................. 56
Section 8.06. Lessee's Reports......................................... 56
Section 8.07. Survival of Obligations.................................. 57
Section 8.08. Payment of Taxes......................................... 57
Section 8.09. Reimbursements by Indemnitees Generally.................. 57
Section 8.10. Obligations of Lessee Unsecured.......................... 57
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 58
Section 9.02. After-Tax Basis.......................................... 61
Section 9.03. Subrogation.............................................. 62
Section 9.04. Notice and Payment....................................... 62
Section 9.05. Refunds.................................................. 62
Section 9.06. Defense of Claims........................................ 63
Section 9.07. Survival of Obligations.................................. 64
Section 9.08. Effect of Other Indemnities.............................. 64
Section 9.09. Interest................................................. 64
Section 9.10. Obligations of Lessee Unsecured.......................... 65
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 65
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 67
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 68
Section 12.02. Interest of Holders of Certificates..................... 69
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 69
Section 13.02. Further Assurances...................................... 69
Section 13.03. No Retroactive Application.............................. 69
Section 13.04. Pass Through Trustee's Acknowledgment................... 70
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 70
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 71
Section 15.02. Reoptimization.......................................... 74
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 76
Section 17.02. [Intentionally Left Blank.]............................. 76
Section 17.03. Counterparts............................................ 76
Section 17.04. No Oral Modifications................................... 76
Section 17.05. Captions................................................ 77
Section 17.06. Successors and Assigns.................................. 77
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee............................... 77
Section 17.08. Severability............................................ 78
Section 17.09. Public Release of Information........................... 78
Section 17.10. Certain Limitations on Reorganization................... 78
Section 17.11. GOVERNING LAW........................................... 78
Section 17.12. Section 1110 Compliance................................. 79
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 79
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E-1 Form of Assignment and Assumption Agreement
EXHIBIT E-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N662FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996 (this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware
corporation (herein, together with its successors and permitted assigns, the
"Lessee"), PMCC LEASING CORPORATION, a Delaware corporation (herein, together
with its successors and permitted assigns, the "Owner Participant"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, THE CHASE MANHATTAN BANK, COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH), (individually, together with its successors and
permitted assigns, an "Original Loan Participant" and collectively the
"Original Loan Participants"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity as trustee, together with its
successors and permitted assigns, the "Owner Trustee"), STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, not in its individual capacity,
except as otherwise expressly stated herein, but solely as indenture trustee
under the Indenture referred to below (in such capacity as trustee, together
with its successors and permitted assigns, the "Indenture Trustee") and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with FSB in its individual capacity,
pursuant to which FSB agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend and restate the Original Ancillary
Agreement I, to amend the Original Tax Indemnity Agreement and to amend and
restate the Original Trust Agreement, each such amendment and restatement to
be executed and delivered simultaneously with the purchase of the Certificates
by the Pass Through Trustee for the Pass Through Trusts and the Refinancing in
full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent in the amount of all
accrued and unpaid interest on the Original Loan Certificates to but
excluding the Refunding Date, which transfer shall constitute the payment
of a like amount of such accrued and unpaid interest;
(ii)the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii)for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv)the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi)the Owner Trustee shall cause the Certificates to be delivered to
the applicable Pass Through Trustee in accordance with Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass Through
Trustee, upon the request of the Owner Trustee, the Certificates as provided
in Section 2.02 hereof. The Owner Participant hereby requests and directs the
Owner Trustee to execute and deliver this Agreement and, subject to the terms
hereof, to take the actions specified herein. The Original Loan Participants
by their execution and delivery hereof, request and direct the Indenture
Trustee to execute and deliver this Agreement and concurrently with the events
specified in clauses (iii) through (v) of this Section 2.01(b) and subject to
the terms and conditions hereof to take the actions contemplated herein. The
parties hereto, including, without limitation, the Original Loan Participants,
confirm that, as provided in Section 2.06 of the Original Indenture, upon
payment in full of the principal amount, Breakage Costs, if any, and interest
on the Original Loan Certificates and all other sums then payable to the
Original Loan Participants under the Original Agreements to the extent
specified in subsection (c) below, the Original Loan Participants shall have
no further interest in, or other right or obligation with respect to, the
Trust Indenture Estate, the Original Agreements or the Operative Agreements
(it being understood that the foregoing shall not limit or detract from any
claim that any Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participants
shall, until the payment in full of such amounts to the Agent on behalf of the
Original Loan Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and shall, upon such payment and thereafter, be governed by this Agreement.
The Lessee hereby consents to the foregoing.
(c) Not less than four (4) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before November 30, 1996, then the rights and
obligations of the parties to the Original Participation Agreement, including,
without limitation, the Original Loan Participants, shall be governed by the
Original Participation Agreement and the other Operative Agreements
contemplated thereby or in effect immediately prior to the effectiveness of
this Agreement and this Agreement shall be of no further force and effect,
except that the Lessee shall be obligated hereby to pay all fees and expenses
of the Original Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee for
each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of the
Pass Through Trustee on behalf of such Pass Through Trust, in the principal
amounts, Maturity, bearing the interest rate and the other economic terms
specified in the Series Supplements and otherwise as provided in Section
2.04 of the Indenture. The Pass Through Certificates shall be registered
under the Securities Act, any applicable state securities laws shall have
been complied with, and the Pass Through Agreement shall have been qualified
under the Trust Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee or their special counsel, would
make it illegal for the Owner Participant, the Lessee, the Owner Trustee,
the Pass Through Trustee or the Indenture Trustee, and no change in
circumstances shall have occurred which would otherwise make it illegal or
otherwise in contravention of guidance issued by regulatory authorities for
the Owner Participant, the Lessee, the Owner Trustee, the Pass Through
Trustee or the Indenture Trustee, to participate in the transaction to be
consummated on the Refunding Date; and no action or proceeding shall have
been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Owner Participant, the Indenture Trustee or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency,
as of the Refunding Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or by
any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the
Owner Participant, as the case may be, of such documents shall have been
delivered to the Owner Participant, the Lessee, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of each of the Lease, the Lease Supplement and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(vi) the Ancillary Agreement I; and
(vii) the Ancillary Agreement II.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participants, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its counsel) shall have
received the following, in each case in form and substance satisfactory to
it:
(i) a copy of the certificate of incorporation and by-laws of
the Lessee, certified by the Secretary or an Assistant Secretary of
the Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Refunding Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Refunding Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which the Owner
Participant is or is to be a party and each other document to be
executed and delivered by the Owner Participant in connection with
the transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws
and other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of each
of the Original Agreements to which it is party, this Agreement, the
Indenture and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Indenture Trustee in connection with the transactions
contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws
and other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant
as the Indenture Trustee, the Pass Through Trustee or the Owner
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1996 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Report on Form 10-Q for
the fiscal quarter ended August 31, 1996) and (ii) in the Lessee's
Current Reports on Form 8-K dated June 7, 1996 and August 16, 1996,
as to which such officer will make no certification concerning the
liability of the Lessee (if any), or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, no material adverse change has occurred in
the financial condition, business or operations of the Lessee from
that shown in the audited financial statements of the Lessee as of
May 31, 1995 or the unaudited consolidated financial statements of
the Lessee as of August 31, 1996 and nothing has occurred which will,
in the judgment of such officer, materially adversely affect the
ability of the Lessee to carry on its business or to perform its
obligations under this Agreement and each other Operative Agreement
to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant. On the Refunding
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Refunding Date,
stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto, are true and correct on and as of the Refunding Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSB and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSB and SSB, respectively, dated the
Refunding Date, stating with respect to FSB and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSB in its
individual capacity and as Owner Trustee, of SSB in its individual
capacity and as Indenture Trustee and of SSB in its individual
capacity and as Pass Through Trustee contained in this Agreement, the
Lease, the Trust Agreement and the Indenture and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSB in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSB and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participants, the Underwriters, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participants, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) George W. Hearn, Vice President - Law of the Lessee, in
the form of Exhibit A(1)(a) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Owner Trustee, the Pass Through Trustee and the Indenture Trustee;
(ii) Simpson Thacher & Bartlett, special counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and the General
Counsel's Office of the Owner Participant, in the form of Exhibit
A(2)(b) hereto, each addressed to the Agent, the Original Loan
Participants, the Underwriters, the Owner Participant, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(vi) Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee; and
(vii) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(6) hereto and addressed to
the Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee.
(m) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(n) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement.
(q) Notice, Etc. The Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Pass Through Trustee shall have
received a refunding notice pursuant to Section 2.01(c) hereof.
(r) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraph (f) of this
Section 4.01; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
then due and payable shall have been duly paid in full.
(s) Governmental Compliance. All appropriate action required to have
been taken by the FAA, or any governmental or political agency, subdivision
or instrumentality of the United States, prior to the Refunding Date in
connection with the transactions contemplated by this Agreement shall have
been taken, and all orders, permits, waivers, authorizations, exemptions
and approvals (collectively "permits") of such entities required to be in
effect on the Refunding Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such permits
shall be in full force and effect on the Refunding Date.
(t) Compliance with Original Participation Agreement. All conditions
precedent set forth in Section 15.01 of the Original Participation
Agreement shall be met to the satisfaction of the Owner Participant.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to
(i) the due recording of such documents and the documents identified in
Section 4.01(i) of the Original Participation Agreement and (ii), subject to
customary qualifications, the lack of any intervening documents with respect
to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l)(ii), (iii), (iv),
(v), (vi) and (vii) of Section 4.01 hereof and the Underwriters and the Owner
Participant shall have made available the amounts required to be paid by them
pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Report on Form 10-Q for the fiscal
quarter ended August 31, 1996) and (ii) in the Lessee's Current Reports on
Form 8-K dated June 7, 1996 and August 16, 1996, as to which no
representation is made concerning the Lessee's liability (if any) or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, if adversely determined,
would materially and adversely affect the consolidated financial condition,
business or operations of the Lessee, or (C) if adversely determined would
adversely affect the ability of the Lessee to perform its obligations under
the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Transportation Code of the Indenture, the Trust Agreement
and the Lease, (B) the filing of the financing statements referred to in
Section 4.01(f) hereof and (C) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document, is necessary or advisable in order (i) to establish the Owner
Trustee's title to and interest in the Aircraft and the Lessor's Estate as
against the Lessee and any third parties, or (ii) to perfect the first
security interests in and mortgage Lien on the Trust Indenture Estate in
favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Reports on Form 10-K for the
fiscal years ended May 31, 1995 and May 31, 1996 and its Quarterly Report
on Form 10-Q for the fiscal quarter ended August 31, 1996, and of the
audited consolidated balance sheets of the Lessee for the fiscal years
ended May 31, 1995 and May 31, 1996 and the unaudited consolidated balance
sheet of the Lessee as of August 31, 1996, and the related consolidated
statements of income, changes in common 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, except as therein
noted, by Arthur Andersen LLP, independent public accountants; said
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly the
financial position of the Lessee as of such dates and the results of its
operations and cash flows for such periods and such Annual Reports,
Quarterly Report and financial statements did not, as of their respective
dates of filing with the SEC, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained
therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the imposition
of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Refunding Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in the
performance of any term or condition of the Purchase Agreement, the Purchase
Agreement Assignment, the Engine Warranty Assignment and the GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof; and
(y) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will promptly take, or cause to be taken, at
the Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary, or as
requested by the Indenture Trustee and appropriate, to maintain the
perfection of the first security interest and the Lien created by the
Indenture, and the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties or if
the Lessee cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee and the Owner Trustee timely notice of the necessity
of such action, together with such instruments, in execution form, and such
other information as may be required to enable either of them to take such
action at the Lessee's cost and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered, in the name of the Owner Trustee, under the Transportation
Code; provided, however, that the Owner Participant, the Owner Trustee and
the Indenture Trustee agree that if at any time after December 31, 2003, so
long as no Event of Default shall have occurred and be continuing, the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate under the laws of such
jurisdiction of reregistration, in the name of the Lessee or a sublessee as
a "lessee" or a "sublessee"), at the Lessee's expense, in a country listed
in Schedule III hereto with which the United States then maintains normal
diplomatic relations (and which is not then experiencing war or substantial
civil unrest), the Owner Participant, upon receipt by the Owner
Participant, the Owner Trustee and the Indenture Trustee of the assurances
and opinion described below, shall not unreasonably withhold their consent
to such change in registration (it being agreed, without limitation, that
the inability of the Lessee to deliver such assurances or such opinion
shall constitute reasonable grounds to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required) and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity, and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity, and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Tax Indemnity Agreement) for which the Lessee has not agreed to
indemnify the Owner Participant to its reasonable satisfaction, the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee (or
any successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(L) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(M) that appropriate deregistration powers of attorney in favor
of the Owner Trustee and the Indenture Trustee have been executed and
delivered by the Lessee and any sublessee and, if necessary or
desirable for the effectiveness thereof, filed with the relevant
aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might reasonably have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any state
thereof (it being understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to cover
such risk and the Lessee undertakes to keep such insurance in full
force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft or under the Lease and
(unless the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft;
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request; and
(H) the Lien of the Indenture continues to constitute a first
priority, duly perfected Lien on the Aircraft.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company (or Person which acquires
by conveyance, transfer or lease the assets of the Lessee) is in compliance
with all of the terms and conditions of this Agreement and the Lease and
each other Operative Agreement and each other document contemplated hereby
or thereby; provided that no such merger, consolidation or conveyance,
transfer or lease shall be permitted if the same gives rise to an Event of
Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become the Lessee
hereunder in the manner prescribed in this Section 6.03(g) from its
liability hereunder or under the other Operative Agreements. Nothing
contained herein shall permit any lease, sublease, or other arrangement for
the use, operation or possession of the Aircraft except in compliance with
the applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to its stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any officer of the Lessee obtaining knowledge of any
condition or event which constitutes a Default or an Event of
Default, an officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is taking
or proposes to take with respect thereto;
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Section 7.03(d) hereof, at all
times be within its control and the foregoing representation shall not limit
the Owner Participant's right to transfer or sell such interests pursuant to
the terms of this Agreement. Neither the Owner Participant nor anyone
authorized to act on its behalf has directly or indirectly offered any
interest in the Lessor's Estate or the Trust Agreement, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from,
anyone. The Owner Participant further represents and warrants that neither it
nor anyone authorized to act on its behalf has made or will make any offer,
solicitation or sale of any interest in the Lessor's Estate or the Trust
Agreement in violation of the provisions of Section 5 of the Securities Act of
1933, as amended. No representation in this Section 7.01(b) shall include any
action or inaction of the Lessee, the Agent, First Chicago Leasing Corporation
or the Underwriters whether or not such action or inaction is purportedly on
behalf of the Owner Trustee, the Owner Participant or any of their Affiliates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee or
the Owner Participant that such lack of United States citizenship would have
any adverse effect on the Lessee or the Owner Participant. The Owner Trustee,
in its individual capacity, further covenants that if at any time it appears
reasonably probable that it will cease to be a Citizen of the United States
based on information that is (i) known to a Responsible Officer or (ii)
generally known to the public, it will promptly so notify, to the extent
permitted by law, all parties to this Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) either it
shall cease to be, or an event which has been publicly disclosed has occurred
of which the Owner Participant has knowledge and which will cause the Owner
Participant to cease to be, a Citizen of the United States and (ii) the
Aircraft shall or would therefore become ineligible for registration in the
name of the Owner Trustee under the Transportation Code and regulations then
applicable thereunder, then the Owner Participant shall give notice thereof to
the Lessee, the Owner Trustee and the Indenture Trustee and shall (at its own
expense and without any reimbursement or indemnification from the Lessee)
immediately (and in any event within a period of 20 days) (x) effect a voting
trust or other similar arrangement, (y) transfer in accordance with the terms
of this Agreement and the Trust Agreement all its rights, title and interest
in and to such Trust Agreement, the Lessor's Estate and this Agreement, or (z)
take any other alternative action that would prevent any deregistration, or
maintain or permit the United States registration, of the Aircraft. It is
agreed that the Owner Participant shall be liable to pay promptly on request
(A) to each of the other parties hereto any actual damages (but not
consequential damages) suffered by any such other party to the extent the same
shall result from the representation and warranty of the Owner Participant in
the first sentence of Section 7.02(a) hereof proving to be untrue as of the
Refunding Date; and (B) to the Lessee, the Indenture Trustee or the Pass
Through Trustee for any damages actually (but not consequentially) incurred by
the Lessee, the Indenture Trustee and the Pass Through Trustee as a result of
the Owner Participant's failure to comply with its obligations pursuant to the
first sentence of this Section 7.02(c); provided, that, the foregoing shall
not restrict the Pass Through Trustee or the Indenture Trustee from asserting
against the Owner Participant any damages actually incurred by the holders of
any Pass Through Certificates. Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the first
sentence of this Section 7.02(c), but without any obligation on the part of
such other party to take any action believed by it in good faith to be
unreasonably burdensome to such party or materially adverse to its business
interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement;
(ii)the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary corporate action on its part and, assuming the accuracy of the
Lessee's representations in Section 6.01(o) hereof, do not require any
governmental approvals that would be required to be obtained by the Owner
Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii), 6.02 and 7.09 hereof and compliance
with Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of the Original Agreements to which it
is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement nor compliance with the terms and provisions hereof or thereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under any law, governmental rule or regulation
applicable to the Owner Participant or the charter documents, as amended, or
bylaws, as amended, of the Owner Participant or any order, writ, injunction
or decree of any court or governmental authority against the Owner
Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its Properties is
bound, or constitutes or will constitute a default thereunder or results or
will result in the imposition of any Lien upon any of its Properties;
(iv)the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Owner Participant or an adverse effect on the ability
of the Owner Participant to perform its obligations under the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party and the Owner Participant
knows of no pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving it in connection with the
transactions contemplated by the Operative Agreements;
(vii)neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is nor the performance of its obligations hereunder
or thereunder requires the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any governmental authority or agency that would be required to be obtained
or taken by the Owner Participant except for filings contemplated by this
Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix)it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and is not a tax resident of another country;
(x) it has a consolidated tangible net worth of not less than
$75,000,000; and
(xi) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee that the Owner Participant
will, at its own cost and expense, take such action as may be necessary (by
bonding or otherwise, so long as neither the Lessee's operation and use of the
Aircraft nor the validity and priority of the Lien of the Indenture is
impaired) to duly discharge and satisfy in full, promptly after the same first
becomes known to the Owner Participant, any Lessor's Lien against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to the Owner Participant (or an Affiliate thereof), provided,
however, that the Owner Participant shall not be required to discharge or
satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do
not involve any material danger of the sale, forfeiture or loss of the
Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest
in any thereof or otherwise materially adversely affect the validity or
priority of the Lien of the Indenture.
(c) Reimbursement. Without limiting any other rights the parties
hereto may have as a result of any breach by the Owner Participant of its
obligations in Section 7.03(b) hereof, the Owner Participant agrees to
reimburse each other party hereto for all reasonable legal fees and expenses
of counsel that may be incurred by any such party as a result of the failure
of the Owner Participant to discharge and satisfy any such Lessor's Lien in
accordance with the terms of Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after
all obligations of the Owner Participant under Section 2.01(d) hereof have
been satisfied in full, and subject to the conditions set forth in this
Section 7.03(d), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee and the Indenture Trustee at least 10
Business Days' notice of such assignment, conveyance or other transfer and
provided further that the Owner Participant and any Owner Participant
Guarantor shall remain liable for all obligations of the Owner Participant
under the Trust Agreement and the Operative Agreements to which the Owner
Participant is a party to the extent (but only to the extent) relating to the
period on or before the date of such transfer and provided that the transferee
agrees by a written instrument substantially in the form attached hereto as
Exhibit E-1 to assume primary liability for all obligations as an Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party relating to the period after the date
of transfer.
Any such transferee shall (a) be (i) a bank, savings institution,
finance company, leasing company or trust company, national banking
association acting for its own account or in a fiduciary capacity as trustee
or agent under any pension, retirement, profit sharing or similar trust or
fund, insurance company, fraternal benefit society or corporation acting for
its own account having a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (ii) a subsidiary of any Person described in clause (i) where such
Person provides (A) support for the obligations assumed by such transferee
subsidiary reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee or (B) an unconditional guaranty substantially in the form
of Exhibit E-2 attached hereto of such transferee subsidiary's obligations, or
(iii) an Affiliate of the transferring Owner Participant, so long as such
Affiliate has a combined capital and surplus (or, if applicable, consolidated
tangible net worth or its equivalent) of not less than $75,000,000, (b) be
legally capable of binding itself to the obligations of the Owner Participant
and shall expressly agree to assume all obligations of the Owner Participant
under the Trust Agreement and this Agreement and (c) provide representations
substantially similar to those contained in Sections 7.02(a) and 7.03(a)
hereof. In the event of any such assignment, conveyance or transfer, the
transferee shall become a party to the Trust Agreement and shall agree to be
bound by all the terms of and will undertake all of the obligations of the
Owner Participant contained in the Trust Agreement and the other Operative
Agreements in the manner set forth in the form attached as Exhibit E-1.
A transferee hereunder shall be (i) a "U.S. Person" as defined in
Section 7701(a)(30) of the Code (or any successor provision thereto) and (B)
such transferee shall be personally liable for any debt service to the extent
that its receipt of rentals is reduced by reason of any withholding Taxes that
result from such transferee's failure to be such a "U.S. Person" and (ii) a
Citizen of the United States or has established a voting trust, voting powers
or other arrangement reasonably satisfactory to the Indenture Trustee and the
Lessee to permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code. A transferee hereunder shall not be, and in
acquiring the Beneficial Interest shall not use the assets of, an employee
benefit plan subject to Title I of ERISA or an individual retirement account
or a plan subject to Section 4975 of the Code. Assuming the truth of the
representations made in Sections 6.01(m) and 7.06 hereof and compliance with
Section 10.06 of the Indenture, no such assignment, conveyance or transfer
shall violate any provision of law or regulation or create a relationship
which would be in violation thereof. The Owner Trustee shall not be on notice
of or otherwise bound by any such assignment, conveyance or transfer unless
and until it shall have received an executed counterpart of the instrument of
such assignment, conveyance or transfer. Upon any such disposition by the
Owner Participant to a transferee as above provided, the transferee shall be
deemed the "Owner Participant" or "Trustor" for all purposes of the Operative
Agreements, and shall be deemed to have made all the payments previously made
by its transferor and to have acquired the same interest in the Lessor's
Estate as theretofore held by its transferor; and each reference therein to
the "Owner Participant" or "Trustor" shall thereafter be deemed a reference to
such transferee.
Notwithstanding anything to the contrary contained in this Section
7.03(d), in no event shall the Owner Participant transfer its interest in the
Beneficial Interest to any entity whose business is that of a nationwide or
worldwide overnight or expedited delivery small package air courier, cargo or
freight deliverer or which competes with the Lessee in such lines of business.
The Lessee agrees that it will reasonably cooperate with the Owner Participant
in effecting an assignment of the Owner Participant's interests including,
without limitation, providing letters to any successor Owner Participant
permitting such successor Owner Participant to rely on any opinions provided
by the Lessee on the Delivery Date.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSB and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSB represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i)it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to
execute, deliver and perform this Agreement, the Original Agreements to
which it is a party and the Operative Agreements to which it is or is to be
a party;
(ii)the execution, delivery and performance by FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the other
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSB, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSB's performance of or compliance with
any of the terms and provisions thereof will violate any Federal or state
or local law or regulation governing FSB's banking or trust powers;
(iii)(A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSB in its individual capacity, constitute the legal, valid
and binding obligation of FSB in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSB in its individual capacity of
any of its obligations thereunder does not contravene any lease, regulation
or contractual restriction binding on FSB in its individual capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv)there are no pending or, to its knowledge, threatened actions or
proceedings against FSB before any court or administrative agency which
would materially and adversely affect the ability of FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi)neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSB in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii)on the Refunding Date the Owner Trustee be holding whatever
title to the Aircraft as was conveyed to it by AVSA on the Delivery Date,
the Aircraft shall be free of Lessor's Liens attributable to FSB in its
individual capacity and FSB in its individual capacity and as Owner Trustee
is a Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) Lessor's Liens. FSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSB, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSB, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSB to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as follows:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii)the Indenture and this Agreement, the Original Agreements to
which it is a party and the other Operative Agreements to which it is or is
to be a party, and the authentication of the Certificates to be delivered
on the Refunding Date, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or Massachusetts law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii)each of the Indenture and this Agreement, the Original
Agreements to which it is a party and the other Operative Agreements to
which it is or is to be a party, has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(iv)neither the execution and delivery by it of the Indenture and this
Agreement, the Original Agreements to which it is a party and the other
Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or state governmental authority or agency governing its banking and
trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi)the Indenture Trustee holds the original counterparts of the
Original Lease, the Lease Supplement, Ancillary Agreement I and AVSA's
Warranty Bill of Sale.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days, after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither the Owner Participant
(or the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as
the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, as the case may be).
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii)the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iii)each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Event of
Default shall have occurred and be continuing then, upon compliance with the
applicable provisions of said Section 4.02(a) of the Lease, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to
the Lien of the Indenture, all of the Owner Trustee's right, title and
interest in and to the Aircraft, and if the Lessee, in connection with such
purchase, elects pursuant to Section 4.02(a)(A), (D) or (E) of the Lease to
assume the obligations of the Owner Trustee to the Indenture Trustee and the
Holders under the Indenture, the Certificates and hereunder, then the Lessee
shall so notify the Indenture Trustee (such notice to be given at least 30 and
not more than 60 days prior to the effective date of such assumption), and
each of the parties shall execute and deliver appropriate documentation
permitting the Lessee to assume such obligations on the basis of full recourse
to the Lessee, maintaining for the benefit of the Holders the security
interest in the Aircraft created by the Indenture, and upon compliance with the
provisions of this Section 7.11 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Certificates, the Indenture,
this Agreement and the other Operative Agreements, except any obligations
relating to the period prior to such assumption and take all such other
actions, at the Lessee's expense, as are reasonably necessary to permit such
assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Holders and the Indenture Trustee, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Delivery Date with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each opinion
described in clause (A) or (B) above, covering such additional matters as
the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSB and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would materially
adversely affect any such party without the prior written consent of such
party. The Owner Trustee confirms for the benefit of the Lessee, the
Indenture Trustee and the Pass Through Trustee that it will comply with the
provisions of Article 2 of the Trust Agreement. Notwithstanding anything else
to the contrary in the Trust Agreement, so long as the Lease remains in
effect, the Owner Participant agrees not to terminate or revoke the trust
created by the Trust Agreement without the consent of the Lessee. If and so
long as the Indenture shall not have been discharged the consent of the
Indenture Trustee shall also be required prior to any termination or
revocation of such trust and in addition, the Owner Participant will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement or Original Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or
local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements or Original
Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, held by the Owner
Trustee under the Trust Agreement or after an Event of Default under the
Lease, or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or Original
Agreement, any interest therein or by reason of the transactions described
in or contemplated by the Operative Agreements or the Original Agreements;
(v) the principal or interest or other amounts payable with respect
to the Original Loan Certificates, the Pass Through Certificates or the
Certificates;
(vi) the Original Loan Certificates, the Pass Through Certificates or
the Certificates or the issuance, sale, acquisition, reoptimization, or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and Supplemental
Rent), receipts or earnings arising from the Operative Agreements or the
Original Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value-added taxes, capital, franchise, net worth (whether
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes"), provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 8.01(a) above any such Income Taxes to the extent such
taxes are imposed by any jurisdiction in which the Indemnitee would not be
subject to such taxes but for, or would be subject to such taxes solely as
a result of, (x) the operation, registration, location, presence, or use of
the Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or the
activities of the Lessee or any sublessee in such jurisdiction (it being
understood that (A) any such indemnity would be payable only to the extent
of the net harm incurred by the Indemnitee from such Income Taxes, taking
into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements or the Original Agreements were the Indemnitee's sole
nexus to the jurisdiction); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii)With respect to an Original Loan Participant, Income Taxes (other
than in the case of a Non-U.S. Person, U.S. federal withholding taxes on
amounts payable with respect to such Original Loan Participant's Loan
Certificate) except to the extent such Income Tax is imposed (including by
way of increase) by any jurisdiction in which the Indemnitee is subject to
tax (A) on or with respect to any gain resulting from the assumption of any
Loan Certificate by the Lessee, (B) as a result of the operation,
registration, location, presence, basing or use of the Aircraft, Airframe,
any Engine or any Part thereof, in such jurisdiction (it being understood
that (I) the incremental Income Taxes described in this clause (B) shall
not include any U.S. Federal income taxes and (II) that to the extent such
incremental Income Taxes give rise to any incremental current Tax benefit in
another tax jurisdiction, that such incremental benefit shall offset and
decrease the incremental Income Taxes determined under this clause (B)) or
(C) solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant, the
Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in such
jurisdiction (it being understood that to the extent that any Income Taxes
described under this clause (C) give rise to any incremental current Tax
benefit in another tax jurisdiction or another tax period, that such
incremental Tax benefit shall offset and decrease the Income Taxes
determined under this clause (C)); provided, however, that the provisions
of this paragraph (b)(ii) relating to Income Taxes shall not exclude from
the indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02 of this Agreement;
(iii)Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods (or any combination of the
foregoing) which occur after the later of (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Original Loan Certificates in the case of an
Original Loan Participant, the Indenture Trustee or the Trust Indenture
Estate if the Lessee shall have assumed the Certificates pursuant to
Section 7.11 of this Agreement), and (B) the earliest of (x) the expiration
of the Term of the Lease and return of the Aircraft in accordance with
Article 12 of the Lease, (y) the termination of the Lease in accordance with
the applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer of
all right, title and interest in the Aircraft to the Lessee pursuant to its
exercise of any of its purchase options set forth in Section 4.02(a) of the
Lease, provided that this exclusion (iii) shall not apply in respect of any
payment made after the dates set forth in clauses (A) and (B) above unless
such payment is made with respect to any event or circumstance occurring
on, with or prior to such return or transfer or period prior to such return
or transfer, or Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default;
(iv)As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements
or the Original Agreements) or the breach by such Indemnitee of: (i) in the
case of an Indemnitee other than the Owner Participant, any representation,
warranty or covenant contained in the Operative Agreements or the Original
Agreements or any document delivered in connection therewith and (ii) in
the case of the Owner Participant, the representations or covenants in
Sections 7.02(a), (c); 7.03(a)(i), (ii), (iii), (iv), (vii), (ix); and
7.03(b), (c), (d), (e) of the Original Participation Agreement or this
Agreement (in either case unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi)Taxes imposed on, and not collected by withholding from payments
of Rent, the Owner Trustee or the Owner Participant or any successor,
assign or Affiliate thereof which became payable by reason of any voluntary
or involuntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including revocation of the Trust, of any interest in some
or all of the Aircraft, Airframe, Engines or Parts thereof or its interest
in the Lessor's Estate (not including any transfers of any Certificates
pursuant to Section 15.01(a) hereof) or a disposition in connection with a
bankruptcy or similar proceedings involving either the Lessor or the Owner
Participant other than (A) transfers resulting from a loss, substitution or
modification of the Aircraft, Engines or any Part, (B) any transfer of the
Aircraft, Engines or any Part (in each case other than at Fair Market
Value) to the Lessee or other person in possession thereof, (C) transfers
attributable to an Event of Default or (D) a transfer pursuant to the
Lessee's exercise of its rights under Section 10.01 of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii)Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii)Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or of any
other Indemnitee under the Original Agreements or an Indemnitee as of the
date hereof under the Operative Agreements (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) which
on the Delivery Date is an Indemnitee (for purposes of this clause (viii),
an "original Indemnitee") or such original Indemnitee to the extent that
such Taxes exceed the amount of Taxes that would have been imposed (in the
case of an Original Loan Participant, immediately after giving effect to
such succession, assignment or other transfer) and would have been
indemnifiable pursuant to Section 8.01(a) had there not been a succession,
assignment or other transfer by such original Indemnitee of any such
interest of such Indemnitee in the Aircraft or any Part, any interest in or
under any Operative Agreement, or any proceeds thereunder (it being
understood that for purposes of determining the amount of indemnification
that would have been due to such original Indemnitee with respect to a net
income Tax, it shall be assumed that such original Indemnitee would be
subject to taxation on its income at the highest marginal statutory rate
applicable to it), provided, however, that the exclusion provided by this
clause (viii) shall not apply in the case of a succession, transfer or
disposition (A) that occurs after the Lease has been declared in default
or if such transfer or disposition is pursuant to the exercise of remedies
under Article 17 of the Lease, (B) which is an actual or deemed transfer
pursuant to Section 7.11 hereof or as a consequence of a Refinancing under
Section 15.01 hereof, or any actual or deemed transfer of an Original Loan
Certificate that as part of a Refinancing under Section 15.01 hereof is not
retired, but only to the extent the Taxes attributable to such transfer
exceed the amount of Taxes that would have been imposed on such transferor
if the debt had instead been retired, (C) to the extent necessary to make
payments with respect to such Taxes on an After-Tax Basis, (D) to the
extent such Taxes are directly attributable to the failure of the Lessee to
take administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost or
expense to the Lessee or (E) in the case of the Owner Participant or the
Lessor, to any Tax other than an Income Tax;
(ix)[Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price and which
have been paid to the applicable taxing authorities;
(xi)Any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien; and
(xii)Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited Transaction");
provided, however, that in the event any prohibited transaction arises
which is not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually or
collectively, a "PTE") then the indemnity provided for herein shall extend
to any Taxes incurred by the Owner Participant (or any Affiliate thereof)
as the result of any Prohibited Transaction arising out of the purchase or
holding of any Loan Certificates by an employee benefit plan subject to
Title I of ERISA or by a plan subject to Section 4975 of the Code
(individually or collectively, an "ERISA Plan") with respect to which the
Owner Participant is a party in interest, within the meaning of Section
3(14) of ERISA, or a disqualified person,within the meaning of Section 4975
of the Code, except, however, that such Indemnity shall not extend to any
Taxes incurred by the Owner Participant (or any Affiliate thereof) as the
result of any Prohibited Transaction occurring with respect to the purchase
or holding of any Loan Certificates (A) over which purchase or holding the
Owner Participant (or an Affiliate thereof) has discretion or control
(other than in the capacity of a custodian, directed trustee or other
similar nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a tax benefit by reason
of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized by such Indemnitee that would not have been
realized but for any payment made by such Indemnitee pursuant to this sentence
and not already paid to the Lessee, and (y) the amount of the payment made
under Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore required to be made under this Section 8.02 and
Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment to
the Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee (and without regard to Section 8.01(b) hereof,
except for clause (v) thereof) for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is subsequently disallowed or reduced (including the
expiration of any tax credit carryovers or carrybacks of such Indemnitee that
would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by Lessee with respect to such Taxes.
Section 8.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 8 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements and the Original Agreements except as otherwise
provided in Section 10.01(d)(i) or Article 15 hereof) of every kind and
nature, including without limitation Make-Whole Premium (unless excluded
pursuant to Section 3.03 of the Lease) (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Pass Through Agreement, AVSA's FAA Bill
of Sale, AVSA's Warranty Bill of Sale or any other Operative Agreement or
any other document entered into in connection herewith or any sublease or
transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii)the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv)any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi)the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to securities), or
the action or inaction of the Owner Trustee or Indenture Trustee as
trustees, in the manner contemplated by this Agreement, the Original
Participation Agreement, the Indenture, the Original Indenture, the
Indenture and Security Agreement Supplement, the Trust Agreement or the
Original Trust Agreement and in the case of the Owner Participant, its
obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or, if the Aircraft remains a part of the Lessor's Estate, after the
expiration of the Term (unless the Aircraft is being returned at such time,
in which case after return of physical possession; provided that if the
Lessor has terminated the Lease pursuant to Article 17 thereof, the
indemnity provided in Section 9.01(a) hereof shall survive for so long as
Lessor shall be exercising remedies under such Article 17), or to acts or
events which occur after return of possession of the Aircraft by the Lessee
in accordance with the provisions of the Lease (subject to the foregoing
proviso if the Lessor has terminated the Lease pursuant to Article 17 of
the Lease) but in any such case only to the extent not fairly attributable
to acts or omissions of the Lessee prior to expiration of the Term,
including without limitation the Lessee's failure to fully discharge all of
its obligations under the Lease, the other Operative Agreements or the
Original Agreements;
(iii)is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv)is a cost or expense required to be paid by the Owner Participant
or its permitted transferees (and not by the Lessee) pursuant to this
Agreement or any other Operative Agreement and for which the Lessee is not
otherwise obligated to reimburse the Owner Participant, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default by the Lessee of any of its obligations under the
Operative Agreements or by another Indemnitee of any of the foregoing;
(vi)[Intentionally Left Blank];
(vii)is, in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; in
the case of FSB, Lessor's Liens to the extent attributable to FSB; and in
the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii)is, in the case of the Owner Participant or the Owner Trustee,
attributable to the offer or sale by such Indemnitee after the Delivery
Date of any interest in the Aircraft, the Lessor's Estate or the Trust
Agreement or any similar interest (including an offer or sale resulting
from bankruptcy or other proceedings for the relief of debtors in which
such Indemnitee is the debtor), unless in each case such offer or sale
shall occur (x) in connection with a Refinancing, (y) as a result of the
occurrence of an Event of Default provided that either the Lease has been
declared in default or the transfer is pursuant to the exercise of remedies
under Article 17 of the Lease or (z) in connection with the Lessee's
exercise of its early termination option under Article 10 of the Lease or
its purchase options under Article 4 of the Lease or in connection with
Article 11 of the Lease;
(ix)is an Expense arising under or in connection with any prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code ("Prohibited Transaction"); provided, however, that
in the event any prohibited transaction arises which is not exempt under
any class prohibited transaction exemption or any individual or statutory
prohibited transaction exemption (individually or collectively, a "PTE")
then the indemnity provided for herein shall extend to any Expenses
incurred by the Owner Participant (or any Affiliate thereof) as the result
of any Prohibited Transaction arising out of the purchase or holding of any
Certificates by an employee benefit plan subject to Title I of ERISA or by
a plan subject to Section 4975 of the Code (individually or collectively,
an "ERISA Plan") with respect to which the Owner Participant is a party in
interest, within the meaning of Section 3(14) of ERISA, or a disqualified
person,within the meaning of Section 4975 of the Code, except, however, that
such Indemnity shall not extend to any Expenses incurred by the Owner
Participant (or any Affiliate thereof) as the result of any Prohibited
Transaction occurring with respect to the purchase or holding of any
Certificates (A) over which purchase or holding the Owner Participant (or
an Affiliate thereof) has discretion or control (other than in the capacity
of a custodian, directed trustee or other similar nondiscretionary
capacity), or (B) by an ERISA Plan with respect to which the Owner
Participant (or any Affiliate thereof) is a "plan sponsor" within the
meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as an Event of Default shall have occurred and be
continuing. Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of such Tax benefit referred to in the next
preceding sentence in a taxable year subsequent to the year of allowance and
utilization by such Indemnitee (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired) shall be indemnifiable pursuant to the provisions of Section 8.01
hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has received notice for which the Lessee is, or may be, liable
under this Article 9; provided, however, that failure to give such notice
shall not terminate any of the rights of the Indemnitees under this Article 9,
except (with respect to such Indemnitee) to the extent that the Lessee has
been materially prejudiced by the failure to provide such notice. Unless
otherwise provided in the Operative Agreements, any amount payable to an
Indemnitee pursuant to this Article 9 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v) hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Payment Default or
Event of Default shall have occurred and be continuing or shall arise at any
time during the claim and (iii) the Lessee shall have first acknowledged in
writing to such Indemnitee the Lessee's obligation to indemnify such
Indemnitee hereunder in respect of such claim, defend any such claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent (A) such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel or on the grounds that such proceeding
involves the potential imposition of criminal liability on such Indemnitee or
(B) such proceeding will involve any material danger of the sale, forfeiture
or loss of, or the creation of any Lien on the Aircraft or the Trust Estate
(unless the Lessee posts a bond or other security reasonably acceptable in
form and substance to such Indemnitee) or involve any material risk of civil
liability to such Indemnitee for which it is not indemnified hereunder.
Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal
fees or expenses of such Indemnitee in connection with the defense of such
claim shall be indemnified hereunder unless the fees or expenses were incurred
at the written request of the Lessee or such insurers. Subject to the
requirement of any policy of insurance applicable to a claim, an Indemnitee
may participate at its own expense at any judicial proceeding controlled by
the Lessee or its insurers pursuant to the preceding provisions, to the extent
that such party's participation does not, in the opinion of the independent
counsel appointed by the Lessee or its insurers to conduct such proceedings,
interfere with such control; and such participation shall not constitute a
waiver of the indemnification provided in this Section 9.06. No Indemnitee
shall enter into any settlement or other compromise with respect to any claim
described in this Section 9.06 without the prior written consent of the
Lessee, which consent shall not unreasonably be withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Article 9 with
respect to such claim. The Lessee shall not enter into any settlement or
compromise which the Lessee has not agreed to discharge or with respect to
which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the
prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities after the expiration or other
termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing (or fairly attributable
to the Lessee's acts or omissions) prior to such termination or expiration or
incurred in the process of (i) the return or disposition of the Aircraft under
Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or
the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
Section 9.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 9 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement all fees and
expenses of the following persons relating to the public offering of the Pass
Through Certificates contemplated by the Underwriting Agreement and related to
the transactions contemplated hereby: (i) the fees and expenses of counsel for
the Owner Participant; (ii) the fees and expenses of the transaction
documentation counsel and counsel for the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Original Loan Participants and the
Underwriters (other than those fees, expenses and disbursements payable by the
Underwriters pursuant to the Underwriting Agreement); (iii) the fees and
expenses of Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses
of the Pass Through Trustee and the fees and expenses of the Owner Trustee and
the Indenture Trustee; (v) any compensation, commissions and discounts payable
to the Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if
any, incurred in printing the Pass Through Certificates; (vii) the fees and
expenses incurred in connection with printing any amendment to the
Registration Statement on Form S-3 bearing Registration No. 333-07691,
printing any Preliminary Prospectus or Prospectus (as such terms are defined
in the Underwriting Agreement) for the offering of the Pass Through
Certificates; (viii) the fees and expenses of Arthur Andersen LLP; (ix) the
fees and expenses of Moody's and S&P; (x) the fees and expenses of First
Chicago Leasing Corporation; (xi) the reasonable out-of-pocket expenses of the
Owner Participant; and (xii) reimbursement to the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee for any and all
fees, expenses and disbursements incurred in connection with the negotiation,
preparation, execution and delivery, filing and recording of the Operative
Agreements and the documents contemplated thereby, including, without
limitation, travel expenses and disbursements which shall have been paid by
such party. The fees and expenses described in clauses (ii) through (xii) of
this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant or the refunding of the Original Loan Certificates, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant or the refunding of the Original Loan
Certificates, in the proportion that the principal amount of the Certificates
bears to the total amount of the Pass Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.33% of the Purchase
Price (the "Estimated Expense Amount").
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom, or (b) the
enforcement of the obligations of the Lessee hereunder or under the other
Operative Agreements, including, without limitation, the entering into or
giving or withholding of any amendments or supplements or waivers or
consents (whether or not consummated), including without limitation, any
amendment, supplement, waiver or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under the Original Agreements, this Agreement, the Lease,
the Indenture, the Certificates, the Tax Indemnity Agreement, the Purchase
Agreement Assignment or any other Operative Agreement or document or
instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement
(including any adjustment pursuant to Section 3.04 of the Lease) or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Section 7.03(d) hereof or otherwise) by the
Owner Participant after the Refunding Date of any interest in the Aircraft,
the Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the Owner Participant shall be responsible for all
such fees and expenses), unless such offer, sale or transfer shall occur
(A) after the Lease has been declared in default or if the transfer is
pursuant to the exercise of remedies under Article 17 of the Lease or (B)
in connection with the termination of the Lease or action or direction of
the Lessee pursuant to Section 4.02, Article 10 or Article 11 of the Lease;
and
(ii)to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii)Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement, the Trust Agreement, the Lease, the Lease
Supplement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the Indenture, the Indenture Supplement and any other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, AVSA's FAA Bill of Sale,
AVSA's Warranty Bill of Sale, the Lease or any other Operative Agreement to
which the Owner Participant is a party and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant be
liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, any Original
Agreement, the ownership of the Aircraft, the administration of the Lessor's
Estate or the Trust Indenture Estate or otherwise, whether or not such action
or inaction is caused by the willful misconduct or gross negligence of the
Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that no section of the Indenture or the
Trust Agreement shall be amended or modified in any manner which materially
adversely affects the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
Section 13.04. Pass Through Trustee's Acknowledgment. The Pass
Through Trustee hereby acknowledges and agrees to be bound by all of the terms
and conditions of the Indenture, including without limitation, Section 8.01
thereof regarding the rights of the Owner Participant to purchase the
Certificates under circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 800 Westchester
Avenue, Rye Brook, New York 10573-1301, Attention: Vice President Leasing
with a copy to Director, Portfolio Administration, telephone (914)
335-5000, facsimile (914) 335-1287, or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee; and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date) in whole but not in
part, of the Certificates prior to the end of the Basic Term (a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as the Owner Participant is satisfied there is
no foreign currency risk to it), and shall be on terms that do not materially
adversely affect the Owner Participant. The Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with the Lessee as
to the terms of any such Refinancing transaction (including the terms of any
debt to be issued in connection with such refinancing and the documentation to
be executed in connection therewith). Without the prior written consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant in a manner satisfactory to it for any liabilities under federal,
state or foreign securities laws resulting from such offering. The aggregate
principal amount of the new Certificates issued in connection with each
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice (three (3) Business Days
with respect to the refinancing contemplated by this Agreement on the
Refunding Date) of the scheduled closing date of such Refinancing and the
Owner Participant shall have been provided such longer period as it shall have
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant,
nor shall its rights against all other parties taken as a whole be adversely
affected compared to such rights in effect under the Operative Agreements
prior to such proposed Refinancing.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, which
consent may be withheld in its sole discretion, no such refinancing shall (1)
cause the aggregate principal amount of the indebtedness to be substituted for
the Loan Certificates to exceed the aggregate principal amount of the then
outstanding Loan Certificates, (2) cause the weighted average life of such
indebtedness to be different by more than 6 months than the remaining weighted
average life of the then outstanding Loan Certificates, or (3) cause the date
of maturity of such indebtedness to be later than the date of maturity of the
Loan Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii)Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing or would occur immediately after
giving effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase of
the Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan or individual retirement account, which is
subject to Section 4975(c) of the Code, (individually or collectively, an
"ERISA Plan"), the Lessee will permit the placement of the Refinancing loan
certificates with an ERISA Plan only if either (A) if such placement is in
the form of pass through certificates, the sole underwriter or the manager
or co-manager of the underwriting syndicate or the selling or placement
agent of the Refinancing loan certificates represents to the Lessee that it
has a prohibited transaction exemption from the U.S. Department of Labor
with respect to pass through certificates (such as Prohibited Transaction
Exemption 89-88 or any other comparable exemption) or (B) purchasers of the
Refinancing loan certificates provide a representation (which may be in the
form of a deemed representation) regarding their source of funds used in
acquiring the Refinancing loan certificates and, if such purchasers
represent that they are using funds of an ERISA Plan in acquiring the
Refinancing loan certificates, such purchasers further represent that (1)
either they are relying on a prohibited transaction exemption from the U.S.
Department of Labor with respect to their purchase and holding of the
Refinancing loan certificates and they provide representations regarding the
satisfaction of the relevant conditions of such an exemption or (2) their
purchase and holding of the Refinancing loan certificates will not
constitute a non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code. The reliance on any such exemption will not
be conditional on the Owner Participant's representation concerning its
party in interest or other status with respect to ERISA Plans. If neither
exemption referred to in clause (A) or (B) of this paragraph (viii) is
valid or applicable in any respect to the purchase and holding of the
Refinancing loan certificates, or if the representation in clause (B) of
this paragraph (viii) that such purchase and holding will not constitute a
non-exempt prohibited transaction is not correct, whichever is applicable,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Sections 8 and 9 hereof for Taxes and
Expenses resulting from any "prohibited transaction", within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with
respect to the placement of the Refinancing loan certificates with, or the
holding of the Refinancing loan certificates by, any ERISA Plan with
respect to which the Owner Participant is a party in interest, within the
meaning of Section 3(14) of ERISA, or a disqualified person, within the
meaning of Section 4975 of the Code, provided, however, that if the Lessee
shall fail to obtain either of the representations set forth in clause (A)
or (B) of this paragraph (viii), such indemnity shall not be subject to the
exceptions set forth under Sections 8.01(b)(xii)(A) and (B) and
9.01(b)(ix)(A) and (B) hereof; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii)the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii)in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that it is the intent of the parties for
Federal, state, local and foreign income tax purposes that the Owner
Participant will be treated as the owner of the Aircraft and the Lessee will
be treated as the lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture and the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee. Each of FSB and SSB is entering into this Agreement
solely in their respective capacities (except to the extent otherwise
expressly indicated), in the case of FSB, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of SSB, not in
its individual capacity but solely as Indenture Trustee under the Indenture
and as Pass Through Trustee under the Pass Through Agreement, and except as
otherwise expressly provided in this Agreement or in the Lease, the Indenture,
the Pass Through Agreement or the Trust Agreement, neither FSB, nor SSB,
shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of FSB and SSB accepts the benefits running to it
under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens
and (g) taxes, fees or other charges on, or based on, or measured by, any
fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or indirectly
on account of any amount payable as Make-Whole Premium, principal or interest
on the Certificates, or any other amount payable on any Certificate that is
provided in the Operative Agreements to be nonrecourse to the Owner
Participant and (iii) the Indenture Trustee actually receives any Recourse
Amount which reflects any payment by the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Lessee and the other parties hereto agree that the transactions contemplated
by the Operative Agreements are expressly intended to be, shall be and should
be construed so as to be entitled to the benefits and protection of Section
1110 of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 17th day of October, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
PMCC LEASING CORPORATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as an Original Loan Participant
By:__________________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:__________________________________________
Name:
Title:
COMMERZBANK AG, ATLANTA AGENCY
By:__________________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-B1
Federal Express Corporation Trust No. N662FE
Interest Rate: 7.39%
Maturity: January 30, 2012
Principal Amount: $43,271,000.00
2. Federal Express Corporation Pass Through Trust, 1996-B2
Federal Express Corporation Trust No. N662FE
Interest Rate: 7.84%
Maturity: January 30, 2018
Principal Amount: $18,300,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N662FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N662FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N662FE), dated the Refunding Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France, and its successors and
assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on December 23, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N662FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of
the Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by manufacturer's serial numbers in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or
12.02 of the Lease, together with all Parts related thereto. Except as
otherwise provided, at such time as a Replacement Engine shall be so
substituted and the Engine for which the substitution is made shall be
released from the Lien of the Indenture, such replaced Engine shall cease to
be an "Engine" under the Lease. The term "Engines" means, as of any date of
determination, both Engines then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease (when it shall be determined based upon the actual
condition and location of the Aircraft), it shall be assumed that the Aircraft
is in the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
September 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N662FE) dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the
Lessee has not indemnified (and is not obligated to indemnify) the Indenture
Trustee in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N662FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, or the Owner Participant, in each
case not related to the transactions contemplated by the Operative Agreements,
(ii) acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270116.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270117.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to
the Original Participation Agreement and their successors and assigns (other
than any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N662FE) between the Lessee and the Owner
Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N662FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of September 1, 1996 and filed with
the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i)Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of
the Indenture; provided, that if such Certificates are to be
prepaid, notice of such prepayment has been duly given pursuant to
the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, among the Lessee, the Original
Loan Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series B1 or 1996 Pass Through Certificates, Series B2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-B1 or Federal Express Pass Through Trust, 1996-B2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates having
a Maturity in 2012, October 23, 2006 and with respect to the Certificates
having a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary
Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. December 23, 2019 and each January 30 and July
30 commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-B2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Stipulated Loss Value is to be calculated with reference to any such
date; provided that if amounts in respect of Stipulated Loss Value are payable
under the Operative Agreements after the Stipulated Loss Determination Date in
respect of which such Stipulated Loss Value was determined, the Lessor shall
be compensated during the period from the Stipulated Loss Determination Date
to such payment date in accordance with the provisions of the Operative
Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2003 in the case of Article 10 of the Lease, and
in the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date
falling on January 30, 2017, (ii) Section 4.02(a)(D) or (E) of the Lease, a
Rent Payment Date that is on or after the seventh anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, the last day of
the Basic Term.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent through such date and, accordingly, no further accrual or credit shall be
required through such date whenever Termination Value is to be calculated with
reference to any such date; provided that if amounts in respect of Termination
Value are payable under the Operative Agreements after the Termination Date in
respect of which such Termination Value was determined, the Lessor shall be
compensated during the period from the Termination Date to such payment date
in accordance with the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, as amended and restated as of
October 15, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October
17, 1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Netherlands
Austria New Zealand
Belgium Norway
Canada Philippines
Denmark Portugal
Finland Republic of China
(Taiwan)
France
Singapore
Germany
Sweden
Greece
Switzerland
Iceland
Thailand
Ireland
United Kingdom
Japan
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N662FE), dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Participation Agreement"), among Federal, as Lessee,
PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company
of New York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as Original Loan Participants, First Security Bank, National Association, a
national banking association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement, State
Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture and State Street Bank and Trust Company, as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for the
refinancing in full of the Original Loan Certificates evidencing the Original
Loan Participants' participation in the payment of the Purchase Price of one
Airbus A300F4-605R aircraft (the "Aircraft"), using the proceeds from the
public offering of the Pass Through Certificates. Two Series of Pass Through
Certificates will be issued by two Pass Through Trusts formed to acquire,
among other securities, the Certificates bearing a particular interest rate
and having a particular Maturity that will be issued under the Trust Indenture
and Security Agreement (Federal Express Corporation Trust No. N662FE) dated as
of September 1, 1996, as amended and restated as of October 15, 1996, as
supplemented by the related Indenture and Security Agreement Supplement
("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined or
caused to be examined by attorneys under my supervision, executed counterparts
of the Operative Agreements, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
Certificate of Incorporation or By-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which are
required to be performed on or prior to the Refunding Date and which shall
have been accomplished on or prior to the Refunding Date) the registration
with, or the taking of any other action in respect of, the Aeronautics
Authority, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (i)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (ii) compliance with the securities laws of each
applicable state, and (iii) the filing of the Indenture, the Lease and the
Trust Agreement with the FAA, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) (i) is expected to
have a material adverse effect on (A) except for the matters described under
"Legal Proceedings" in Federal's Annual Report on Form 10-K for the fiscal
year ended May 31, 1996 (as updated by Note 7 to the financial statements
included in Federal's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996) and in Federal's Current Reports on Form 8-K dated June
7, 1996 and August 16, 1996, as to which I can express no opinion at this time
concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and valid
title to the Aircraft free and clear of all Liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease. Pursuant to the
Original Participation Agreement the Aircraft was duly delivered to the Owner
Trustee. Federal, as Lessee, duly accepted the Aircraft under the Original
Lease and the Lease Supplement and the Term commenced on the Delivery Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation ("Federal Express"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N662FE), dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Participation Agreement"), among Federal Express, as
Lessee, PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty Trust
Company of New York, Bank of America National Trust & Savings Association, The
Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A.
(South), as the Original Loan Participants, First Security Bank, National
Association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, State Street Bank and Trust Company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture, and State Street Bank and Trust Company, as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(viii) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one Airbus A300F4-605R Aircraft which was purchased by
the Owner Trustee pursuant to AVSA's FAA Bill of Sale and AVSA's Warranty Bill
of Sale, subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides, among
other things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of the Pass Through Certificates. Two
Series of Pass Through Certificates will be issued by separate Pass Through
Trusts, each formed to acquire, among other securities, the Certificates
bearing a particular interest rate and having a particular Maturity that will
be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery of
the Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificates are delivered by the Original Loan Participants
to the Indenture Trustee for cancellation and are cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank, National Association in its individual or trust capacity
in the State of New York not related to the transactions contemplated by the
Transaction Agreements. We have assumed that First Security Bank, National
Association has made the filings necessary to comply with Section 131.3 of the
Banking Law of the State of New York, however we express no opinion as to
whether First Security Bank, National Association is required to comply with
said Section 131.3.
6. All the properties which are part of the Trust Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in paragraph
2 above, neither the execution and delivery by Federal Express of the
Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, the Securities and
Exchange Commission or any other Federal or New York State governmental
authority.
10. It is not necessary, in connection with the creation of the
beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States Bankruptcy
Code will apply to the Aircraft for the benefit of the Lessor, as lessor under
and by reason of the Lease. The Lease, including the rights under Section
1110 of the United States Bankruptcy Code, has been assigned to the Indenture
Trustee pursuant to the Indenture as part of the collateral for the
Certificates and, as assignee, the Indenture Trustee has the benefit of
Section 1110.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty, Fowler &
Peregrin and George W. Hearn, Vice President - Law of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
(e) We rendered an opinion dated September 23, 1996 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(a)
[Letterhead of Simpson Thacher & Bartlett]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
We have acted as special New York counsel for PMCC Leasing Corporation
("PMCC") in connection with the transactions contemplated by the Participation
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as lessee,
First Security Bank, National Association, not in its individual capacity, but
solely as owner trustee, PMCC, as owner participant, State Street Bank and
Trust Company, not in its individual capacity but solely as indenture trustee,
State Street Bank and Trust Company, not in its individual capacity but solely
as pass through trustee and Morgan Guaranty Trust Company of New York, Bank
of America National Trust & Savings Association, The Chase Manhattan Bank,
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as original loan
participants. This opinion is being furnished to you pursuant to Section
4.01(l)(ii) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined herein shall have the meaning ascribed to them in the
Participation Agreement.
We have examined executed counterparts of the Participation Agreement,
Amendment No. 1 to the Tax Indemnity Agreement, Trust Agreement, Ancillary
Agreement I and Ancillary Agreement II (collectively, the "Owner Participant
Documents") and we have made such other and further investigations as we have
deemed necessary or appropriate for purposes of this opinion. In our
examination we have assumed, with your permission, and without independent
investigation or inquiry, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
With your permission, we have further assumed that (i) the Owner
Participant Documents have been duly authorized, executed and delivered by
each of the parties thereto, (ii) the respective parties thereto have the
power and authority to execute, deliver and perform the Owner Participant
Documents, (iii) the execution, delivery and performance of the Owner
Participant Documents by the parties thereto do not and will not violate the
certificate of incorporation, by-laws or other organizational documents of any
such party or any bond, debenture, note, mortgage, indenture, lease or other
agreement or instrument to which any such party is a party or by which any
such party is bound and does and will fully comply with all laws and
regulations applicable to each such party and (iv) the Owner Participant
Documents constitute valid, legal and binding obligations of the parties
thereto (other than PMCC), enforceable against such parties (other than PMCC)
in accordance with their respective terms.
Based upon the foregoing, we are of the opinion that:
1. The Participation Agreement and the Amendment No. 1 to the Tax
Indemnity Agreement constitute valid and legally binding obligations of PMCC
enforceable against PMCC in accordance with their respective terms.
2. The execution and delivery by the Owner Participant of the Owner
Participant Documents and the making of its investment thereby will not result
in any violation of any Federal or New York statute or any order, rule or
regulation issued pursuant to any New York or Federal statute by any New York
or Federal Court or governmental agency or body having jurisdiction over the
Owner Participant.
3. No consent, approval, authorization, order, registration or
qualification under any Federal or New York statute is required to be obtained
by the Owner Participant for the execution and delivery by the Owner
Participant of the Owner Participant Documents or the making of its investment
thereby.
Our opinion in paragraph 1 is subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York and express no
opinion herein concerning any law other than the laws of the State of New York.
This opinion is rendered to you in connection with the above-described
transaction. This opinion may not be relied by you for any other purpose, or
relied upon by or furnished to any other person, firm or corporation without
our prior written consent, except that the Owner Participant may furnish a
copy of this opinion to a potential transferee or participant of the interest
of such entity or otherwise as required by a governmental authority.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Simpson Thacher & Bartlett
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(b)
[Letterhead of Philip Morris Capital Corporation]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
In my capacity as Assistant General Counsel and Assistant
Secretary of Philip Morris Capital Corporation, a Delaware corporation, I
have supervised corporate proceedings of its wholly owned subsidiary, PMCC
Leasing Corporation, a Delaware corporation (the "Owner Participant"), in
connection with the Owner Participant's participation in the transactions
contemplated by that certain Participation Agreement (Federal Express
Corporation Trust No. N662FE), dated as of September 1, 1996, as amended
and restated as of October 15, 1996 (the "Participation Agreement"), among
the Owner Participant; Federal Express Corporation as Lessee; the Original
Loan Participants named in the Participation Agreement; First Security
Bank, National Association, not in its individual capacity, except as
otherwise stated, but solely as owner trustee; State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but
solely as indenture trustee and as pass through trustee. This opinion is
delivered pursuant to Section 4.01(l)(ii) of the Participation Agreement.
Capitalized terms used herein but not otherwise defined herein shall have
the respective meanings set forth in Schedule II to the Participation
Agreement.
In connection with this opinion, I have examined originals, or copies
certified or otherwise identified to my satisfaction of the Participation
Agreement, the Ancillary Agreement I, the Ancillary Agreement II, the
Amendment No. 1 to the Tax Indemnity Agreement, and the Trust Agreement (each
such Participation Agreement, Ancillary Agreement I, Ancillary Agreement II,
Amendment No. 1 to the Tax Indemnity Agreement and Trust Agreement to be
hereafter referred to individually as an "Operative Document" and collectively
as the "Operative Documents"). I have also examined such corporate documents,
records and instruments of the Owner Participant as in my judgment are
necessary or appropriate to enable me to render the opinions expressed below.
In rendering such opinions, I have relied upon the representations and
warranties contained in or made pursuant to the Operative Documents and have
assumed the due authorization, execution and delivery of all documents and
instruments by all parties thereto other than the Owner Participant.
Based on the foregoing and subject to the qualifications and matters
of reliance set forth herein, I am of the opinion that:
1. The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has
full corporate power, authority and legal right to carry on its business as
now conducted, and is duly authorized and empowered to execute and deliver
the Operative Documents and to fulfill and comply with the terms,
conditions and other provisions thereof.
2. The Operative Documents have been duly authorized by all necessary
corporate action on the part of the Owner Participant, and have been duly
executed and delivered by the Owner Participant.
3. No filing with, notice to or authorization or approval from any
governmental or public body or authority is required under the laws of the
State of New York, the laws of the United States of America, or the General
Corporation Law of the State of Delaware in connection with the execution,
delivery and performance by the Owner Participant of the Operative
Documents.
4. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Owner Participant) pending or, to my
knowledge, threatened against or affecting the Owner Participant or any
property rights of the Owner Participant at law or in equity or before any
commission or other administrative agency which, either individually or in
the aggregate, could materially and adversely affect the condition,
financial or otherwise, of the Owner Participant or its ability to perform
its obligations under the Operative Documents or which would affect the
legality, validity or enforceability of such Operative Documents.
5. Neither the execution and delivery of the Operative Documents, the
consummation of the transactions therein contemplated nor the fulfillment
of or compliance with the terms, conditions and other provisions thereof
will conflict with, or result in any breach of, any of the terms,
conditions or provisions of (i) any law or regulation binding upon the
Owner Participant, (ii) any order, injunction or decree of any court or
governmental instrumentality binding upon the Owner Participant, (iii) the
Certificate of Incorporation or Bylaws of the Owner Participant, or (iv) to
my knowledge, any bond, debenture, note, mortgage, indenture or other
agreement or instrument to which the Owner Participant is now a party or by
which the property of the Owner Participant may be bound.
I am a member of the bar of the State of New York, and I do not
purport to be conversant with, or to express any opinion herein concerning,
the laws of any jurisdiction other than those of the State of New York and the
United States of America and the General Corporation Law of the State of
Delaware. In addition, I express no opinion concerning the laws of the State
of New York, the United States of America or any other jurisdiction applicable
to the offering or sale of securities. Further, I have made no investigation
and express no opinion, as to any aviation law or other laws, statutes, rules
or regulations applicable due to the particular nature of the equipment
subject to the Lease.
This opinion is solely for the benefit of the addresses hereof and
their respective successors and assigns for use in connection with the
transactions contemplated by the Operative Documents and may not be relied
upon by any other person or for any other purpose without my express written
consent. This opinion may be relied upon by Messrs. Simpson, Thacher &
Bartlett in rendering their opinion of even date herewith.
I rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully, and with the same
force and effect as if such addressees were originally named therein on the
date of the Delivery Date Opinion.
Very truly yours,
Nancy S. Rights
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Indenture") between First Security Bank, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee") and the
Indenture Trustee, in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N662FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996 (the "Participation Agreement"), among Federal Express Corporation,
as Lessee (the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"); Morgan Guaranty Trust Company of New York, Bank of
America National Trust & Savings Association, The Chase Manhattan Bank,
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as Loan
Participants (the "Original Loan Participants"); the Owner Trustee; and the
Indenture Trustee. This opinion is being delivered pursuant to Section
4.01(l)(iii) of the Participation Agreement. Except as otherwise defined
herein, all capitalized terms used herein shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Indenture Trustee, as the case may be, is a party (collectively, the
"Indenture Trustee Documents"), the Certificate of the Massachusetts
Commissioner of Banks relating to State Street and originals, or copies
certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates, or other instruments as we have
deemed necessary or advisable for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Indenture Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such agreement is
the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Refunding Date and to perform its other
obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee Documents by
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, and compliance by State Street or the Indenture Trustee, as the case
may be, individually or as Indenture Trustee, as the case may be, with all of
the provisions thereof do not and will not contravene any Massachusetts or
Federal law, rule or regulation governing the banking or trust powers of State
Street or the Indenture Trustee, or any order or judgment known to us, of any
Massachusetts or Federal court or governmental authority applicable to or
binding on State Street, individually or as Indenture Trustee, or contravene
the provisions of, or constitute a default under, or result in the creation
of a Lien on any property of State Street or the Indenture Trustee under, its
charter documents or By-Laws or any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement, in
each case known to us, or any other agreement or instrument, in each case
known to us, to which State Street, individually or as Indenture Trustee, is a
party or by which it or any of its property may be bound or affected, other
than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document
constitutes a legal, valid and binding obligation of State Street, in its
individual capacity or as Indenture Trustee, as the case may be, enforceable
against State Street, in its individual capacity or as Indenture Trustee, as
the case may be, in accordance with its terms.
5. The Certificates issued and dated the Refunding Date have been
duly authenticated and delivered by the Indenture Trustee pursuant to the
terms of the Indenture.
6. There are no fees, taxes or other governmental charges payable
by the Owner Trustee, the Indenture Trustee (except taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof in connection with the execution, delivery or
performance of any of the Operative Agreements or in connection with the
issuance and acquisition of the Certificates by the Certificate Holders or the
beneficial interest of the Certificate Holders in the Trust Indenture Estate
solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
Neither the Indenture Trustee nor the trust created under the Indenture will
be subject to any fee, tax or other governmental charge (except for taxes
imposed on fees payable to the Indenture Trustee in its individual capacity)
under the laws of the Commonwealth of Massachusetts or any political
subdivision thereof in existence on the date hereof, on, based on or measured
by, directly or indirectly, the gross receipts, net income or value of the
Trust Indenture Estate solely because the Indenture Trustee in its individual
capacity (a) is incorporated under the laws of the Commonwealth of
Massachusetts, (b) has its principal place of business in the Commonwealth of
Massachusetts, (c) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee Documents in the
Commonwealth of Massachusetts, and (d) engages in any activities unrelated to
the transactions contemplated by the Indenture Trustee Documents in the
Commonwealth of Massachusetts. There is no fee, tax or other governmental
charge (except for taxes imposed on fees payable to the Indenture Trustee in
its individual capacity) under the laws of the Commonwealth of Massachusetts
or any political subdivision thereof in existence on the date hereof, on,
based on or measured by any payments under the Certificates by reason of the
creation of the trust under the Indenture solely because the Indenture Trustee
in its individual capacity (a) is incorporated under the laws of the
Commonwealth of Massachusetts, (b) has its principal place of business in the
Commonwealth of Massachusetts, (c) performs (in its individual capacity or as
Indenture Trustee) any or all of its duties under the Indenture Trustee
Documents in the Commonwealth of Massachusetts, and (d) engages in any
activities unrelated to the transactions contemplated by the Indenture Trustee
Documents in the Commonwealth of Massachusetts. We express no opinion as to
whether or not any fees, taxes or other charges are now or hereafter may be
payable by the Original Loan Participants or the Owner Participant to the
Commonwealth of Massachusetts or any political subdivision thereof in
connection with (a) the execution, delivery, or performance by any of the
Indenture, the Participation Agreement or any of the other Operative
Agreements and (b) the making by the Owner Participant of its investment in
the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Indenture Trustee, to perform its obligations under the Indenture Trustee
Documents.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(l)(iv) of
the Participation Agreement (Federal Express Corporation Trust No. N662FE),
dated as of September 1, 1996, as amended and restated as of October 15, 1996
(the "Participation Agreement") among Federal Express Corporation, as lessee
(the "Lessee"), PMCC Leasing Corporation, as owner participant (the "Owner
Participant"), Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as original loan
participants (the "Original Loan Participants"), First Security Bank, National
Association, as owner trustee (the "Owner Trustee"), State Street Bank and
Trust Company, as indenture trustee (the "Indenture Trustee"), and State
Street Bank and Trust Company, as pass through trustee (the "Pass Through
Trustee"), which Participation Agreement amends and restates that certain
Participation Agreement (Federal Express Corporation Trust No. N662FE), dated
as of September 1, 1996 (the "Original Participation Agreement") among the
Lessee, the Owner Participant, the Original Loan Participants, the Owner
Trustee and the Indenture Trustee, with respect to that portion of Subtitle
VII of Title 49 of the United States Code relative to the recordation of
instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined, have
the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No. N662FE)
dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Trust Agreement") between the Owner
Participant and the Owner Trustee, which Trust Agreement amends
and restates the Original Trust Agreement, which Trust Agreement
was filed at ____ _.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N662FE) dated as of September 1, 1996, as
amended and restated as of October 15, 1996 (the "Indenture")
between the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture, which
Indenture was filed at ____ _.m., C._.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No. N662FE)
dated as of September 1, 1996, as amended and restated as of
October 15, 1996 (the "Lease") between the Owner Trustee, as
lessor, and the Lessee, as lessee, which Lease amends and
restates the Original Lease, with the Indenture attached
thereto, which Lease with the Indenture attached was filed at
____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture as containing confidential
financial information.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated September 23, 1996 (the
"FAA Bill of Sale") from AVSA S.A.R.L., as seller, conveying title to
the Airframe to the Owner Trustee has been duly recorded by the FAA
on September 23, 1996 and assigned Conveyance No. 2A270087;
2. the Indenture and the Lease with the Indenture attached are in due
form for recordation by and have been duly filed for recordation with
the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly filed
with the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on September
23, 1996 pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded by the
FAA pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44107;
6. the Original Lease with the Lease Supplement, the Original Indenture
and the Indenture and Security Agreement Supplement attached was duly
filed with and duly recorded by the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the security
interest created by the Original Indenture, as amended and restated
by the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, and (ii) the rights of the parties under the
Original Lease, as amended and restated by the Lease, as supplemented
by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Indenture, as
supplemented by the Indenture and Security Agreement Supplement,
constitutes a duly perfected first priority security interest in the
Aircraft and a duly perfected first assignment of all the right,
title and interest of the Owner Trustee in, to and under the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been duly
effected) are necessary in order to perfect in any applicable
jurisdiction in the United States (A) the Owner Trustee's title to
the Airframe or (B) such security interest and assignment (insofar as
such assignment affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the validity,
priority or enforceability of such security interest and assignment
under local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is required
for the valid authorization, delivery and performance of the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement, the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, or the Original Trust Agreement, as amended and
restated by the Trust Agreement, except for such filings as are
referred to in our opinion dated September 23, 1996 (which have been
duly effected) and the filings referred to in clauses (a), (b) and
(c) above; and,
11. neither the authorization, issuance and delivery of the Certificates,
the execution and delivery by the parties thereto of the Original
Trust Agreement, the Trust Agreement, the Original Indenture, the
Indenture, the Indenture and Security Agreement Supplement, the
Original Participation Agreement, the Participation Agreement, the
FAA Bill of Sale, the Original Lease, the Lease and the Lease
Supplement or the performance by the parties thereto of: (i) the
Original Trust Agreement, as amended and restated by the Trust
Agreement; (ii) the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security Agreement
Supplement; (iii) the Original Participation Agreement, as amended and
restated by the Participation Agreement; and (iv) the Original Lease,
as amended and restated by the Lease, as supplemented by the Lease
Supplement, in accordance with the provisions thereof, nor the
consummation by the parties thereto of any of the transactions
contemplated thereby, requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of any
other action in respect of, the FAA except for the filings, the
recordations and the filings for recordations specified elsewhere in
this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have actual notice. In rendering this opinion we
are assuming that there are no documents with respect to the Aircraft which
have been filed for recording under the recording system of the FAA but have
not yet been listed in the available records of such system as having been so
filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated October ___, 1996 and
have continued to rely upon the opinion of the Assistant Chief Counsel of the
Aeronautical Center dated September 18, 1996, copies of which are attached
hereto.
Very truly yours,
Robert M. Peregrin
For the Firm
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing manufacturer's
serial number 761 and U.S. Registration No. N662FE (the "Airframe") and two
(2) General Electric CF6-80C2-A5F aircraft engines bearing manufacturer's
serial numbers 705-246 and 705-247 (the "Engines") (the Airframe and the
Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N662FE) dated
as of September 1, 1996 between PMCC Leasing Corporation, as owner
participant, and First Security Bank, National Association, as owner trustee,
which was filed with the FAA on September 23, 1996.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N662FE) dated as of September 1, 1996 between First
Security Bank, National Association, as owner trustee, and State Street Bank
and Trust Company, as indenture trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on September 25, 1996 and assigned
Conveyance No. 2A270116.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996 between First Security
Bank, National Association, as owner trustee, and State Street Bank and Trust
Company, as indenture trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N662FE) dated
as of September 1, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, which
together with the Lease Supplement (as hereinafter defined), the Original
Indenture and the Indenture and Security Agreement Supplement attached thereto
was recorded as one instrument by the FAA on September 25, 1996 and assigned
Conveyance No. 2A270117.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No. N662FE)
dated September 23, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, with
respect to the Aircraft, which was attached to and recorded by the FAA as one
instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) Basic Rent (Schedule II),
(ii) the Stipulated Loss Values (Schedule III), (iii) the Termination Values
(Schedule IV), (iv) the Additional Purchase Option Schedule (Schedule V)
omitted from the FAA filing counterpart thereof as containing confidential
financial information; and (v) the purchase price under Section 4.02(a)(F) of
the Lease set forth in Ancillary Agreement II, which was not attached to the
FAA filing counterpart of the Lease or otherwise filed with the FAA for
recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Trust Agreement (Federal Express Corporation Trust No. N662FE), dated
as of September 1, 1996, as amended and restated as of October 15, 1996 (the
"Trust Agreement"), between First Security and PMCC Leasing Corporation, a
Delaware corporation (the "Owner Participant"). Pursuant to the Participation
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee, the
Owner Participant, Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants, First Security, not in its individual capacity except as
otherwise expressly set forth therein but solely as Owner Trustee (the "Owner
Trustee") under the Trust Agreement, State Street Bank and Trust Company, as
Indenture Trustee and State Street Bank and Trust Company, as Pass Through
Trustee, one Airbus A300F4-605R aircraft bearing U.S. Registration No. N662FE
(the "Aircraft") is being refinanced. This opinion is furnished pursuant to
Section 4.01(l)(vii) of the Participation Agreement. Capitalized terms used
herein and not otherwise defined are used as defined in the Participation
Agreement, except that references herein to any instrument shall mean such
instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1 dated
September 23, 1996;
(e) The Lease;
(f) The Ancillary Agreement I;
(g) The Ancillary Agreement II:
(h) The Lease Supplement dated September 23, 1996 (each of the
documents identified in paragraphs (a) through (h) being
collectively referred to as the "Owner Trustee Documents"); and
(h) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other documents,
such corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Owner Trustee Documents.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly organized
and validly existing under the laws of the United States of America holding
a valid certificate to do business as a national banking association, with
banking and trust powers, is a Citizen of the United States within the
meaning of Section 40102(a)(15) of the Transportation Code, and each of
First Security and the Owner Trustee, as the case may be, has or had, on
the date of execution thereof, full corporate power, authority and legal
right to execute, deliver and perform each of the Owner Trustee Documents
to which it is or is to be a party and to issue, execute, deliver and
perform the Certificates.
2. Each of First Security and the Owner Trustee, as the case may be,
has duly authorized, executed and delivered each Owner Trustee Document to
which it is a party; each such document constitutes a legal, valid and
binding obligation of the Owner Trustee (and, to the extent set forth in
the respective Owner Trustee Document, of First Security) enforceable
against the Owner Trustee (and, to the extent set forth in the respective
Owner Trustee Document, against First Security) in accordance with its
terms; and assuming the Trust Agreement was properly authorized, executed
and delivered by the Owner Participant and that the terms of the Trust
Agreement are not in violation of any laws, documents, judgments,
regulations or other provisions applicable to the Owner Participant, the
Trust Agreement constitutes, under the laws of the State of Utah, a legal,
valid and binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with its terms. The Certificates have
been duly issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and constitute the legal,
valid and binding obligations of the Owner Trustee enforceable against the
Owner Trustee in accordance with their terms and the terms of the
Indenture; and the Certificates are entitled to the benefits and security
afforded by the Indenture in accordance with their terms and the terms of
the Indenture.
3. On the Delivery Date, the Owner Trustee received from AVSA such
title to the Aircraft as AVSA conveyed to the Owner Trustee, subject to the
rights of the Owner Trustee and the Lessee under the Original Lease and the
security interest created pursuant to the Original Indenture and the
Indenture Supplement; and to our knowledge, there exist no Liens affecting
the title of the Owner Trustee to the Lessor's Estate resulting from claims
against First Security not related to the ownership of the Lessor's Estate
or the administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust Indenture
Estate.
4. Under the laws of the State of Utah, all of the properties which
are part of the Trust Indenture Estate have been pledged and mortgaged with
the Indenture Trustee as part of the Trust Indenture Estate and the
beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the Indenture,
to the Lien of the Indenture in favor of the holders of the Certificates
issued and to be issued under the Indenture.
5. To the extent that the Uniform Commercial Code of the State of
Utah (the "UCC") is applicable, except for the Indenture Trustee's taking
possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including the
filing or recording of any document, is necessary (i) to create under the
UCC the security interest in the Trust Indenture Estate (including the
grant and assignment unto the Indenture Trustee of the security interest in
all estate, right, title and interest of the Owner Trustee in, to and under
the Lease, the Lease Supplement and the Participation Agreement), which
the Indenture by its terms purports to create in favor of the Indenture
Trustee, and (ii) to perfect in the State of Utah such security
interest, except for the filing of a UCC financing statement complying
with the formal requisites of Section 9-402 of the UCC in the office of
the Division of Corporations and Commercial Code of the State of Utah
with respect to the security interest, which filing has been duly
effected, and the filing of continuation statements with respect thereto
required to be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Utah law, the trust created by the Trust Agreement has been duly created
and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the interest in
the properties referred to in Section 1.02 of the Trust Agreement which the
Trust Agreement by its terms purports to create, which interest is subject
and subordinate to the security interests created by the Indenture to the
extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the Owner
Trustee or First Security, as the case may be, of the Owner Trustee
Documents, nor the issuance, execution and delivery by the Owner Trustee of
the Certificates nor the fulfillment or compliance by the Owner Trustee or
First Security with the respective terms and provisions thereof nor the
consummation of any of the transactions by the Owner Trustee or First
Security, as the case may be, contemplated thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Utah or the United States
of America governing the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is not
physically located in Utah at the commencement or termination of the Term
or during such Term, (ii) in connection with any sale of the Aircraft, such
Aircraft will not be physically delivered in Utah to a buyer nor be shipped
from a point within Utah to a buyer, and (iii) the trust created by the
Trust Agreement is treated as a grantor trust for federal income tax
purposes within the contemplation of Sections 671 through 678 of the
Internal Revenue Code of 1986, there are no fees, taxes, or other charges
(except taxes imposed on fees payable to the Owner Trustee) payable to the
State of Utah or any political subdivision thereof in connection with the
execution, delivery or performance by the Owner Trustee, the Indenture
Trustee, the Lessee or the Owner Participant, as the case may be, of the
Owner Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of the
beneficial interest in the Lessor's Estate or in connection with the
issuance and acquisition of the Certificates, and neither the Owner
Trustee, the Lessor's Estate nor the trust created by the Trust Agreement
will be subject to any fee, tax or other governmental charge (except taxes
on fees payable to the Owner Trustee) under the laws of the State of Utah
or any political subdivision thereof on, based on or measured by, directly
or indirectly, the gross receipts, net income or value of the Lessor's
Estate solely by reason of the creation or continued existence of the trust
under the terms of the Trust Agreement pursuant to the laws of the State of
Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. The execution, delivery and performance by the Owner Trustee or
First Security, as the case may be, of each of the Owner Trustee Documents
and the issuance, execution, delivery and performance of the Certificates
by the Owner Trustee are not or were not, on the date of execution thereof,
in violation of the charter or by-laws of First Security or of any law,
governmental rule, or regulation of the State of Utah or the United States
of America governing the banking or trust powers of First Security or, to
our knowledge, of any indenture, mortgage, bank credit agreement, note or
bond purchase agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or, to our
knowledge, of any judgment or order of the State of Utah or the United
States of America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the laws
of the State of Utah or any political subdivision thereof in existence on
the date hereof on, based on or measured by any payments under the
Certificates or the beneficial interests in the Lessor's Estate, by reason
of the creation of the trust under the Trust Agreement, pursuant to the
laws of the State of Utah or the Owner Trustee's performance of its duties
under the Trust Agreement, within the State of Utah, which would not have
been imposed if First Security did not have its principal place of business
and did not perform its obligations under the Owner Trustee Documents in
the State of Utah.
11. Neither a Utah court nor a federal court applying federal law or
Utah law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the
Trust Agreement, except in accordance with its terms or with the consent of
the Indenture Trustee, as long as the Lien of the Indenture on the Trust
Estate has not been released or payment of the principal of, and Make-Whole
Premium, if any, and interest on, the Certificates have not been made in
full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively, the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the
rights of such Owner Participant under the Trust Agreement or in the
Trust Estate, and do not have, and may not through the enforcement of
such Creditor's rights acquire, any greater rights than such Owner
Participant with respect to the Trust Agreement or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its properties
in any court or before any administrative agency or arbitrator, which, if
adversely determined, would materially adversely affect the ability of
First Security or the Owner Trustee, as the case may be, to perform its
obligations under any of the Owner Trustee Documents, and there are no
pending or, to our knowledge, threatened actions or proceedings before any
court, administrative agency or tribunal involving First Security or the
Owner Trustee, as the case may be, in connection with the transactions
contemplated by any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the
banking and trust powers of First Security and Title II of the United States
Code entitled "Bankruptcy". In addition, we express no opinion with respect
to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as
amended (except with respect to the opinion set forth in paragraph 1 above
concerning the citizenship of First Security) and (iii) state securities or
blue sky laws. Insofar as the foregoing opinions relate to the validity
and enforceability in the State of Utah of the Certificates and the other
Owner Trustee Documents expressed to be governed by the laws of the State
of New York, we have assumed that the laws of New York are identical to the
laws of Utah in all material respects, and that the Certificates and such
other Owner Trustee Documents constitute legal, valid, binding and
enforceable documents or instruments under such laws (as to which we
express no opinion). No opinion is expressed as to the priority of any
security interest or as to title to any part of the Trust Estate.
B. The foregoing opinions regarding enforceability of any document or
instrument, except for the opinions set forth in paragraphs 11 and 12 above,
are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery by
each of the parties thereto, other than First Security and the Owner Trustee,
of the Owner Trustee Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Vice President, the facts set forth
in which we have not independently verified.
E. We have assumed the due authentication of the Certificates by the
Indenture Trustee.
F. We have assumed that all signatures (other than those of the Owner
Trustee or First Security) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express any
opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment acquired by the Owner
Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated September 23, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(6)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N662FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of June 1, 1996 (the "Pass Through Trust
Agreement"), as supplemented by the Series Supplements dated the date hereof
between Federal Express Corporation and the Pass Through Trustee, designated
as Series Supplement 1996-B1 and 1996-B2, respectively (the "Series
Supplements") and in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N662FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"); Morgan Guaranty Trust Company of New York, Bank of
America National Trust & Savings Association, The Chase Manhattan Bank,
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants; First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement; State Street, not in its individual capacity but solely
as Indenture Trustee under the Indenture; and State Street, not in its
individual capacity, except as otherwise stated therein, but solely as Pass
Through Trustee. This opinion is being delivered pursuant to Section
4.01(l)(ix) of the Participation Agreement. Except as otherwise defined
herein, all capitalized terms used herein shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Pass Through Trustee, as the case may be, is a party, the Pass Through Trust
Agreement and the Series Supplements (collectively, the "Pass Through Trustee
Documents"), the Certificate of the Massachusetts Commissioner of Banks
relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Pass Through Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Pass Through Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such agreement
is the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the Pass
Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
In rendering the opinion set forth below in paragraph 6 as to certain
Massachusetts tax matters, we have assumed that, for Federal income tax
purposes, the trusts created by the Series Supplements are not classified as
associations taxable as corporations and that the trusts created by the Series
Supplements are grantor trusts under subpart E, Part I of Subchapter J of
Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Pass Through Trustee
Documents and, in its capacity as Pass Through Trustee, to authenticate the
Pass Through Certificates delivered on the Refunding Date.
2. The execution and delivery of the Pass Through Trustee Documents
(other than the Pass Through Trust Agreement) by State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not and will not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the Pass
Through Trustee, or any order or judgment known to us, of any Massachusetts or
Federal court or governmental authority applicable to or binding on State
Street, individually or as Pass Through Trustee, or contravene the provisions
of, or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Pass Through Trustee under, its charter
documents or By-Laws or any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, in each case
known to us, or any other agreement or instrument, in each case known to us,
to which State Street, individually or as Pass Through Trustee, is a party or
by which it or any of its property may be bound or affected, other than the
Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than the Pass
Through Trust Agreement) has been duly authorized, executed and delivered by
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, and each such document constitutes a legal, valid and binding
obligation of State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, enforceable against State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, in
accordance with its terms.
5. The Pass Through Certificates have been duly authorized and
validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates are enforceable against the
Pass Through Trustee and the holders thereof are entitled to the benefits of
the Pass Through Trust Agreement and the related Series Supplements.
6. There are no fees, taxes or other governmental charges ("Taxes")
payable under the laws of the Commonwealth of Massachusetts with respect to the
execution and delivery by State Street, in its individual capacity or as Pass
Through Trustee, as the case may be, of any of the Pass Through Trustee
Documents (except for Taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts. Neither State Street, in its individual capacity or as the
Pass Through Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trusts created by the Series Supplements will, as a result of
the transactions contemplated thereby, be subject to any Taxes under the laws
of the Commonwealth of Massachusetts or any political subdivision thereof
(except for Taxes on any fees payable to State Street in its individual
capacity) which would not have been imposed if State Street did not have its
principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts, and there are no Taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for Taxes on any
fees payable to State Street in its individual capacity) upon or with respect
to the Aircraft or any Engine or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession, presence, use,
operation, condition, storage, maintenance, modification, alteration, repair,
sale, return, transfer or other disposition of the Aircraft which would not
have been imposed if State Street did not have its principal place of business
in Massachusetts or did not perform its administrative duties under the Pass
Through Trustee Documents in Massachusetts. We express no opinion as to
whether or not any fees, tax or other charges are now or hereafter may be
payable by the Owner Participant to the Commonwealth of Massachusetts or any
political subdivision thereof in connection with (a) the execution, delivery,
or performance of the Series Supplements, the Participation Agreement or any
of the other Operative Agreements and (b) the making by the Owner Participant
of its investment in the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Pass Through Trustee, to perform its obligations under the Pass Through
Trustee Documents.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.e]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.b.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.d]
EXHIBIT E-1
[FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT]
BENEFICIAL INTEREST TRANSFER AGREEMENT (this "Document"), dated as of
_______ __, ____, between ______________, a ______________ corporation
("Transferor") and ______________, a ______________ corporation ("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer by
Transferor to Transferee of all of the rights, title and interest of
Transferor in and to its interest (the "Beneficial Interest") under the Trust
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the "Trust
Agreement"), between Transferor and First Security Bank, National Association,
and the Lessor's Estate created thereunder, and all of Transferor's rights and
obligations under the Participation Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, as amended and restated as
of October 15, 1996 (the "Participation Agreement"), among Federal Express
Corporation, as Lessee, First Security Bank, National Association, as Owner
Trustee, PMCC Leasing Corporation, as Owner Participant, State Street Bank and
Trust Company, as Indenture Trustee, Morgan Guaranty Trust Company of New
York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as Original Loan Participants and State Street Bank and Trust Company, as Pass
Through Trustee, and under the other Operative Agreements and (b) the
acceptance by Transferee of such transfer and the assumption by Transferee of
such obligations of Transferor thereunder; and
WHEREAS, Section 7.03(d) of the Participation Agreement permits such
transfer and assumption upon satisfaction of certain conditions heretofore or
concurrently herewith being observed;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings ascribed thereto in the Participation
Agreement.
2. Transfer. Transferor does hereby sell, convey, assign,
transfer and set over, unto Transferee, as of the Effective Time (as defined
below), all of Transferor's present and future right, title and interest in
and to (a) all of the Beneficial Interest and (b) all of the Owner
Participant's rights and obligations under the Participation Agreement, the
Tax Indemnity Agreement, the Trust Agreement and the other Operative
Agreements and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
rights of Transferor as have arisen or accrued to Transferor prior to the
Effective Time (including without limitation, the right to receive any amounts
due or accrued to Transferor under the Operative Agreements as of a time prior
to the Effective Time and the right to receive any indemnity payment pursuant
to the Participation Agreement or the Tax Indemnity Agreement, with respect to
events occurring prior to such time); all of the foregoing that is being
transferred under this paragraph 2, the "Transferred Interest".
3. Assumption. Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of Transferor and the other parties
to the Participation Agreement, assumes and undertakes and agrees to perform
and discharge all of the duties and obligations of Transferor with respect to
the Transferred Interest whenever and wherever accrued (other than duties and
obligations of Transferor required to be performed by it on or prior to the
Effective Time). Transferee hereby confirms that, from and after the
Effective Time, Transferee (a) shall be deemed, to the extent set forth in
Section 2 hereof, the "Owner Participant" party to the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements and (b) shall be bound by all of the terms of the
Operative Agreements to the extent the same relate to the Transferred Interest.
4. Release of Transferor. At the Effective Time, Transferor shall
be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
Transferor shall in no event be released from any such duty or obligations
arising or relating to any event occurring prior to the Effective Time, or on
account of any breach by Transferor of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements, or for any
fraudulent or willful misconduct engaged in by it prior to the Effective Time,
or from any obligation that relates to any indemnity claimed by Transferor or
any Lessor's Lien attributable to Transferor.
5. Fees and Expenses. The fees, expenses and charges of the
parties to the Participation Agreement incurred in connection with the
transfer effected hereby shall be for the account of [specify
Transferor/Transferee].
6. Payments. Transferor hereby covenants and agrees to pay over to
Transferee, if and when received following the Effective Time, any amounts
(including any sums payable as interest in respect thereof) paid on account of
the Transferred Interest to or for the benefit of Transferor, and Transferee
hereby covenants and agrees to pay over to Transferor, if and when received
following the Effective Time, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Transferee that are
not attributable to the Transferred Interest and to which Transferor is
otherwise entitled.
7. Investment Purpose. Transferee hereby represents and warrants
that, as of the date hereof, it is acquiring the Transferred Interest for its
account with no present intention of distributing such Transferred Interest
or any part thereof in any manner which would violate the Securities Act of
1933, as amended, but without prejudice, however, to the right of Transferee
at all times to sell or otherwise dispose of all or any part of such
Transferred Interest in compliance with Section 7.03(d) of the
Participation Agreement.
8. Representations and Warranties of Transferor. Transferor
represents and warrants to Transferee that as of the Effective Time:
(a) Organization and Power. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power, authority and
legal right to execute, deliver and perform this Agreement and to
enter into and carry out the transactions contemplated hereby and in
the other Operative Agreements (the "Transactions").
(b) Authorization, Execution and Validity. This Agreement has been
duly authorized, executed and delivered by Transferor and constitutes
the legal, valid and binding obligation of Transferor, enforceable
against it in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity.
(c) Conflict. The execution, delivery and performance by
Transferor of this Agreement and compliance by Transferor with all of
the provisions hereof do not contravene any regulation or any order
of any governmental authority applicable to or binding on Transferor,
or contravene the provisions, or constitute a default by Transferor
under, its certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
Transferor is a party or by which Transferor or any of its Properties
is bound or affected.
(d) Consents. No consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice or the
taking of any other action with respect to, any governmental
authority on the part of Transferor is required in connection with
the execution, delivery and performance by Transferor of this
Agreement.
(e) Litigation. There are no proceedings pending or, to the
knowledge of Transferor, threatened against Transferor before any
governmental authority that would materially and adversely affect the
ability of Transferor to consummate the Transactions.
(f) No Liens. The Trust Estate is free of Lessor's Liens
attributable to Transferor.
(g) Compliance with Operative Agreements. Transferor has fully
performed all of its obligations under the Participation Agreement
and under each other Operative Agreement which obligations by their
terms are required to be satisfied or performed prior to the
Effective Time or prior to the consummation of the Transactions.
(h) Default. As a result of the transfer effected hereby, no
Indenture Default attributable to the Owner Participant or the Owner
Trustee has occurred and is continuing.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement
with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee,
including, without limitation, the airworthiness, value, condition,
workmanship, design, patent or trademark infringement, operation,
merchantability or fitness for use of the Aircraft.
9. Representations and Warranties of Transferee. Transferee
represents and warrants to Transferor and to the other parties to the
Participation Agreement that as of the Effective Time:
(a) Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of [ ], has
the full corporate power, authority and legal right to carry on its
business as now conducted, and has full corporate power, authority
and legal right to execute, deliver and perform this Agreement and to
enter into and carry out the transactions contemplated hereby and in
the other Operative Agreements (the "Transactions");
(b) Transferee has full corporate power, authority and legal right
to execute, deliver and enter into this Agreement and the other
Operative Agreements and full corporate power and authority to
perform its obligations thereunder, and such execution, delivery and
performance do not and will not contravene any applicable law or any
order of any governmental authority applicable to or binding on the
Transferee, or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien upon the property of the
Transferee under, its articles of incorporation or by-laws or any
material indenture, mortgage, contract or other agreement or
instrument to which the Transferee is a party or by which it or any
of its property may be bound or affected;
(c) the execution, delivery and performance of this Agreement by the
Transferee (i) has been duly authorized by all necessary corporate
action and (ii) does not require any approval of the shareholders of
the Transferee or any approval or consent of, or notice to, any
trustee or holders of any indebtedness or obligation of the
Transferee, except for such approvals and consents as have already
been obtained;
(d) this Agreement has been duly executed and delivered by the
Transferee, and constitutes the legal, valid and binding obligation
of the Transferee, enforceable against the Transferee in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity;
(e) there are no proceedings or actions pending or, to the
knowledge of the Transferee, threatened against the Transferee before
any governmental authority in which there is a reasonable probability
of an adverse determination that individually or in the aggregate
would materially and adversely impair the ability of the Transferee
to perform its obligations under this Agreement or the Operative
Agreements, or which involve the Transactions or question the
validity of any Operative Agreement to which the Owner Participant is
a party or any action taken or to be taken pursuant thereto; and the
Transferee is not in default with respect to any order of any
governmental authority which involves the Transactions or the default
under which would materially and adversely affect the ability of the
Transferee to perform its obligations under this Agreement or any of
the Operative Agreements;
(f) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any governmental authority is required under any law for
the execution and delivery by the Transferee of this Agreement, or
the carrying out by the Transferee of any of the Transactions, other
than any such consent, approval, order, authorization, registration,
notice or action as has been duly obtained, given or taken;
(g) the Lessor's Estate is free of any Lessor's Liens attributable
to the Transferee;
(h) the Transferee, upon execution of this Agreement, will not be
in default under any of the Operative Agreements;
(i) no part of the funds to be used by it to acquire the interests
acquired by the Owner Participant under the Participation Agreement
constitutes assets (within the meaning of ERISA and any applicable
rules and regulations) of any employee benefit plan subject to Title
I of ERISA or of any plan or individual retirement account subject to
Section 4975 of the Code;
(j) Transferee is a "U.S. Person" as defined in Section 7701(a)(30)
of the Code and is not a tax resident of another country and if it
shall at any time cease to be such a "U.S. Person" or shall become a
tax resident of another country, it shall furnish to the Agent and
each Loan Certificate Holder an indemnity, in form and substance
reasonably satisfactory to such Loan Certificate Holder, for any
Taxes that may be imposed on such Holder as a result of its failure
to be such a "U.S. Person" or as a result of its being a tax resident
of another country, and it shall be personally liable for any debt
service to the extent that the receipt of rentals is reduced by
reason of any withholding Taxes that result from such failure to be
such a "U.S. Person" or from being a tax resident of another country;
(k) [After giving effect to a voting trust or similar
agreement(1), Transferee is a Citizen of the United States]
[applicable if Aircraft is registered in the United States or is
proposed to be so registered]
---------------------
(1) Such voting trust or similar agreement must be reasonably
satisfactory to the Lessor and the Indenture Trustee.
(l) On and as of the Effective Date, the representations and
warranties of the Owner Participant in Article 7 of the Participation
Agreement are true and correct as to the Transferee; and
(m) Transferee satisfies the conditions applicable to a transferee
of the Beneficial Interest set forth in Section 7.03(d) of the
Participation Agreement, including without limitation, the condition
set forth in the last sentence thereof [and to the extent the same
has been requested by the Lessee or the Indenture Trustee, Transferee
has heretofore provided to the Lessee and the Indenture Trustee its
most recent audited financial statements, which show a consolidated
tangible net worth or combined capital and surplus of at least
$75,000,000] [remove bracketed language if an Owner Participant
Guaranty is provided].
(n) the Transferee has, independently and without reliance upon any
other party (including without limitation the Transferor) and based
on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement,
and the Transferee has established adequate means of obtaining from
Lessee on a continuing basis information pertaining to, and is now
and on a continuing basis will be completely familiar with, the
financial condition, operations, properties and prospects of Lessee.
Notwithstanding the foregoing or anything else contained in this Agreement, it
makes no representation or warranty in this Agreement with respect to laws,
rules or regulations relating to aviation or to the nature or use of the
equipment owned by the Owner Trustee, including, without limitation, the
airworthiness, value, condition, workmanship, design, patent or trademark
infringement, operation, merchantability or fitness for use of the Aircraft,
other than such laws, rules or regulations relating to the citizenship
requirements of it under applicable aviation law.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Effectiveness. This Agreement shall be effective upon the mutual
execution and delivery of this Agreement (the "Effective Time").
12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by both parties so long
as each party shall sign at least one counterpart.
13. Beneficiaries. Each of the Owner Trustee, the Indenture Trustee,
the Original Loan Participants and the Lessee, together with their respective
successors and permitted assigns, is and shall be deemed a third party
beneficiary of this Agreement entitled to enforce this Agreement directly and
in its own name and enforce any rights or claims of the parties hereto.
14. Further Assurances. Each party agrees that from time to time
after the Effective Time, it shall execute and deliver or cause to be executed
and delivered such instruments, documents and papers, and take all such
further action as may be reasonably required in order to consummate fully the
purposes of this Agreement and to implement the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
[TRANSFEROR]
By:____________________________
Name:
Title:
[TRANSFEREE]
By:____________________________
Name:
Title:
EXHIBIT E-2
[FORM OF OWNER PARTICIPANT GUARANTY]
TRANSFEREE'S PARENT GUARANTY, dated as of ___________ __, ____, (this
"Guaranty") by ____________________, a ___________ corporation (the
"Guarantor"), to First Security Bank, National Association, in its individual
capacity and as Owner Trustee, State Street Bank and Trust Company, as
Indenture Trustee, the Original Loan Participants and the Lessee referred to
in the Participation Agreement described below (collectively, together with
their successors and assigns and the holders from time to time of the Loan
Certificates, the "Beneficiaries").
W I T N E S S E T H :
WHEREAS, ___________, a ____________ corporation (the "Transferor"), is
party to the Participation Agreement (Federal Express Corporation Trust No.
N662FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996 (as amended, modified or supplemented from time to time, the
"Participation Agreement"), among Federal Express Corporation, as Lessee, PMCC
Leasing Corporation, as Owner Participant, First Security Bank, National
Association, as Owner Trustee, State Street Bank and Trust Company, as
Indenture Trustee, Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants and State Street Bank and Trust Company, as Pass Through Trustee;
and
WHEREAS, the Transferor wishes to transfer, among other things, all of
the rights, title and interest of the Transferor in and to the Beneficial
Interest under the Trust Agreement and the Lessor's Estate created thereunder,
and all of the Transferor's rights and obligations under the Participation
Agreement, the Trust Agreement and the other Operative Agreements to
__________________, a _______________ [corporation] (together with its
successors and assigns, the "Transferee"), a subsidiary of the Guarantor,
pursuant to the Beneficial Interest Transfer Agreement, dated as of the date
hereof (the "Transfer Agreement"), between the Transferor and the Transferee;
and
WHEREAS, the terms of the Participation Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guaranty by the Guarantor;
NOW, THEREFORE, in order that the Transferor may make the aforementioned
transfer to the Transferee, the Guarantor hereby agrees with and for the
benefit of the Beneficiaries as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings assigned thereto in the Participation
Agreement or the Transfer Agreement.
2. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees, as primary obligor and not merely surety, to the Beneficiaries the
prompt and complete payment by the Transferee when due of all payment
obligations of the Transferee under the Operative Agreements without offset or
deduction and the timely performance of all other obligations of the
Transferee thereunder (such payment and other obligations, the "Obligations"),
and the Guarantor further agrees to pay any and all expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be paid
or incurred by the Beneficiaries in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guaranty.
The Guarantor will not exercise any rights that it may now or
hereafter acquire against Transferee that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty,
the Transferred Interest or the Operative Agreements, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against Transferee or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from Transferee,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations have been performed in full and all
other amounts payable under this Guaranty shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the final payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of any Beneficiary and shall forthwith
be paid to such Beneficiary to be credited and applied to the Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured,
in accordance with the terms of the Operative Agreements, or to be held as
collateral for any Obligations or other amounts payable under this Guaranty
thereafter arising.
3. No Subrogation. Notwithstanding anything to the contrary in
this Guaranty, the Guarantor hereby agrees not to assert any rights which may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the Bankruptcy Code, under common law or
otherwise) of any Beneficiary against the Transferee for the payment of the
obligations until all of the Obligations shall have been satisfied by payment
and performance in full.
4. Amendments with Respect to the Obligations; Waiver of Rights.
The Guarantor shall remain fully obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to
or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the obligations continued, and the Obligations, may, from time to
time, in whole or part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any
Operative Agreement may be amended, modified, supplemented or terminated, in
whole or in part, in accordance with the provisions thereof from time to time.
When making any demand hereunder against the Guarantor, a Beneficiary may, but
shall be under no obligation to, make a similar demand on the Transferee, and
any failure by a Beneficiary to make any such demand or to collect any
payments from the Transferee or any release of the Transferee shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a
matter of law, of any Beneficiary against the Guarantor. For the purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings. The Guarantor represents and warrants that it is the parent of
the Transferee, and agrees that its obligations hereunder shall continue
unimpaired, even if the Guarantor is no longer an Affiliate of the Transferee.
5. Guaranty Absolute and Unconditional. The Guarantor guarantees
that the Obligations will be paid and performed strictly in accordance with
the terms of the Transfer Agreement and the Operative Agreements, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any such terms or the rights of any Beneficiary with respect
thereto. The obligations of the Guarantor under this Guaranty are independent
of the Obligations or any other obligations of any other party, and a separate
action or actions may be brought and prosecuted against the Guarantor to
enforce this Guaranty, irrespective of whether the Transferee or any other
party is joined in any such action or actions. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guaranty or acceptance of this Guaranty; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guaranty; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guaranty. The Guarantor waives, to the fullest extent permitted by
applicable law, diligence, presentment, promptness, protest, mitigation of
damages by the Beneficiaries demand for payment and notice of default or
nonpayment to or upon the Transferee or the Guarantor with respect to the
Obligations. The Guarantor further waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to all
Obligations, whether existing now or in the future. The Guarantor understands
and agrees that, to the fullest extent permitted by applicable law, this
Guaranty shall be construed as a continuing, absolute and unconditional
guaranty of payment and performance (and not merely of collectibility) without
regard to:
(a) the validity, regularity or enforceability of the Transfer
Agreement, any Operative Agreement, or any of the Obligations at any
time or from time to time held by any Beneficiary;
(b) any defense, set-off, rebate, adjustment, withholding,
deduction or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by
the Transferee against any Beneficiary or any agreement or instrument
relating thereto or;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations or any other
obligations of any other party under the Transfer Agreement, the
Operative Agreements, or any other amendment or waiver of or any
consent to departure from the Transfer Agreement or other Operative
Agreements;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(e) any change, restructuring or termination of the corporate
structure or existence of the Guarantor or the Transferee or any of
the Affiliates of either;
(f) any defect in the title, condition, design, operation or
fitness of, or any interference with the operation, use or possession
of, the Aircraft;
(g) any failure to establish, perfect or preserve title to or any
security interest in or to the Aircraft or any other collateral
security for the Obligations; or
(h) any other circumstance whatsoever or any existence of or
reliance on any representation by any Beneficiary that might
otherwise constitute a defense available to, or a discharge of, the
Guarantor or any other guarantor or surety.
When pursuing its rights and remedies hereunder against the Guarantor,
any Beneficiary may, but shall be under no obligation to, pursue such rights
and remedies as it may have against the Transferee for the Obligations, and
any failure by any Beneficiary to pursue such other rights or remedies or to
collect any payments from the Transferee, or any release of the Transferee,
shall not, to the fullest extent permitted by applicable law, relieve the
Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of any Beneficiary against the Guarantor. This Guaranty is a continuing
guaranty and shall remain in full force and effect until the earlier of (x)
the date that all of the Obligations are satisfied by payment and performance
in full and (y) the date that all right, title and interest of the Transferee
shall have been transferred to a Person meeting the requirements of Section
7.03(d) of the Participation Agreement in accordance with said section;
provided that this Guaranty shall remain in full force and effect with respect
to obligations relating to the period prior to such transfer.
6. Reinstatement. This Guaranty shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored
or returned by any Beneficiary upon the insolvency, bankruptcy dissolution,
liquidation or reorganization of the Transferee or the Guarantor, or upon or
as a result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Transferee or the Guarantor or any
substantial part of its property, or otherwise, all as though such payments
had not been made and the Guarantor agrees that it will indemnify any such
Beneficiary on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) by such
Beneficiary in connection with such rescission or restoration.
7. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction, rebate,
adjustment or withholding, and shall be made in U.S. Dollars in immediately
available funds.
8. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and the Transferee is currently a subsidiary of the
Guarantor;
(b) the Guarantor has the power and authority and the legal right
to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally;
(d) the execution, delivery and performance of this Guaranty will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor or any of its constitutive documents;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no
consent of any other person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty;
(f) the Guarantor is a [a bank, savings institution, finance
company, leasing company or trust company, national banking
association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or
similar trust or fund, insurance company, fraternal benefit society
or corporation acting for its own account having a combined capital
and surplus (or, if applicable, consolidated tangible net worth or
its equivalent)] of not less than $75,000,000 [and has, if the same
have been requested by the Lessee or the Indenture Trustee,
heretofore furnished to the Lessee and the Indenture Trustee copies
of its most recent audited financial statements];
(g) there are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived; and
(h) the Guarantor has, independently and without reliance upon any
Beneficiary and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to
enter into this Guaranty, and the Guarantor has established adequate
means of obtaining from Transferee on a continuing basis information
pertaining to, and is now and on a continuing basis will be
completely familiar with, the financial condition, operations,
properties and prospects of Transferee.
9. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. Jurisdiction; Waiver of Jury Trial, Etc.
(a) The Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America
sitting in New York, New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to
this Guaranty, the Transfer Agreement or any Operative Agreement to
which it is or is to be a party, or for recognition or enforcement
of any judgment, and the Guarantor hereby irrevocably and
unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The
Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this Guaranty shall affect any right that any
party may otherwise have to bring any action or proceeding relating
to this Guaranty, the Transfer Agreement or any Operative Agreement
to which it is or is to be a party in the courts of any jurisdiction.
(b) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection
that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Guaranty, the
Transfer Agreement or any Operative Agreement to which it is or is to
be a party in any New York State or federal court. The Guarantor
hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
11. Section Headings. The Section headings used in this Guaranty
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any Beneficiary, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right power or privilege. A waiver by a
Beneficiary of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that such Beneficiary would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. Amendments and Waivers. None of the terms or provisions of this
Guaranty may be waived, amended or supplemented or otherwise modified except
by a written instrument executed by the Guarantor and each Beneficiary.
14. Successors and Assigns. This Guaranty shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Beneficiaries and their respective successors and permitted assigns but
Guarantor may not assign this Guaranty without prior written consent of the
Beneficiaries except to an assignee making, as of the date of such assignment,
(i) representations and warranties substantially similar to those contained in
Section 8 hereof and (ii) a representation that it is a U.S. citizen, unless,
in the case of the preceding clause (ii) any of (a) the aircraft is not then
registered in the United States nor contemplated to be so registered or (b) a
voting trust or similar arrangement reasonably satisfactory to the
Beneficiaries is in place with respect to such registration or (c) it is not
necessary for the Guarantor to be a U.S. citizen in order for the aircraft to
remain registered in the United States.
15. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given
or made, when delivered by hand or by mail, upon receipt, or, when delivered
by facsimile transmission, upon being sent and confirmed, addressed (a) in the
case of the Guarantor, to the Guarantor at the address set forth under its
signature below, and (b) in the case of any Beneficiary, to such Beneficiary
at the address provided for such Beneficiary in or pursuant to the
Participation Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
[NAME OF GUARANTOR]
_________________________________
Name:
Title:
__________________________________
__________________________________
__________________________________
Address for Notices:
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
Dated as of August 1, 1996
Amended and Restated as of October 15, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
PMCC LEASING CORPORATION,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
THE CHASE MANHATTAN BANK
COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH),
Original Loan Participants
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 771, REGISTRATION NO. N667FE
TABLE OF CONTENTS
Page
----
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 6
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 16
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 16
Section 6.02. Offering by Lessee....................................... 22
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 30
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate.................................................. 31
Section 7.02. Citizenship.............................................. 31
Section 7.03. Representations, Warranties and Covenants of Owner
Participant............................................. 32
Section 7.04. Representations, Covenants and Warranties of FSB and the
Owner Trustee........................................... 37
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee................................................ 40
Section 7.06. Indenture Trustee's Notice of Default.................... 42
Section 7.07. Releases from Indenture.................................. 42
Section 7.08. Covenant of Quiet Enjoyment.............................. 42
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties.......................... 42
Section 7.10. Survival of Representations, Warranties and Covenants.... 43
Section 7.11. Lessee's Assumption of the Certificates.................. 43
Section 7.12. Indebtedness of Owner Trustee............................ 45
Section 7.13. Compliance with Trust Agreement, Etc..................... 46
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 46
Section 8.02. After-Tax Basis.......................................... 52
Section 8.03. Time of Payment.......................................... 53
Section 8.04. Contests................................................. 53
Section 8.05. Refunds.................................................. 56
Section 8.06. Lessee's Reports......................................... 56
Section 8.07. Survival of Obligations.................................. 57
Section 8.08. Payment of Taxes......................................... 57
Section 8.09. Reimbursements by Indemnitees Generally.................. 57
Section 8.10. Obligations of Lessee Unsecured.......................... 57
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 58
Section 9.02. After-Tax Basis.......................................... 61
Section 9.03. Subrogation.............................................. 62
Section 9.04. Notice and Payment....................................... 62
Section 9.05. Refunds.................................................. 62
Section 9.06. Defense of Claims........................................ 63
Section 9.07. Survival of Obligations.................................. 64
Section 9.08. Effect of Other Indemnities.............................. 64
Section 9.09. Interest................................................. 64
Section 9.10. Obligations of Lessee Unsecured.......................... 65
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 65
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 67
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 68
Section 12.02. Interest of Holders of Certificates..................... 69
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 69
Section 13.02. Further Assurances...................................... 69
Section 13.03. No Retroactive Application.............................. 69
Section 13.04. Pass Through Trustee's Acknowledgment................... 70
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 70
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 71
Section 15.02. Reoptimization.......................................... 74
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 76
Section 17.02. [Intentionally Left Blank.]............................. 76
Section 17.03. Counterparts............................................ 76
Section 17.04. No Oral Modifications................................... 76
Section 17.05. Captions................................................ 77
Section 17.06. Successors and Assigns.................................. 77
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee............................... 77
Section 17.08. Severability............................................ 78
Section 17.09. Public Release of Information........................... 78
Section 17.10. Certain Limitations on Reorganization................... 78
Section 17.11. GOVERNING LAW........................................... 78
Section 17.12. Section 1110 Compliance................................. 79
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 79
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E-1 Form of Assignment and Assumption Agreement
EXHIBIT E-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N667FE) dated as of August 1, 1996, as amended and restated as of October 15,
1996 (this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware
corporation (herein, together with its successors and permitted assigns, the
"Lessee"), PMCC LEASING CORPORATION, a Delaware corporation (herein, together
with its successors and permitted assigns, the "Owner Participant"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, THE CHASE MANHATTAN BANK, COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH), (individually, together with its successors and
permitted assigns, an "Original Loan Participant" and collectively the
"Original Loan Participants"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity as trustee, together with its
successors and permitted assigns, the "Owner Trustee"), STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, not in its individual capacity,
except as otherwise expressly stated herein, but solely as indenture trustee
under the Indenture referred to below (in such capacity as trustee, together
with its successors and permitted assigns, the "Indenture Trustee") and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with FSB in its individual capacity,
pursuant to which FSB agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend and restate the Original Ancillary
Agreement I, to amend the Original Tax Indemnity Agreement and to amend and
restate the Original Trust Agreement, each such amendment and restatement to
be executed and delivered simultaneously with the purchase of the Certificates
by the Pass Through Trustee for the Pass Through Trusts and the Refinancing in
full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent in the amount of all
accrued and unpaid interest on the Original Loan Certificates to but
excluding the Refunding Date, which transfer shall constitute the payment
of a like amount of such accrued and unpaid interest;
(ii)the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii)for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv)the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi)the Owner Trustee shall cause the Certificates to be delivered to
the applicable Pass Through Trustee in accordance with Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass Through
Trustee, upon the request of the Owner Trustee, the Certificates as provided
in Section 2.02 hereof. The Owner Participant hereby requests and directs the
Owner Trustee to execute and deliver this Agreement and, subject to the terms
hereof, to take the actions specified herein. The Original Loan Participants
by their execution and delivery hereof, request and direct the Indenture
Trustee to execute and deliver this Agreement and concurrently with the events
specified in clauses (iii) through (v) of this Section 2.01(b) and subject to
the terms and conditions hereof to take the actions contemplated herein. The
parties hereto, including, without limitation, the Original Loan Participants,
confirm that, as provided in Section 2.06 of the Original Indenture, upon
payment in full of the principal amount, Breakage Costs, if any, and interest
on the Original Loan Certificates and all other sums then payable to the
Original Loan Participants under the Original Agreements to the extent
specified in subsection (c) below, the Original Loan Participants shall have
no further interest in, or other right or obligation with respect to, the
Trust Indenture Estate, the Original Agreements or the Operative Agreements
(it being understood that the foregoing shall not limit or detract from any
claim that any Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participants
shall, until the payment in full of such amounts to the Agent on behalf of the
Original Loan Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and shall, upon such payment and thereafter, be governed by this Agreement.
The Lessee hereby consents to the foregoing.
(c) Not less than four (4) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before November 30, 1996, then the rights and
obligations of the parties to the Original Participation Agreement, including,
without limitation, the Original Loan Participants, shall be governed by the
Original Participation Agreement and the other Operative Agreements
contemplated thereby or in effect immediately prior to the effectiveness of
this Agreement and this Agreement shall be of no further force and effect,
except that the Lessee shall be obligated hereby to pay all fees and expenses
of the Original Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee for
each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of the
Pass Through Trustee on behalf of such Pass Through Trust, in the principal
amounts, Maturity, bearing the interest rate and the other economic terms
specified in the Series Supplements and otherwise as provided in Section
2.04 of the Indenture. The Pass Through Certificates shall be registered
under the Securities Act, any applicable state securities laws shall have
been complied with, and the Pass Through Agreement shall have been qualified
under the Trust Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee or their special counsel, would
make it illegal for the Owner Participant, the Lessee, the Owner Trustee,
the Pass Through Trustee or the Indenture Trustee, and no change in
circumstances shall have occurred which would otherwise make it illegal or
otherwise in contravention of guidance issued by regulatory authorities for
the Owner Participant, the Lessee, the Owner Trustee, the Pass Through
Trustee or the Indenture Trustee, to participate in the transaction to be
consummated on the Refunding Date; and no action or proceeding shall have
been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Owner Participant, the Indenture Trustee or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency,
as of the Refunding Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or by
any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the
Owner Participant, as the case may be, of such documents shall have been
delivered to the Owner Participant, the Lessee, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of each of the Lease, the Lease Supplement and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(vi) the Ancillary Agreement I; and
(vii) the Ancillary Agreement II.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participants, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its counsel) shall have
received the following, in each case in form and substance satisfactory to
it:
(i) a copy of the certificate of incorporation and by-laws of
the Lessee, certified by the Secretary or an Assistant Secretary of
the Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Refunding Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Refunding Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which the Owner
Participant is or is to be a party and each other document to be
executed and delivered by the Owner Participant in connection with
the transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws
and other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of each
of the Original Agreements to which it is party, this Agreement, the
Indenture and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Indenture Trustee in connection with the transactions
contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws
and other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant
as the Indenture Trustee, the Pass Through Trustee or the Owner
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1996 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Report on Form 10-Q for
the fiscal quarter ended August 31, 1996) and (ii) in the Lessee's
Current Reports on Form 8-K dated June 7, 1996 and August 16, 1996,
as to which such officer will make no certification concerning the
liability of the Lessee (if any), or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, no material adverse change has occurred in
the financial condition, business or operations of the Lessee from
that shown in the audited financial statements of the Lessee as of
May 31, 1995 or the unaudited consolidated financial statements of
the Lessee as of August 31, 1996 and nothing has occurred which will,
in the judgment of such officer, materially adversely affect the
ability of the Lessee to carry on its business or to perform its
obligations under this Agreement and each other Operative Agreement
to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant. On the Refunding
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Refunding Date,
stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto, are true and correct on and as of the Refunding Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSB and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSB and SSB, respectively, dated the
Refunding Date, stating with respect to FSB and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSB in its
individual capacity and as Owner Trustee, of SSB in its individual
capacity and as Indenture Trustee and of SSB in its individual
capacity and as Pass Through Trustee contained in this Agreement, the
Lease, the Trust Agreement and the Indenture and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSB in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSB and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participants, the Underwriters, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participants, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) George W. Hearn, Vice President - Law of the Lessee, in
the form of Exhibit A(1)(a) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Owner Trustee, the Pass Through Trustee and the Indenture Trustee;
(ii) Simpson Thacher & Bartlett, special counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and the General
Counsel's Office of the Owner Participant, in the form of Exhibit
A(2)(b) hereto, each addressed to the Agent, the Original Loan
Participants, the Underwriters, the Owner Participant, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(vi) Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee; and
(vii) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(6) hereto and addressed to
the Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee.
(m) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(n) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement.
(q) Notice, Etc. The Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Pass Through Trustee shall have
received a refunding notice pursuant to Section 2.01(c) hereof.
(r) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraph (f) of this
Section 4.01; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
then due and payable shall have been duly paid in full.
(s) Governmental Compliance. All appropriate action required to have
been taken by the FAA, or any governmental or political agency, subdivision
or instrumentality of the United States, prior to the Refunding Date in
connection with the transactions contemplated by this Agreement shall have
been taken, and all orders, permits, waivers, authorizations, exemptions
and approvals (collectively "permits") of such entities required to be in
effect on the Refunding Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such permits
shall be in full force and effect on the Refunding Date.
(t) Compliance with Original Participation Agreement. All conditions
precedent set forth in Section 15.01 of the Original Participation
Agreement shall be met to the satisfaction of the Owner Participant.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to
(i) the due recording of such documents and the documents identified in
Section 4.01(i) of the Original Participation Agreement and (ii), subject to
customary qualifications, the lack of any intervening documents with respect
to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l)(ii), (iii), (iv),
(v), (vi) and (vii) of Section 4.01 hereof and the Underwriters and the Owner
Participant shall have made available the amounts required to be paid by them
pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Report on Form 10-Q for the fiscal
quarter ended August 31, 1996) and (ii) in the Lessee's Current Reports on
Form 8-K dated June 7, 1996 and August 16, 1996, as to which no
representation is made concerning the Lessee's liability (if any) or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, if adversely determined,
would materially and adversely affect the consolidated financial condition,
business or operations of the Lessee, or (C) if adversely determined would
adversely affect the ability of the Lessee to perform its obligations under
the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Transportation Code of the Indenture, the Trust Agreement
and the Lease, (B) the filing of the financing statements referred to in
Section 4.01(f) hereof and (C) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document, is necessary or advisable in order (i) to establish the Owner
Trustee's title to and interest in the Aircraft and the Lessor's Estate as
against the Lessee and any third parties, or (ii) to perfect the first
security interests in and mortgage Lien on the Trust Indenture Estate in
favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Reports on Form 10-K for the
fiscal years ended May 31, 1995 and May 31, 1996 and its Quarterly Report
on Form 10-Q for the fiscal quarter ended August 31, 1996, and of the
audited consolidated balance sheets of the Lessee for the fiscal years
ended May 31, 1995 and May 31, 1996 and the unaudited consolidated balance
sheet of the Lessee as of August 31, 1996, and the related consolidated
statements of income, changes in common 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, except as therein
noted, by Arthur Andersen LLP, independent public accountants; said
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied and present fairly the
financial position of the Lessee as of such dates and the results of its
operations and cash flows for such periods and such Annual Reports,
Quarterly Report and financial statements did not, as of their respective
dates of filing with the SEC, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained
therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the imposition
of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Refunding Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in the
performance of any term or condition of the Purchase Agreement, the Purchase
Agreement Assignment, the Engine Warranty Assignment and the GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof; and
(y) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will promptly take, or cause to be taken, at
the Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary, or as
requested by the Indenture Trustee and appropriate, to maintain the
perfection of the first security interest and the Lien created by the
Indenture, and the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties or if
the Lessee cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee and the Owner Trustee timely notice of the necessity
of such action, together with such instruments, in execution form, and such
other information as may be required to enable either of them to take such
action at the Lessee's cost and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered, in the name of the Owner Trustee, under the Transportation
Code; provided, however, that the Owner Participant, the Owner Trustee and
the Indenture Trustee agree that if at any time after December 31, 2003, so
long as no Event of Default shall have occurred and be continuing, the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate under the laws of such
jurisdiction of reregistration, in the name of the Lessee or a sublessee as
a "lessee" or a "sublessee"), at the Lessee's expense, in a country listed
in Schedule III hereto with which the United States then maintains normal
diplomatic relations (and which is not then experiencing war or substantial
civil unrest), the Owner Participant, upon receipt by the Owner
Participant, the Owner Trustee and the Indenture Trustee of the assurances
and opinion described below, shall not unreasonably withhold their consent
to such change in registration (it being agreed, without limitation, that
the inability of the Lessee to deliver such assurances or such opinion
shall constitute reasonable grounds to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required) and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity, and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity, and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Tax Indemnity Agreement) for which the Lessee has not agreed to
indemnify the Owner Participant to its reasonable satisfaction, the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee (or
any successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(L) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(M) that appropriate deregistration powers of attorney in favor
of the Owner Trustee and the Indenture Trustee have been executed and
delivered by the Lessee and any sublessee and, if necessary or
desirable for the effectiveness thereof, filed with the relevant
aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might reasonably have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any state
thereof (it being understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to cover
such risk and the Lessee undertakes to keep such insurance in full
force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft or under the Lease and
(unless the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft;
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request; and
(H) the Lien of the Indenture continues to constitute a first
priority, duly perfected Lien on the Aircraft.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company (or Person which acquires
by conveyance, transfer or lease the assets of the Lessee) is in compliance
with all of the terms and conditions of this Agreement and the Lease and
each other Operative Agreement and each other document contemplated hereby
or thereby; provided that no such merger, consolidation or conveyance,
transfer or lease shall be permitted if the same gives rise to an Event of
Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become the Lessee
hereunder in the manner prescribed in this Section 6.03(g) from its
liability hereunder or under the other Operative Agreements. Nothing
contained herein shall permit any lease, sublease, or other arrangement for
the use, operation or possession of the Aircraft except in compliance with
the applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to its stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any officer of the Lessee obtaining knowledge of any
condition or event which constitutes a Default or an Event of
Default, an officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is taking
or proposes to take with respect thereto;
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Section 7.03(d) hereof, at all
times be within its control and the foregoing representation shall not limit
the Owner Participant's right to transfer or sell such interests pursuant to
the terms of this Agreement. Neither the Owner Participant nor anyone
authorized to act on its behalf has directly or indirectly offered any
interest in the Lessor's Estate or the Trust Agreement, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from,
anyone. The Owner Participant further represents and warrants that neither it
nor anyone authorized to act on its behalf has made or will make any offer,
solicitation or sale of any interest in the Lessor's Estate or the Trust
Agreement in violation of the provisions of Section 5 of the Securities Act of
1933, as amended. No representation in this Section 7.01(b) shall include any
action or inaction of the Lessee, the Agent, First Chicago Leasing Corporation
or the Underwriters whether or not such action or inaction is purportedly on
behalf of the Owner Trustee, the Owner Participant or any of their Affiliates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee or
the Owner Participant that such lack of United States citizenship would have
any adverse effect on the Lessee or the Owner Participant. The Owner Trustee,
in its individual capacity, further covenants that if at any time it appears
reasonably probable that it will cease to be a Citizen of the United States
based on information that is (i) known to a Responsible Officer or (ii)
generally known to the public, it will promptly so notify, to the extent
permitted by law, all parties to this Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) either it
shall cease to be, or an event which has been publicly disclosed has occurred
of which the Owner Participant has knowledge and which will cause the Owner
Participant to cease to be, a Citizen of the United States and (ii) the
Aircraft shall or would therefore become ineligible for registration in the
name of the Owner Trustee under the Transportation Code and regulations then
applicable thereunder, then the Owner Participant shall give notice thereof to
the Lessee, the Owner Trustee and the Indenture Trustee and shall (at its own
expense and without any reimbursement or indemnification from the Lessee)
immediately (and in any event within a period of 20 days) (x) effect a voting
trust or other similar arrangement, (y) transfer in accordance with the terms
of this Agreement and the Trust Agreement all its rights, title and interest
in and to such Trust Agreement, the Lessor's Estate and this Agreement, or (z)
take any other alternative action that would prevent any deregistration, or
maintain or permit the United States registration, of the Aircraft. It is
agreed that the Owner Participant shall be liable to pay promptly on request
(A) to each of the other parties hereto any actual damages (but not
consequential damages) suffered by any such other party to the extent the same
shall result from the representation and warranty of the Owner Participant in
the first sentence of Section 7.02(a) hereof proving to be untrue as of the
Refunding Date; and (B) to the Lessee, the Indenture Trustee or the Pass
Through Trustee for any damages actually (but not consequentially) incurred by
the Lessee, the Indenture Trustee and the Pass Through Trustee as a result of
the Owner Participant's failure to comply with its obligations pursuant to the
first sentence of this Section 7.02(c); provided, that, the foregoing shall
not restrict the Pass Through Trustee or the Indenture Trustee from asserting
against the Owner Participant any damages actually incurred by the holders of
any Pass Through Certificates. Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the first
sentence of this Section 7.02(c), but without any obligation on the part of
such other party to take any action believed by it in good faith to be
unreasonably burdensome to such party or materially adverse to its business
interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement;
(ii)the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary corporate action on its part and, assuming the accuracy of the
Lessee's representations in Section 6.01(o) hereof, do not require any
governmental approvals that would be required to be obtained by the Owner
Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii), 6.02 and 7.09 hereof and compliance
with Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of the Original Agreements to which it
is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement nor compliance with the terms and provisions hereof or thereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under any law, governmental rule or regulation
applicable to the Owner Participant or the charter documents, as amended, or
bylaws, as amended, of the Owner Participant or any order, writ, injunction
or decree of any court or governmental authority against the Owner
Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its Properties is
bound, or constitutes or will constitute a default thereunder or results or
will result in the imposition of any Lien upon any of its Properties;
(iv)the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Owner Participant or an adverse effect on the ability
of the Owner Participant to perform its obligations under the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party and the Owner Participant
knows of no pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving it in connection with the
transactions contemplated by the Operative Agreements;
(vii)neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is nor the performance of its obligations hereunder
or thereunder requires the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any governmental authority or agency that would be required to be obtained
or taken by the Owner Participant except for filings contemplated by this
Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix)it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and is not a tax resident of another country;
(x) it has a consolidated tangible net worth of not less than
$75,000,000; and
(xi) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee that the Owner Participant
will, at its own cost and expense, take such action as may be necessary (by
bonding or otherwise, so long as neither the Lessee's operation and use of the
Aircraft nor the validity and priority of the Lien of the Indenture is
impaired) to duly discharge and satisfy in full, promptly after the same first
becomes known to the Owner Participant, any Lessor's Lien against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to the Owner Participant (or an Affiliate thereof), provided,
however, that the Owner Participant shall not be required to discharge or
satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do
not involve any material danger of the sale, forfeiture or loss of the
Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest
in any thereof or otherwise materially adversely affect the validity or
priority of the Lien of the Indenture.
(c) Reimbursement. Without limiting any other rights the parties
hereto may have as a result of any breach by the Owner Participant of its
obligations in Section 7.03(b) hereof, the Owner Participant agrees to
reimburse each other party hereto for all reasonable legal fees and expenses
of counsel that may be incurred by any such party as a result of the failure
of the Owner Participant to discharge and satisfy any such Lessor's Lien in
accordance with the terms of Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after
all obligations of the Owner Participant under Section 2.01(d) hereof have
been satisfied in full, and subject to the conditions set forth in this
Section 7.03(d), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee and the Indenture Trustee at least 10
Business Days' notice of such assignment, conveyance or other transfer and
provided further that the Owner Participant and any Owner Participant
Guarantor shall remain liable for all obligations of the Owner Participant
under the Trust Agreement and the Operative Agreements to which the Owner
Participant is a party to the extent (but only to the extent) relating to the
period on or before the date of such transfer and provided that the transferee
agrees by a written instrument substantially in the form attached hereto as
Exhibit E-1 to assume primary liability for all obligations as an Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party relating to the period after the date
of transfer.
Any such transferee shall (a) be (i) a bank, savings institution,
finance company, leasing company or trust company, national banking
association acting for its own account or in a fiduciary capacity as trustee
or agent under any pension, retirement, profit sharing or similar trust or
fund, insurance company, fraternal benefit society or corporation acting for
its own account having a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (ii) a subsidiary of any Person described in clause (i) where such
Person provides (A) support for the obligations assumed by such transferee
subsidiary reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee or (B) an unconditional guaranty substantially in the form
of Exhibit E-2 attached hereto of such transferee subsidiary's obligations, or
(iii) an Affiliate of the transferring Owner Participant, so long as such
Affiliate has a combined capital and surplus (or, if applicable, consolidated
tangible net worth or its equivalent) of not less than $75,000,000, (b) be
legally capable of binding itself to the obligations of the Owner Participant
and shall expressly agree to assume all obligations of the Owner Participant
under the Trust Agreement and this Agreement and (c) provide representations
substantially similar to those contained in Sections 7.02(a) and 7.03(a)
hereof. In the event of any such assignment, conveyance or transfer, the
transferee shall become a party to the Trust Agreement and shall agree to be
bound by all the terms of and will undertake all of the obligations of the
Owner Participant contained in the Trust Agreement and the other Operative
Agreements in the manner set forth in the form attached as Exhibit E-1.
A transferee hereunder shall be (i) a "U.S. Person" as defined in
Section 7701(a)(30) of the Code (or any successor provision thereto) and (B)
such transferee shall be personally liable for any debt service to the extent
that its receipt of rentals is reduced by reason of any withholding Taxes that
result from such transferee's failure to be such a "U.S. Person" and (ii) a
Citizen of the United States or has established a voting trust, voting powers
or other arrangement reasonably satisfactory to the Indenture Trustee and the
Lessee to permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code. A transferee hereunder shall not be, and in
acquiring the Beneficial Interest shall not use the assets of, an employee
benefit plan subject to Title I of ERISA or an individual retirement account
or a plan subject to Section 4975 of the Code. Assuming the truth of the
representations made in Sections 6.01(m) and 7.06 hereof and compliance with
Section 10.06 of the Indenture, no such assignment, conveyance or transfer
shall violate any provision of law or regulation or create a relationship
which would be in violation thereof. The Owner Trustee shall not be on notice
of or otherwise bound by any such assignment, conveyance or transfer unless
and until it shall have received an executed counterpart of the instrument of
such assignment, conveyance or transfer. Upon any such disposition by the
Owner Participant to a transferee as above provided, the transferee shall be
deemed the "Owner Participant" or "Trustor" for all purposes of the Operative
Agreements, and shall be deemed to have made all the payments previously made
by its transferor and to have acquired the same interest in the Lessor's
Estate as theretofore held by its transferor; and each reference therein to
the "Owner Participant" or "Trustor" shall thereafter be deemed a reference to
such transferee.
Notwithstanding anything to the contrary contained in this Section
7.03(d), in no event shall the Owner Participant transfer its interest in the
Beneficial Interest to any entity whose business is that of a nationwide or
worldwide overnight or expedited delivery small package air courier, cargo or
freight deliverer or which competes with the Lessee in such lines of business.
The Lessee agrees that it will reasonably cooperate with the Owner Participant
in effecting an assignment of the Owner Participant's interests including,
without limitation, providing letters to any successor Owner Participant
permitting such successor Owner Participant to rely on any opinions provided
by the Lessee on the Delivery Date.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSB and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSB represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i)it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to
execute, deliver and perform this Agreement, the Original Agreements to
which it is a party and the Operative Agreements to which it is or is to be
a party;
(ii)the execution, delivery and performance by FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the other
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSB, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSB's performance of or compliance with
any of the terms and provisions thereof will violate any Federal or state
or local law or regulation governing FSB's banking or trust powers;
(iii)(A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSB in its individual capacity, constitute the legal, valid
and binding obligation of FSB in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSB in its individual capacity of
any of its obligations thereunder does not contravene any lease, regulation
or contractual restriction binding on FSB in its individual capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv)there are no pending or, to its knowledge, threatened actions or
proceedings against FSB before any court or administrative agency which
would materially and adversely affect the ability of FSB, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi)neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSB in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii)on the Refunding Date the Owner Trustee be holding whatever
title to the Aircraft as was conveyed to it by AVSA on the Delivery Date,
the Aircraft shall be free of Lessor's Liens attributable to FSB in its
individual capacity and FSB in its individual capacity and as Owner Trustee
is a Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) Lessor's Liens. FSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSB, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSB, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSB to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as follows:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii)the Indenture and this Agreement, the Original Agreements to
which it is a party and the other Operative Agreements to which it is or is
to be a party, and the authentication of the Certificates to be delivered
on the Refunding Date, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or Massachusetts law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii)each of the Indenture and this Agreement, the Original
Agreements to which it is a party and the other Operative Agreements to
which it is or is to be a party, has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(iv)neither the execution and delivery by it of the Indenture and this
Agreement, the Original Agreements to which it is a party and the other
Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or state governmental authority or agency governing its banking and
trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi)the Indenture Trustee holds the original counterparts of the
Original Lease, the Lease Supplement, Ancillary Agreement I and AVSA's
Warranty Bill of Sale.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days, after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither the Owner Participant
(or the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as
the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, as the case may be).
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii)the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iii)each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Event of
Default shall have occurred and be continuing then, upon compliance with the
applicable provisions of said Section 4.02(a) of the Lease, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to
the Lien of the Indenture, all of the Owner Trustee's right, title and
interest in and to the Aircraft, and if the Lessee, in connection with such
purchase, elects pursuant to Section 4.02(a)(A), (D) or (E) of the Lease to
assume the obligations of the Owner Trustee to the Indenture Trustee and the
Holders under the Indenture, the Certificates and hereunder, then the Lessee
shall so notify the Indenture Trustee (such notice to be given at least 30 and
not more than 60 days prior to the effective date of such assumption), and
each of the parties shall execute and deliver appropriate documentation
permitting the Lessee to assume such obligations on the basis of full recourse
to the Lessee, maintaining for the benefit of the Holders the security
interest in the Aircraft created by the Indenture, and upon compliance with the
provisions of this Section 7.11 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Certificates, the Indenture,
this Agreement and the other Operative Agreements, except any obligations
relating to the period prior to such assumption and take all such other
actions, at the Lessee's expense, as are reasonably necessary to permit such
assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Holders and the Indenture Trustee, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Delivery Date with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each opinion
described in clause (A) or (B) above, covering such additional matters as
the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSB and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would materially
adversely affect any such party without the prior written consent of such
party. The Owner Trustee confirms for the benefit of the Lessee, the
Indenture Trustee and the Pass Through Trustee that it will comply with the
provisions of Article 2 of the Trust Agreement. Notwithstanding anything else
to the contrary in the Trust Agreement, so long as the Lease remains in
effect, the Owner Participant agrees not to terminate or revoke the trust
created by the Trust Agreement without the consent of the Lessee. If and so
long as the Indenture shall not have been discharged the consent of the
Indenture Trustee shall also be required prior to any termination or
revocation of such trust and in addition, the Owner Participant will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement or Original Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or
local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements or Original
Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, held by the Owner
Trustee under the Trust Agreement or after an Event of Default under the
Lease, or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or Original
Agreement, any interest therein or by reason of the transactions described
in or contemplated by the Operative Agreements or the Original Agreements;
(v) the principal or interest or other amounts payable with respect
to the Original Loan Certificates, the Pass Through Certificates or the
Certificates;
(vi) the Original Loan Certificates, the Pass Through Certificates or
the Certificates or the issuance, sale, acquisition, reoptimization, or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and Supplemental
Rent), receipts or earnings arising from the Operative Agreements or the
Original Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value-added taxes, capital, franchise, net worth (whether
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes"), provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 8.01(a) above any such Income Taxes to the extent such
taxes are imposed by any jurisdiction in which the Indemnitee would not be
subject to such taxes but for, or would be subject to such taxes solely as
a result of, (x) the operation, registration, location, presence, or use of
the Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or the
activities of the Lessee or any sublessee in such jurisdiction (it being
understood that (A) any such indemnity would be payable only to the extent
of the net harm incurred by the Indemnitee from such Income Taxes, taking
into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements or the Original Agreements were the Indemnitee's sole
nexus to the jurisdiction); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii)With respect to an Original Loan Participant, Income Taxes (other
than in the case of a Non-U.S. Person, U.S. federal withholding taxes on
amounts payable with respect to such Original Loan Participant's Loan
Certificate) except to the extent such Income Tax is imposed (including by
way of increase) by any jurisdiction in which the Indemnitee is subject to
tax (A) on or with respect to any gain resulting from the assumption of any
Loan Certificate by the Lessee, (B) as a result of the operation,
registration, location, presence, basing or use of the Aircraft, Airframe,
any Engine or any Part thereof, in such jurisdiction (it being understood
that (I) the incremental Income Taxes described in this clause (B) shall
not include any U.S. Federal income taxes and (II) that to the extent such
incremental Income Taxes give rise to any incremental current Tax benefit in
another tax jurisdiction, that such incremental benefit shall offset and
decrease the incremental Income Taxes determined under this clause (B)) or
(C) solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant, the
Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in such
jurisdiction (it being understood that to the extent that any Income Taxes
described under this clause (C) give rise to any incremental current Tax
benefit in another tax jurisdiction or another tax period, that such
incremental Tax benefit shall offset and decrease the Income Taxes
determined under this clause (C)); provided, however, that the provisions
of this paragraph (b)(ii) relating to Income Taxes shall not exclude from
the indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02 of this Agreement;
(iii)Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods (or any combination of the
foregoing) which occur after the later of (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Original Loan Certificates in the case of an
Original Loan Participant, the Indenture Trustee or the Trust Indenture
Estate if the Lessee shall have assumed the Certificates pursuant to
Section 7.11 of this Agreement), and (B) the earliest of (x) the expiration
of the Term of the Lease and return of the Aircraft in accordance with
Article 12 of the Lease, (y) the termination of the Lease in accordance with
the applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer of
all right, title and interest in the Aircraft to the Lessee pursuant to its
exercise of any of its purchase options set forth in Section 4.02(a) of the
Lease, provided that this exclusion (iii) shall not apply in respect of any
payment made after the dates set forth in clauses (A) and (B) above unless
such payment is made with respect to any event or circumstance occurring
on, with or prior to such return or transfer or period prior to such return
or transfer, or Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default;
(iv)As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements
or the Original Agreements) or the breach by such Indemnitee of: (i) in the
case of an Indemnitee other than the Owner Participant, any representation,
warranty or covenant contained in the Operative Agreements or the Original
Agreements or any document delivered in connection therewith and (ii) in
the case of the Owner Participant, the representations or covenants in
Sections 7.02(a), (c); 7.03(a)(i), (ii), (iii), (iv), (vii), (ix); and
7.03(b), (c), (d), (e) of the Original Participation Agreement or this
Agreement (in either case unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi)Taxes imposed on, and not collected by withholding from payments
of Rent, the Owner Trustee or the Owner Participant or any successor,
assign or Affiliate thereof which became payable by reason of any voluntary
or involuntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including revocation of the Trust, of any interest in some
or all of the Aircraft, Airframe, Engines or Parts thereof or its interest
in the Lessor's Estate (not including any transfers of any Certificates
pursuant to Section 15.01(a) hereof) or a disposition in connection with a
bankruptcy or similar proceedings involving either the Lessor or the Owner
Participant other than (A) transfers resulting from a loss, substitution or
modification of the Aircraft, Engines or any Part, (B) any transfer of the
Aircraft, Engines or any Part (in each case other than at Fair Market
Value) to the Lessee or other person in possession thereof, (C) transfers
attributable to an Event of Default or (D) a transfer pursuant to the
Lessee's exercise of its rights under Section 10.01 of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii)Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii)Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or of any
other Indemnitee under the Original Agreements or an Indemnitee as of the
date hereof under the Operative Agreements (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) which
on the Delivery Date is an Indemnitee (for purposes of this clause (viii),
an "original Indemnitee") or such original Indemnitee to the extent that
such Taxes exceed the amount of Taxes that would have been imposed (in the
case of an Original Loan Participant, immediately after giving effect to
such succession, assignment or other transfer) and would have been
indemnifiable pursuant to Section 8.01(a) had there not been a succession,
assignment or other transfer by such original Indemnitee of any such
interest of such Indemnitee in the Aircraft or any Part, any interest in or
under any Operative Agreement, or any proceeds thereunder (it being
understood that for purposes of determining the amount of indemnification
that would have been due to such original Indemnitee with respect to a net
income Tax, it shall be assumed that such original Indemnitee would be
subject to taxation on its income at the highest marginal statutory rate
applicable to it), provided, however, that the exclusion provided by this
clause (viii) shall not apply in the case of a succession, transfer or
disposition (A) that occurs after the Lease has been declared in default
or if such transfer or disposition is pursuant to the exercise of remedies
under Article 17 of the Lease, (B) which is an actual or deemed transfer
pursuant to Section 7.11 hereof or as a consequence of a Refinancing under
Section 15.01 hereof, or any actual or deemed transfer of an Original Loan
Certificate that as part of a Refinancing under Section 15.01 hereof is not
retired, but only to the extent the Taxes attributable to such transfer
exceed the amount of Taxes that would have been imposed on such transferor
if the debt had instead been retired, (C) to the extent necessary to make
payments with respect to such Taxes on an After-Tax Basis, (D) to the
extent such Taxes are directly attributable to the failure of the Lessee to
take administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost or
expense to the Lessee or (E) in the case of the Owner Participant or the
Lessor, to any Tax other than an Income Tax;
(ix)[Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price and which
have been paid to the applicable taxing authorities;
(xi)Any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien; and
(xii)Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited Transaction");
provided, however, that in the event any prohibited transaction arises
which is not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually or
collectively, a "PTE") then the indemnity provided for herein shall extend
to any Taxes incurred by the Owner Participant (or any Affiliate thereof)
as the result of any Prohibited Transaction arising out of the purchase or
holding of any Loan Certificates by an employee benefit plan subject to
Title I of ERISA or by a plan subject to Section 4975 of the Code
(individually or collectively, an "ERISA Plan") with respect to which the
Owner Participant is a party in interest, within the meaning of Section
3(14) of ERISA, or a disqualified person,within the meaning of Section 4975
of the Code, except, however, that such Indemnity shall not extend to any
Taxes incurred by the Owner Participant (or any Affiliate thereof) as the
result of any Prohibited Transaction occurring with respect to the purchase
or holding of any Loan Certificates (A) over which purchase or holding the
Owner Participant (or an Affiliate thereof) has discretion or control
(other than in the capacity of a custodian, directed trustee or other
similar nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a tax benefit by reason
of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized by such Indemnitee that would not have been
realized but for any payment made by such Indemnitee pursuant to this sentence
and not already paid to the Lessee, and (y) the amount of the payment made
under Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore required to be made under this Section 8.02 and
Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment to
the Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee (and without regard to Section 8.01(b) hereof,
except for clause (v) thereof) for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is subsequently disallowed or reduced (including the
expiration of any tax credit carryovers or carrybacks of such Indemnitee that
would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by Lessee with respect to such Taxes.
Section 8.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 8 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements and the Original Agreements except as otherwise
provided in Section 10.01(d)(i) or Article 15 hereof) of every kind and
nature, including without limitation Make-Whole Premium (unless excluded
pursuant to Section 3.03 of the Lease) (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Pass Through Agreement, AVSA's FAA Bill
of Sale, AVSA's Warranty Bill of Sale or any other Operative Agreement or
any other document entered into in connection herewith or any sublease or
transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii)the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv)any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi)the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to securities), or
the action or inaction of the Owner Trustee or Indenture Trustee as
trustees, in the manner contemplated by this Agreement, the Original
Participation Agreement, the Indenture, the Original Indenture, the
Indenture and Security Agreement Supplement, the Trust Agreement or the
Original Trust Agreement and in the case of the Owner Participant, its
obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or, if the Aircraft remains a part of the Lessor's Estate, after the
expiration of the Term (unless the Aircraft is being returned at such time,
in which case after return of physical possession; provided that if the
Lessor has terminated the Lease pursuant to Article 17 thereof, the
indemnity provided in Section 9.01(a) hereof shall survive for so long as
Lessor shall be exercising remedies under such Article 17), or to acts or
events which occur after return of possession of the Aircraft by the Lessee
in accordance with the provisions of the Lease (subject to the foregoing
proviso if the Lessor has terminated the Lease pursuant to Article 17 of
the Lease) but in any such case only to the extent not fairly attributable
to acts or omissions of the Lessee prior to expiration of the Term,
including without limitation the Lessee's failure to fully discharge all of
its obligations under the Lease, the other Operative Agreements or the
Original Agreements;
(iii)is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv)is a cost or expense required to be paid by the Owner Participant
or its permitted transferees (and not by the Lessee) pursuant to this
Agreement or any other Operative Agreement and for which the Lessee is not
otherwise obligated to reimburse the Owner Participant, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default by the Lessee of any of its obligations under the
Operative Agreements or by another Indemnitee of any of the foregoing;
(vi)[Intentionally Left Blank];
(vii)is, in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; in
the case of FSB, Lessor's Liens to the extent attributable to FSB; and in
the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii)is, in the case of the Owner Participant or the Owner Trustee,
attributable to the offer or sale by such Indemnitee after the Delivery
Date of any interest in the Aircraft, the Lessor's Estate or the Trust
Agreement or any similar interest (including an offer or sale resulting
from bankruptcy or other proceedings for the relief of debtors in which
such Indemnitee is the debtor), unless in each case such offer or sale
shall occur (x) in connection with a Refinancing, (y) as a result of the
occurrence of an Event of Default provided that either the Lease has been
declared in default or the transfer is pursuant to the exercise of remedies
under Article 17 of the Lease or (z) in connection with the Lessee's
exercise of its early termination option under Article 10 of the Lease or
its purchase options under Article 4 of the Lease or in connection with
Article 11 of the Lease;
(ix)is an Expense arising under or in connection with any prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code ("Prohibited Transaction"); provided, however, that
in the event any prohibited transaction arises which is not exempt under
any class prohibited transaction exemption or any individual or statutory
prohibited transaction exemption (individually or collectively, a "PTE")
then the indemnity provided for herein shall extend to any Expenses
incurred by the Owner Participant (or any Affiliate thereof) as the result
of any Prohibited Transaction arising out of the purchase or holding of any
Certificates by an employee benefit plan subject to Title I of ERISA or by
a plan subject to Section 4975 of the Code (individually or collectively,
an "ERISA Plan") with respect to which the Owner Participant is a party in
interest, within the meaning of Section 3(14) of ERISA, or a disqualified
person,within the meaning of Section 4975 of the Code, except, however, that
such Indemnity shall not extend to any Expenses incurred by the Owner
Participant (or any Affiliate thereof) as the result of any Prohibited
Transaction occurring with respect to the purchase or holding of any
Certificates (A) over which purchase or holding the Owner Participant (or
an Affiliate thereof) has discretion or control (other than in the capacity
of a custodian, directed trustee or other similar nondiscretionary
capacity), or (B) by an ERISA Plan with respect to which the Owner
Participant (or any Affiliate thereof) is a "plan sponsor" within the
meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as an Event of Default shall have occurred and be
continuing. Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of such Tax benefit referred to in the next
preceding sentence in a taxable year subsequent to the year of allowance and
utilization by such Indemnitee (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired) shall be indemnifiable pursuant to the provisions of Section 8.01
hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has received notice for which the Lessee is, or may be, liable
under this Article 9; provided, however, that failure to give such notice
shall not terminate any of the rights of the Indemnitees under this Article 9,
except (with respect to such Indemnitee) to the extent that the Lessee has
been materially prejudiced by the failure to provide such notice. Unless
otherwise provided in the Operative Agreements, any amount payable to an
Indemnitee pursuant to this Article 9 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v) hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Payment Default or
Event of Default shall have occurred and be continuing or shall arise at any
time during the claim and (iii) the Lessee shall have first acknowledged in
writing to such Indemnitee the Lessee's obligation to indemnify such
Indemnitee hereunder in respect of such claim, defend any such claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent (A) such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel or on the grounds that such proceeding
involves the potential imposition of criminal liability on such Indemnitee or
(B) such proceeding will involve any material danger of the sale, forfeiture
or loss of, or the creation of any Lien on the Aircraft or the Trust Estate
(unless the Lessee posts a bond or other security reasonably acceptable in
form and substance to such Indemnitee) or involve any material risk of civil
liability to such Indemnitee for which it is not indemnified hereunder.
Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal
fees or expenses of such Indemnitee in connection with the defense of such
claim shall be indemnified hereunder unless the fees or expenses were incurred
at the written request of the Lessee or such insurers. Subject to the
requirement of any policy of insurance applicable to a claim, an Indemnitee
may participate at its own expense at any judicial proceeding controlled by
the Lessee or its insurers pursuant to the preceding provisions, to the extent
that such party's participation does not, in the opinion of the independent
counsel appointed by the Lessee or its insurers to conduct such proceedings,
interfere with such control; and such participation shall not constitute a
waiver of the indemnification provided in this Section 9.06. No Indemnitee
shall enter into any settlement or other compromise with respect to any claim
described in this Section 9.06 without the prior written consent of the
Lessee, which consent shall not unreasonably be withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Article 9 with
respect to such claim. The Lessee shall not enter into any settlement or
compromise which the Lessee has not agreed to discharge or with respect to
which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the
prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities after the expiration or other
termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing (or fairly attributable
to the Lessee's acts or omissions) prior to such termination or expiration or
incurred in the process of (i) the return or disposition of the Aircraft under
Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or
the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
Section 9.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 9 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement all fees and
expenses of the following persons relating to the public offering of the Pass
Through Certificates contemplated by the Underwriting Agreement and related to
the transactions contemplated hereby: (i) the fees and expenses of counsel for
the Owner Participant; (ii) the fees and expenses of the transaction
documentation counsel and counsel for the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Original Loan Participants and the
Underwriters (other than those fees, expenses and disbursements payable by the
Underwriters pursuant to the Underwriting Agreement); (iii) the fees and
expenses of Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses
of the Pass Through Trustee and the fees and expenses of the Owner Trustee and
the Indenture Trustee; (v) any compensation, commissions and discounts payable
to the Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if
any, incurred in printing the Pass Through Certificates; (vii) the fees and
expenses incurred in connection with printing any amendment to the
Registration Statement on Form S-3 bearing Registration No. 333-07691,
printing any Preliminary Prospectus or Prospectus (as such terms are defined
in the Underwriting Agreement) for the offering of the Pass Through
Certificates; (viii) the fees and expenses of Arthur Andersen LLP; (ix) the
fees and expenses of Moody's and S&P; (x) the fees and expenses of First
Chicago Leasing Corporation; (xi) the reasonable out-of-pocket expenses of the
Owner Participant; and (xii) reimbursement to the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee for any and all
fees, expenses and disbursements incurred in connection with the negotiation,
preparation, execution and delivery, filing and recording of the Operative
Agreements and the documents contemplated thereby, including, without
limitation, travel expenses and disbursements which shall have been paid by
such party. The fees and expenses described in clauses (ii) through (xii) of
this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant or the refunding of the Original Loan Certificates, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant or the refunding of the Original Loan
Certificates, in the proportion that the principal amount of the Certificates
bears to the total amount of the Pass Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.35% of the Purchase
Price (the "Estimated Expense Amount").
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom, or (b) the
enforcement of the obligations of the Lessee hereunder or under the other
Operative Agreements, including, without limitation, the entering into or
giving or withholding of any amendments or supplements or waivers or
consents (whether or not consummated), including without limitation, any
amendment, supplement, waiver or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under the Original Agreements, this Agreement, the Lease,
the Indenture, the Certificates, the Tax Indemnity Agreement, the Purchase
Agreement Assignment or any other Operative Agreement or document or
instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement
(including any adjustment pursuant to Section 3.04 of the Lease) or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Section 7.03(d) hereof or otherwise) by the
Owner Participant after the Refunding Date of any interest in the Aircraft,
the Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the Owner Participant shall be responsible for all
such fees and expenses), unless such offer, sale or transfer shall occur
(A) after the Lease has been declared in default or if the transfer is
pursuant to the exercise of remedies under Article 17 of the Lease or (B)
in connection with the termination of the Lease or action or direction of
the Lessee pursuant to Section 4.02, Article 10 or Article 11 of the Lease;
and
(ii)to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii)Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement, the Trust Agreement, the Lease, the Lease
Supplement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the Indenture, the Indenture Supplement and any other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, AVSA's FAA Bill of Sale,
AVSA's Warranty Bill of Sale, the Lease or any other Operative Agreement to
which the Owner Participant is a party and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant be
liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, any Original
Agreement, the ownership of the Aircraft, the administration of the Lessor's
Estate or the Trust Indenture Estate or otherwise, whether or not such action
or inaction is caused by the willful misconduct or gross negligence of the
Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that no section of the Indenture or the
Trust Agreement shall be amended or modified in any manner which materially
adversely affects the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
Section 13.04. Pass Through Trustee's Acknowledgment. The Pass
Through Trustee hereby acknowledges and agrees to be bound by all of the terms
and conditions of the Indenture, including without limitation, Section 8.01
thereof regarding the rights of the Owner Participant to purchase the
Certificates under circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 800 Westchester
Avenue, Rye Brook, New York 10573-1301, Attention: Vice President Leasing
with a copy to Director, Portfolio Administration, telephone (914)
335-5000, facsimile (914) 335-1287, or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee; and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date) in whole but not in
part, of the Certificates prior to the end of the Basic Term (a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as the Owner Participant is satisfied there is
no foreign currency risk to it), and shall be on terms that do not materially
adversely affect the Owner Participant. The Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with the Lessee as
to the terms of any such Refinancing transaction (including the terms of any
debt to be issued in connection with such refinancing and the documentation to
be executed in connection therewith). Without the prior written consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant in a manner satisfactory to it for any liabilities under federal,
state or foreign securities laws resulting from such offering. The aggregate
principal amount of the new Certificates issued in connection with each
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice (three (3) Business Days
with respect to the refinancing contemplated by this Agreement on the
Refunding Date) of the scheduled closing date of such Refinancing and the
Owner Participant shall have been provided such longer period as it shall have
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant,
nor shall its rights against all other parties taken as a whole be adversely
affected compared to such rights in effect under the Operative Agreements
prior to such proposed Refinancing.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, which
consent may be withheld in its sole discretion, no such refinancing shall (1)
cause the aggregate principal amount of the indebtedness to be substituted for
the Loan Certificates to exceed the aggregate principal amount of the then
outstanding Loan Certificates, (2) cause the weighted average life of such
indebtedness to be different by more than 6 months than the remaining weighted
average life of the then outstanding Loan Certificates, or (3) cause the date
of maturity of such indebtedness to be later than the date of maturity of the
Loan Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii)Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing or would occur immediately after
giving effect to such Refinancing;
(viii)In the event the Lessee shall not prohibit the purchase of
the Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan or individual retirement account, which is
subject to Section 4975(c) of the Code, (individually or collectively, an
"ERISA Plan"), the Lessee will permit the placement of the Refinancing loan
certificates with an ERISA Plan only if either (A) if such placement is in
the form of pass through certificates, the sole underwriter or the manager
or co-manager of the underwriting syndicate or the selling or placement
agent of the Refinancing loan certificates represents to the Lessee that it
has a prohibited transaction exemption from the U.S. Department of Labor
with respect to pass through certificates (such as Prohibited Transaction
Exemption 89-88 or any other comparable exemption) or (B) purchasers of the
Refinancing loan certificates provide a representation (which may be in the
form of a deemed representation) regarding their source of funds used in
acquiring the Refinancing loan certificates and, if such purchasers
represent that they are using funds of an ERISA Plan in acquiring the
Refinancing loan certificates, such purchasers further represent that (1)
either they are relying on a prohibited transaction exemption from the U.S.
Department of Labor with respect to their purchase and holding of the
Refinancing loan certificates and they provide representations regarding the
satisfaction of the relevant conditions of such an exemption or (2) their
purchase and holding of the Refinancing loan certificates will not
constitute a non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code. The reliance on any such exemption will not
be conditional on the Owner Participant's representation concerning its
party in interest or other status with respect to ERISA Plans. If neither
exemption referred to in clause (A) or (B) of this paragraph (viii) is
valid or applicable in any respect to the purchase and holding of the
Refinancing loan certificates, or if the representation in clause (B) of
this paragraph (viii) that such purchase and holding will not constitute a
non-exempt prohibited transaction is not correct, whichever is applicable,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Sections 8 and 9 hereof for Taxes and
Expenses resulting from any "prohibited transaction", within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with
respect to the placement of the Refinancing loan certificates with, or the
holding of the Refinancing loan certificates by, any ERISA Plan with
respect to which the Owner Participant is a party in interest, within the
meaning of Section 3(14) of ERISA, or a disqualified person, within the
meaning of Section 4975 of the Code, provided, however, that if the Lessee
shall fail to obtain either of the representations set forth in clause (A)
or (B) of this paragraph (viii), such indemnity shall not be subject to the
exceptions set forth under Sections 8.01(b)(xii)(A) and (B) and
9.01(b)(ix)(A) and (B) hereof; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii)the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii)in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that it is the intent of the parties for
Federal, state, local and foreign income tax purposes that the Owner
Participant will be treated as the owner of the Aircraft and the Lessee will
be treated as the lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture and the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee. Each of FSB and SSB is entering into this Agreement
solely in their respective capacities (except to the extent otherwise
expressly indicated), in the case of FSB, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of SSB, not in
its individual capacity but solely as Indenture Trustee under the Indenture
and as Pass Through Trustee under the Pass Through Agreement, and except as
otherwise expressly provided in this Agreement or in the Lease, the Indenture,
the Pass Through Agreement or the Trust Agreement, neither FSB, nor SSB,
shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of FSB and SSB accepts the benefits running to it
under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens
and (g) taxes, fees or other charges on, or based on, or measured by, any
fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or indirectly
on account of any amount payable as Make-Whole Premium, principal or interest
on the Certificates, or any other amount payable on any Certificate that is
provided in the Operative Agreements to be nonrecourse to the Owner
Participant and (iii) the Indenture Trustee actually receives any Recourse
Amount which reflects any payment by the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Lessee and the other parties hereto agree that the transactions contemplated
by the Operative Agreements are expressly intended to be, shall be and should
be construed so as to be entitled to the benefits and protection of Section
1110 of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 17th day of October, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
PMCC LEASING CORPORATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as an Original Loan Participant
By:__________________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:__________________________________________
Name:
Title:
COMMERZBANK AG, ATLANTA AGENCY
By:__________________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-B1
Federal Express Corporation Trust No. N667FE
Interest Rate: 7.39%
Maturity: January 30, 2012
Principal Amount: $43,597,000.00
2. Federal Express Corporation Pass Through Trust, 1996-B2
Federal Express Corporation Trust No. N667FE
Interest Rate: 7.84%
Maturity: January 30, 2018
Principal Amount: $18,188,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N667FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N667FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N667FE), dated the Refunding Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France, and its successors and
assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
August 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on November 28, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N667FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1996 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of
the Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. August 28, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by manufacturer's serial numbers in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or
12.02 of the Lease, together with all Parts related thereto. Except as
otherwise provided, at such time as a Replacement Engine shall be so
substituted and the Engine for which the substitution is made shall be
released from the Lien of the Indenture, such replaced Engine shall cease to
be an "Engine" under the Lease. The term "Engines" means, as of any date of
determination, both Engines then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease (when it shall be determined based upon the actual
condition and location of the Aircraft), it shall be assumed that the Aircraft
is in the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
August 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996, as amended
and restated as of October 15, 1996, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N667FE) dated August 28, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the
Lessee has not indemnified (and is not obligated to indemnify) the Indenture
Trustee in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N667FE) dated as of August 1, 1996, as amended and restated as of October 15,
1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, or the Owner Participant, in each
case not related to the transactions contemplated by the Operative Agreements,
(ii) acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August 1,
1996, between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE), dated August 28, 1996 attached thereto was
recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269964.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N667FE), dated August 28, 1996 attached thereto
was recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269965.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to
the Original Participation Agreement and their successors and assigns (other
than any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of August 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N667FE) between the Lessee and the Owner
Participant as it was originally executed as of August 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N667FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of August 1, 1996 and filed with the
FAA on August 28, 1996.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i)Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of
the Indenture; provided, that if such Certificates are to be
prepaid, notice of such prepayment has been duly given pursuant to
the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996, as amended
and restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series B1 or 1996 Pass Through Certificates, Series B2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-B1 or Federal Express Pass Through Trust, 1996-B2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates having
a Maturity in 2012, October 23, 2006 and with respect to the Certificates
having a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary
Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. November 28, 2019 and each January 30 and July
30 commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-B2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Stipulated Loss Value is to be calculated with reference to any such
date; provided that if amounts in respect of Stipulated Loss Value are payable
under the Operative Agreements after the Stipulated Loss Determination Date in
respect of which such Stipulated Loss Value was determined, the Lessor shall
be compensated during the period from the Stipulated Loss Determination Date
to such payment date in accordance with the provisions of the Operative
Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2003 in the case of Article 10 of the Lease, and
in the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date
falling on January 30, 2015, (ii) Section 4.02(a)(D) or (E) of the Lease, a
Rent Payment Date that is on or after the seventh anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, the last day of
the Basic Term.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent through such date and, accordingly, no further accrual or credit shall be
required through such date whenever Termination Value is to be calculated with
reference to any such date; provided that if amounts in respect of Termination
Value are payable under the Operative Agreements after the Termination Date in
respect of which such Termination Value was determined, the Lessor shall be
compensated during the period from the Termination Date to such payment date
in accordance with the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, as amended and restated as of
October 15, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October
17, 1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Netherlands
Austria New Zealand
Belgium Norway
Canada Philippines
Denmark Portugal
Finland Republic of China
(Taiwan)
France
Singapore
Germany
Sweden
Greece
Switzerland
Iceland
Thailand
Ireland
United Kingdom
Japan
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N667FE), dated as of August 1, 1996, as amended and restated as of October
15, 1996 (the "Participation Agreement"), among Federal, as Lessee, PMCC
Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company of
New York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as Original Loan Participants, First Security Bank, National Association, a
national banking association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement, State
Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture and State Street Bank and Trust Company, as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for the
refinancing in full of the Original Loan Certificates evidencing the Original
Loan Participants' participation in the payment of the Purchase Price of one
Airbus A300F4-605R aircraft (the "Aircraft"), using the proceeds from the
public offering of the Pass Through Certificates. Two Series of Pass Through
Certificates will be issued by two Pass Through Trusts formed to acquire,
among other securities, the Certificates bearing a particular interest rate
and having a particular Maturity that will be issued under the Trust Indenture
and Security Agreement (Federal Express Corporation Trust No. N667FE) dated as
of August 1, 1996, as amended and restated as of October 15, 1996, as
supplemented by the related Indenture and Security Agreement Supplement
("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined or
caused to be examined by attorneys under my supervision, executed counterparts
of the Operative Agreements, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
Certificate of Incorporation or By-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which are
required to be performed on or prior to the Refunding Date and which shall
have been accomplished on or prior to the Refunding Date) the registration
with, or the taking of any other action in respect of, the Aeronautics
Authority, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (i)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (ii) compliance with the securities laws of each
applicable state, and (iii) the filing of the Indenture, the Lease and the
Trust Agreement with the FAA, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) (i) is expected to
have a material adverse effect on (A) except for the matters described under
"Legal Proceedings" in Federal's Annual Report on Form 10-K for the fiscal
year ended May 31, 1996 (as updated by Note 7 to the financial statements
included in Federal's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996) and in Federal's Current Reports on Form 8-K dated June
7, 1996 and August 16, 1996, as to which I can express no opinion at this time
concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and valid
title to the Aircraft free and clear of all Liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease. Pursuant to the
Original Participation Agreement the Aircraft was duly delivered to the Owner
Trustee. Federal, as Lessee, duly accepted the Aircraft under the Original
Lease and the Lease Supplement and the Term commenced on the Delivery Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation ("Federal Express"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N667FE), dated as of August 1, 1996, as amended and restated as of October
15, 1996 (the "Participation Agreement"), among Federal Express, as Lessee,
PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company
of New York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as the Original Loan Participants, First Security Bank, National Association,
not in its individual capacity but solely as Owner Trustee under the Trust
Agreement, State Street Bank and Trust Company, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture, and State Street Bank and Trust Company, as Pass Through
Trustee, relating to the Aircraft. This opinion is being delivered pursuant
to Section 4.01(l)(viii) of the Participation Agreement. Capitalized terms
not otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one Airbus A300F4-605R Aircraft which was purchased by
the Owner Trustee pursuant to AVSA's FAA Bill of Sale and AVSA's Warranty Bill
of Sale, subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides, among
other things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of the Pass Through Certificates. Two
Series of Pass Through Certificates will be issued by separate Pass Through
Trusts, each formed to acquire, among other securities, the Certificates
bearing a particular interest rate and having a particular Maturity that will
be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery of
the Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificates are delivered by the Original Loan Participants
to the Indenture Trustee for cancellation and are cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank, National Association in its individual or trust capacity
in the State of New York not related to the transactions contemplated by the
Transaction Agreements. We have assumed that First Security Bank, National
Association has made the filings necessary to comply with Section 131.3 of the
Banking Law of the State of New York, however we express no opinion as to
whether First Security Bank, National Association is required to comply with
said Section 131.3.
6. All the properties which are part of the Trust Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in paragraph
2 above, neither the execution and delivery by Federal Express of the
Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, the Securities and
Exchange Commission or any other Federal or New York State governmental
authority.
10. It is not necessary, in connection with the creation of the
beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States Bankruptcy
Code will apply to the Aircraft for the benefit of the Lessor, as lessor under
and by reason of the Lease. The Lease, including the rights under Section
1110 of the United States Bankruptcy Code, has been assigned to the Indenture
Trustee pursuant to the Indenture as part of the collateral for the
Certificates and, as assignee, the Indenture Trustee has the benefit of
Section 1110.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty, Fowler &
Peregrin and George W. Hearn, Vice President - Law of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
(e) We rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(a)
[Letterhead of Simpson Thacher & Bartlett]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
We have acted as special New York counsel for PMCC Leasing Corporation
("PMCC") in connection with the transactions contemplated by the Participation
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August 1,
1996, as amended and restated as of October 15, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as lessee, First Security Bank,
National Association, not in its individual capacity, but solely as owner
trustee, PMCC, as owner participant, State Street Bank and Trust Company, not
in its individual capacity but solely as indenture trustee, State Street Bank
and Trust Company, not in its individual capacity but solely as pass through
trustee and Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as original loan
participants. This opinion is being furnished to you pursuant to Section
4.01(l)(ii) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined herein shall have the meaning ascribed to them in the
Participation Agreement.
We have examined executed counterparts of the Participation Agreement,
Amendment No. 1 to the Tax Indemnity Agreement, Trust Agreement, Ancillary
Agreement I and Ancillary Agreement II (collectively, the "Owner Participant
Documents") and we have made such other and further investigations as we have
deemed necessary or appropriate for purposes of this opinion. In our
examination we have assumed, with your permission, and without independent
investigation or inquiry, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
With your permission, we have further assumed that (i) the Owner
Participant Documents have been duly authorized, executed and delivered by
each of the parties thereto, (ii) the respective parties thereto have the
power and authority to execute, deliver and perform the Owner Participant
Documents, (iii) the execution, delivery and performance of the Owner
Participant Documents by the parties thereto do not and will not violate the
certificate of incorporation, by-laws or other organizational documents of any
such party or any bond, debenture, note, mortgage, indenture, lease or other
agreement or instrument to which any such party is a party or by which any
such party is bound and does and will fully comply with all laws and
regulations applicable to each such party and (iv) the Owner Participant
Documents constitute valid, legal and binding obligations of the parties
thereto (other than PMCC), enforceable against such parties (other than PMCC)
in accordance with their respective terms.
Based upon the foregoing, we are of the opinion that:
1. The Participation Agreement and the Amendment No. 1 to the Tax
Indemnity Agreement constitute valid and legally binding obligations of PMCC
enforceable against PMCC in accordance with their respective terms.
2. The execution and delivery by the Owner Participant of the Owner
Participant Documents and the making of its investment thereby will not result
in any violation of any Federal or New York statute or any order, rule or
regulation issued pursuant to any New York or Federal statute by any New York
or Federal Court or governmental agency or body having jurisdiction over the
Owner Participant.
3. No consent, approval, authorization, order, registration or
qualification under any Federal or New York statute is required to be obtained
by the Owner Participant for the execution and delivery by the Owner
Participant of the Owner Participant Documents or the making of its investment
thereby.
Our opinion in paragraph 1 is subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York and express no
opinion herein concerning any law other than the laws of the State of New York.
This opinion is rendered to you in connection with the above-described
transaction. This opinion may not be relied by you for any other purpose, or
relied upon by or furnished to any other person, firm or corporation without
our prior written consent, except that the Owner Participant may furnish a
copy of this opinion to a potential transferee or participant of the interest
of such entity or otherwise as required by a governmental authority.
We rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Simpson Thacher & Bartlett
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(2)(b)
[Letterhead of Philip Morris Capital Corporation]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
In my capacity as Assistant General Counsel and Assistant
Secretary of Philip Morris Capital Corporation, a Delaware corporation, I
have supervised corporate proceedings of its wholly owned subsidiary, PMCC
Leasing Corporation, a Delaware corporation (the "Owner Participant"), in
connection with the Owner Participant's participation in the transactions
contemplated by that certain Participation Agreement (Federal Express
Corporation Trust No. N667FE), dated as of August 1, 1996, as amended and
restated as of October 15, 1996 (the "Participation Agreement"), among the
Owner Participant; Federal Express Corporation as Lessee; the Original
Loan Participants named in the Participation Agreement; First Security
Bank, National Association, not in its individual capacity, except as
otherwise stated, but solely as owner trustee; State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but
solely as indenture trustee and as pass through trustee. This opinion is
delivered pursuant to Section 4.01(l)(ii) of the Participation Agreement.
Capitalized terms used herein but not otherwise defined herein shall have
the respective meanings set forth in Schedule II to the Participation
Agreement.
In connection with this opinion, I have examined originals, or copies
certified or otherwise identified to my satisfaction of the Participation
Agreement, the Ancillary Agreement I, the Ancillary Agreement II, the
Amendment No. 1 to the Tax Indemnity Agreement, and the Trust Agreement (each
such Participation Agreement, Ancillary Agreement I, Ancillary Agreement II,
Amendment No. 1 to the Tax Indemnity Agreement and Trust Agreement to be
hereafter referred to individually as an "Operative Document" and collectively
as the "Operative Documents"). I have also examined such corporate documents,
records and instruments of the Owner Participant as in my judgment are
necessary or appropriate to enable me to render the opinions expressed below.
In rendering such opinions, I have relied upon the representations and
warranties contained in or made pursuant to the Operative Documents and have
assumed the due authorization, execution and delivery of all documents and
instruments by all parties thereto other than the Owner Participant.
Based on the foregoing and subject to the qualifications and matters
of reliance set forth herein, I am of the opinion that:
1. The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has
full corporate power, authority and legal right to carry on its business as
now conducted, and is duly authorized and empowered to execute and deliver
the Operative Documents and to fulfill and comply with the terms,
conditions and other provisions thereof.
2. The Operative Documents have been duly authorized by all necessary
corporate action on the part of the Owner Participant, and have been duly
executed and delivered by the Owner Participant.
3. No filing with, notice to or authorization or approval from any
governmental or public body or authority is required under the laws of the
State of New York, the laws of the United States of America, or the General
Corporation Law of the State of Delaware in connection with the execution,
delivery and performance by the Owner Participant of the Operative
Documents.
4. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Owner Participant) pending or, to my
knowledge, threatened against or affecting the Owner Participant or any
property rights of the Owner Participant at law or in equity or before any
commission or other administrative agency which, either individually or in
the aggregate, could materially and adversely affect the condition,
financial or otherwise, of the Owner Participant or its ability to perform
its obligations under the Operative Documents or which would affect the
legality, validity or enforceability of such Operative Documents.
5. Neither the execution and delivery of the Operative Documents, the
consummation of the transactions therein contemplated nor the fulfillment
of or compliance with the terms, conditions and other provisions thereof
will conflict with, or result in any breach of, any of the terms,
conditions or provisions of (i) any law or regulation binding upon the
Owner Participant, (ii) any order, injunction or decree of any court or
governmental instrumentality binding upon the Owner Participant, (iii) the
Certificate of Incorporation or Bylaws of the Owner Participant, or (iv) to
my knowledge, any bond, debenture, note, mortgage, indenture or other
agreement or instrument to which the Owner Participant is now a party or by
which the property of the Owner Participant may be bound.
I am a member of the bar of the State of New York, and I do not
purport to be conversant with, or to express any opinion herein concerning,
the laws of any jurisdiction other than those of the State of New York and the
United States of America and the General Corporation Law of the State of
Delaware. In addition, I express no opinion concerning the laws of the State
of New York, the United States of America or any other jurisdiction applicable
to the offering or sale of securities. Further, I have made no investigation
and express no opinion, as to any aviation law or other laws, statutes, rules
or regulations applicable due to the particular nature of the equipment
subject to the Lease.
This opinion is solely for the benefit of the addresses hereof and
their respective successors and assigns for use in connection with the
transactions contemplated by the Operative Documents and may not be relied
upon by any other person or for any other purpose without my express written
consent. This opinion may be relied upon by Messrs. Simpson, Thacher &
Bartlett in rendering their opinion of even date herewith.
I rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully, and with the same
force and effect as if such addressees were originally named therein on the
date of the Delivery Date Opinion.
Very truly yours,
Nancy S. Rights
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N667FE), dated as of
August 1, 1996, as amended and restated as of October 15, 1996 (the
"Indenture") between First Security Bank, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee") and the
Indenture Trustee, in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N667FE), dated as of August 1, 1996, as amended and restated as of October 15,
1996 (the "Participation Agreement"), among Federal Express Corporation, as
Lessee (the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"); Morgan Guaranty Trust Company of New York, Bank of
America National Trust & Savings Association, The Chase Manhattan Bank,
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as Loan
Participants (the "Original Loan Participants"); the Owner Trustee; and the
Indenture Trustee. This opinion is being delivered pursuant to Section
4.01(l)(iii) of the Participation Agreement. Except as otherwise defined
herein, all capitalized terms used herein shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Indenture Trustee, as the case may be, is a party (collectively, the
"Indenture Trustee Documents"), the Certificate of the Massachusetts
Commissioner of Banks relating to State Street and originals, or copies
certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates, or other instruments as we have
deemed necessary or advisable for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Indenture Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such agreement is
the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Refunding Date and to perform its other
obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee Documents by
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, and compliance by State Street or the Indenture Trustee, as the case
may be, individually or as Indenture Trustee, as the case may be, with all of
the provisions thereof do not and will not contravene any Massachusetts or
Federal law, rule or regulation governing the banking or trust powers of State
Street or the Indenture Trustee, or any order or judgment known to us, of any
Massachusetts or Federal court or governmental authority applicable to or
binding on State Street, individually or as Indenture Trustee, or contravene
the provisions of, or constitute a default under, or result in the creation
of a Lien on any property of State Street or the Indenture Trustee under, its
charter documents or By-Laws or any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement, in
each case known to us, or any other agreement or instrument, in each case
known to us, to which State Street, individually or as Indenture Trustee, is a
party or by which it or any of its property may be bound or affected, other
than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document
constitutes a legal, valid and binding obligation of State Street, in its
individual capacity or as Indenture Trustee, as the case may be, enforceable
against State Street, in its individual capacity or as Indenture Trustee, as
the case may be, in accordance with its terms.
5. The Certificates issued and dated the Refunding Date have been
duly authenticated and delivered by the Indenture Trustee pursuant to the
terms of the Indenture.
6. There are no fees, taxes or other governmental charges payable
by the Owner Trustee, the Indenture Trustee (except taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof in connection with the execution, delivery or
performance of any of the Operative Agreements or in connection with the
issuance and acquisition of the Certificates by the Certificate Holders or the
beneficial interest of the Certificate Holders in the Trust Indenture Estate
solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
Neither the Indenture Trustee nor the trust created under the Indenture will
be subject to any fee, tax or other governmental charge (except for taxes
imposed on fees payable to the Indenture Trustee in its individual capacity)
under the laws of the Commonwealth of Massachusetts or any political
subdivision thereof in existence on the date hereof, on, based on or measured
by, directly or indirectly, the gross receipts, net income or value of the
Trust Indenture Estate solely because the Indenture Trustee in its individual
capacity (a) is incorporated under the laws of the Commonwealth of
Massachusetts, (b) has its principal place of business in the Commonwealth of
Massachusetts, (c) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee Documents in the
Commonwealth of Massachusetts, and (d) engages in any activities unrelated to
the transactions contemplated by the Indenture Trustee Documents in the
Commonwealth of Massachusetts. There is no fee, tax or other governmental
charge (except for taxes imposed on fees payable to the Indenture Trustee in
its individual capacity) under the laws of the Commonwealth of Massachusetts
or any political subdivision thereof in existence on the date hereof, on,
based on or measured by any payments under the Certificates by reason of the
creation of the trust under the Indenture solely because the Indenture Trustee
in its individual capacity (a) is incorporated under the laws of the
Commonwealth of Massachusetts, (b) has its principal place of business in the
Commonwealth of Massachusetts, (c) performs (in its individual capacity or as
Indenture Trustee) any or all of its duties under the Indenture Trustee
Documents in the Commonwealth of Massachusetts, and (d) engages in any
activities unrelated to the transactions contemplated by the Indenture Trustee
Documents in the Commonwealth of Massachusetts. We express no opinion as to
whether or not any fees, taxes or other charges are now or hereafter may be
payable by the Original Loan Participants or the Owner Participant to the
Commonwealth of Massachusetts or any political subdivision thereof in
connection with (a) the execution, delivery, or performance by any of the
Indenture, the Participation Agreement or any of the other Operative
Agreements and (b) the making by the Owner Participant of its investment in
the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Indenture Trustee, to perform its obligations under the Indenture Trustee
Documents.
We rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(l)(iv) of
the Participation Agreement (Federal Express Corporation Trust No. N667FE),
dated as of August 1, 1996, as amended and restated as of October 15, 1996
(the "Participation Agreement") among Federal Express Corporation, as lessee
(the "Lessee"), PMCC Leasing Corporation, as owner participant (the "Owner
Participant"), Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as original loan
participants (the "Original Loan Participants"), First Security Bank, National
Association, as owner trustee (the "Owner Trustee"), State Street Bank and
Trust Company, as indenture trustee (the "Indenture Trustee"), and State Street
Bank and Trust Company, as pass through trustee (the "Pass Through Trustee"),
which Participation Agreement amends and restates that certain Participation
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August 1,
1996 (the "Original Participation Agreement") among the Lessee, the Owner
Participant, the Original Loan Participants, the Owner Trustee and the
Indenture Trustee, with respect to that portion of Subtitle VII of Title 49 of
the United States Code relative to the recordation of instruments and the
registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined, have
the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No. N667FE)
dated as of August 1, 1996, as amended and restated as of
October 15, 1996 (the "Trust Agreement") between the Owner
Participant and the Owner Trustee, which Trust Agreement amends
and restates the Original Trust Agreement, which Trust
Agreement was filed at ____ _.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N667FE) dated as of August 1, 1996, as
amended and restated as of October 15, 1996 (the "Indenture")
between the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture, which
Indenture was filed at ____ _.m., C._.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No. N667FE)
dated as of August 1, 1996, as amended and restated as of
October 15, 1996 (the "Lease") between the Owner Trustee, as
lessor, and the Lessee, as lessee, which Lease amends and
restates the Original Lease, with the Indenture attached
thereto, which Lease with the Indenture attached was filed at
____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture as containing confidential
financial information.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated August 28, 1996 (the "FAA
Bill of Sale") from AVSA S.A.R.L., as seller, conveying title to the
Airframe to the Owner Trustee has been duly recorded by the FAA on
August 28, 1996 and assigned Conveyance No. 2A269961;
2. the Indenture and the Lease with the Indenture attached are in due
form for recordation by and have been duly filed for recordation with
the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly filed
with the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on August 28,
1996 pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded by the
FAA pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44107;
6. the Original Lease with the Lease Supplement, the Original Indenture
and the Indenture and Security Agreement Supplement attached was duly
filed with and duly recorded by the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the security
interest created by the Original Indenture, as amended and restated
by the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, and (ii) the rights of the parties under the
Original Lease, as amended and restated by the Lease, as supplemented
by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Indenture, as
supplemented by the Indenture and Security Agreement Supplement,
constitutes a duly perfected first priority security interest in the
Aircraft and a duly perfected first assignment of all the right,
title and interest of the Owner Trustee in, to and under the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been duly
effected) are necessary in order to perfect in any applicable
jurisdiction in the United States (A) the Owner Trustee's title to
the Airframe or (B) such security interest and assignment (insofar as
such assignment affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the validity,
priority or enforceability of such security interest and assignment
under local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is required
for the valid authorization, delivery and performance of the Original
Lease, as amended and restated by the Lease, as supplemented by the
Lease Supplement, the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security
Agreement Supplement, or the Original Trust Agreement, as amended and
restated by the Trust Agreement, except for such filings as are
referred to in our opinion dated August 28, 1996 (which have been
duly effected) and the filings referred to in clauses (a), (b) and (c)
above; and,
11. neither the authorization, issuance and delivery of the Certificates,
the execution and delivery by the parties thereto of the Original
Trust Agreement, the Trust Agreement, the Original Indenture, the
Indenture, the Indenture and Security Agreement Supplement, the
Original Participation Agreement, the Participation Agreement, the
FAA Bill of Sale, the Original Lease, the Lease and the Lease
Supplement or the performance by the parties thereto of: (i) the
Original Trust Agreement, as amended and restated by the Trust
Agreement; (ii) the Original Indenture, as amended and restated by
the Indenture, as supplemented by the Indenture and Security Agreement
Supplement; (iii) the Original Participation Agreement, as amended and
restated by the Participation Agreement; and (iv) the Original Lease,
as amended and restated by the Lease, as supplemented by the Lease
Supplement, in accordance with the provisions thereof, nor the
consummation by the parties thereto of any of the transactions
contemplated thereby, requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of any
other action in respect of, the FAA except for the filings, the
recordations and the filings for recordations specified elsewhere in
this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have actual notice. In rendering this opinion we
are assuming that there are no documents with respect to the Aircraft which
have been filed for recording under the recording system of the FAA but have
not yet been listed in the available records of such system as having been so
filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated October ___, 1996 and
have continued to rely upon the opinion of the Assistant Chief Counsel of the
Aeronautical Center dated August 28, 1996, copies of which are attached
hereto.
Very truly yours,
Robert M. Peregrin
For the Firm
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing manufacturer's
serial number 771 and U.S. Registration No. N667FE (the "Airframe") and two
(2) General Electric CF6-80C2-A5F aircraft engines bearing manufacturer's
serial numbers 705-244 and 705-245 (the "Engines") (the Airframe and the
Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N667FE) dated
as of August 1, 1996 between PMCC Leasing Corporation, as owner participant,
and First Security Bank, National Association, as owner trustee, which was
filed with the FAA on August 28, 1996.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N667FE) dated as of August 1, 1996 between First Security
Bank, National Association, as owner trustee, and State Street Bank and Trust
Company, as indenture trustee, which together with the Indenture and Security
Agreement Supplement (as hereinafter defined) attached thereto was recorded as
one instrument by the FAA on August 29, 1996 and assigned Conveyance No.
2A269964.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996 between First Security
Bank, National Association, as owner trustee, and State Street Bank and Trust
Company, as indenture trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N667FE) dated
as of August 1, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, which
together with the Lease Supplement (as hereinafter defined), the Original
Indenture and the Indenture and Security Agreement Supplement attached thereto
was recorded as one instrument by the FAA on August 29, 1996 and assigned
Conveyance No. 2A269965.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No. N667FE)
dated August 28, 1996 between First Security Bank, National Association, as
owner trustee, as lessor, and Federal Express Corporation, as lessee, with
respect to the Aircraft, which was attached to and recorded by the FAA as one
instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) Basic Rent (Schedule II),
(ii) the Stipulated Loss Values (Schedule III), (iii) the Termination Values
(Schedule IV), (iv) the Additional Purchase Option Schedule (Schedule V)
omitted from the FAA filing counterpart thereof as containing confidential
financial information; and (v) the purchase price under Section 4.02(a)(F) of
the Lease set forth in Ancillary Agreement II, which was not attached to the
FAA filing counterpart of the Lease or otherwise filed with the FAA for
recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Persons Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Trust Agreement (Federal Express Corporation Trust No. N667FE), dated
as of August 1, 1996, as amended and restated as of October 15, 1996 (the
"Trust Agreement"), between First Security and PMCC Leasing Corporation, a
Delaware corporation (the "Owner Participant"). Pursuant to the Participation
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August
1, 1996, as amended and restated as of October 15, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee, the Owner
Participant, Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants, First Security, not in its individual capacity except as
otherwise expressly set forth therein but solely as Owner Trustee (the "Owner
Trustee") under the Trust Agreement, State Street Bank and Trust Company, as
Indenture Trustee and State Street Bank and Trust Company, as Pass Through
Trustee, one Airbus A300F4-605R aircraft bearing U.S. Registration No. N667FE
(the "Aircraft") is being refinanced. This opinion is furnished pursuant to
Section 4.01(l)(vii) of the Participation Agreement. Capitalized terms used
herein and not otherwise defined are used as defined in the Participation
Agreement, except that references herein to any instrument shall mean such
instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1 dated
August 28, 1996;
(e) The Lease;
(f) The Ancillary Agreement I;
(g) The Ancillary Agreement II:
(h) The Lease Supplement dated August 28, 1996 (each of the
documents identified in paragraphs (a) through (h) being
collectively referred to as the "Owner Trustee Documents"); and
(h) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other documents,
such corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Owner Trustee Documents.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly organized
and validly existing under the laws of the United States of America holding
a valid certificate to do business as a national banking association, with
banking and trust powers, is a Citizen of the United States within the
meaning of Section 40102(a)(15) of the Transportation Code, and each of
First Security and the Owner Trustee, as the case may be, has or had, on
the date of execution thereof, full corporate power, authority and legal
right to execute, deliver and perform each of the Owner Trustee Documents
to which it is or is to be a party and to issue, execute, deliver and
perform the Certificates.
2. Each of First Security and the Owner Trustee, as the case may be,
has duly authorized, executed and delivered each Owner Trustee Document to
which it is a party; each such document constitutes a legal, valid and
binding obligation of the Owner Trustee (and, to the extent set forth in
the respective Owner Trustee Document, of First Security) enforceable
against the Owner Trustee (and, to the extent set forth in the respective
Owner Trustee Document, against First Security) in accordance with its
terms; and assuming the Trust Agreement was properly authorized, executed
and delivered by the Owner Participant and that the terms of the Trust
Agreement are not in violation of any laws, documents, judgments,
regulations or other provisions applicable to the Owner Participant, the
Trust Agreement constitutes, under the laws of the State of Utah, a legal,
valid and binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with its terms. The Certificates have
been duly issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and constitute the legal,
valid and binding obligations of the Owner Trustee enforceable against the
Owner Trustee in accordance with their terms and the terms of the
Indenture; and the Certificates are entitled to the benefits and security
afforded by the Indenture in accordance with their terms and the terms of
the Indenture.
3. On the Delivery Date, the Owner Trustee received from AVSA such
title to the Aircraft as AVSA conveyed to the Owner Trustee, subject to the
rights of the Owner Trustee and the Lessee under the Original Lease and the
security interest created pursuant to the Original Indenture and the
Indenture Supplement; and to our knowledge, there exist no Liens affecting
the title of the Owner Trustee to the Lessor's Estate resulting from claims
against First Security not related to the ownership of the Lessor's Estate
or the administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust Indenture
Estate.
4. Under the laws of the State of Utah, all of the properties which
are part of the Trust Indenture Estate have been pledged and mortgaged with
the Indenture Trustee as part of the Trust Indenture Estate and the
beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the Indenture,
to the Lien of the Indenture in favor of the holders of the Certificates
issued and to be issued under the Indenture.
5. To the extent that the Uniform Commercial Code of the State of
Utah (the "UCC") is applicable, except for the Indenture Trustee's taking
possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including the
filing or recording of any document, is necessary (i) to create under the
UCC the security interest in the Trust Indenture Estate (including the
grant and assignment unto the Indenture Trustee of the security interest in
all estate, right, title and interest of the Owner Trustee in, to and under
the Lease, the Lease Supplement and the Participation Agreement), which
the Indenture by its terms purports to create in favor of the Indenture
Trustee, and (ii) to perfect in the State of Utah such security
interest, except for the filing of a UCC financing statement complying
with the formal requisites of Section 9-402 of the UCC in the office of
the Division of Corporations and Commercial Code of the State of Utah
with respect to the security interest, which filing has been duly
effected, and the filing of continuation statements with respect thereto
required to be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Utah law, the trust created by the Trust Agreement has been duly created
and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the interest in
the properties referred to in Section 1.02 of the Trust Agreement which the
Trust Agreement by its terms purports to create, which interest is subject
and subordinate to the security interests created by the Indenture to the
extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the Owner
Trustee or First Security, as the case may be, of the Owner Trustee
Documents, nor the issuance, execution and delivery by the Owner Trustee of
the Certificates nor the fulfillment or compliance by the Owner Trustee or
First Security with the respective terms and provisions thereof nor the
consummation of any of the transactions by the Owner Trustee or First
Security, as the case may be, contemplated thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Utah or the United States
of America governing the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is not
physically located in Utah at the commencement or termination of the Term
or during such Term, (ii) in connection with any sale of the Aircraft, such
Aircraft will not be physically delivered in Utah to a buyer nor be shipped
from a point within Utah to a buyer, and (iii) the trust created by the
Trust Agreement is treated as a grantor trust for federal income tax
purposes within the contemplation of Sections 671 through 678 of the
Internal Revenue Code of 1986, there are no fees, taxes, or other charges
(except taxes imposed on fees payable to the Owner Trustee) payable to the
State of Utah or any political subdivision thereof in connection with the
execution, delivery or performance by the Owner Trustee, the Indenture
Trustee, the Lessee or the Owner Participant, as the case may be, of the
Owner Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of the
beneficial interest in the Lessor's Estate or in connection with the
issuance and acquisition of the Certificates, and neither the Owner
Trustee, the Lessor's Estate nor the trust created by the Trust Agreement
will be subject to any fee, tax or other governmental charge (except taxes
on fees payable to the Owner Trustee) under the laws of the State of Utah
or any political subdivision thereof on, based on or measured by, directly
or indirectly, the gross receipts, net income or value of the Lessor's
Estate solely by reason of the creation or continued existence of the trust
under the terms of the Trust Agreement pursuant to the laws of the State of
Utah or the Owner Trustee's performance of its duties under the Trust
Agreement.
9. The execution, delivery and performance by the Owner Trustee or
First Security, as the case may be, of each of the Owner Trustee Documents
and the issuance, execution, delivery and performance of the Certificates
by the Owner Trustee are not or were not, on the date of execution thereof,
in violation of the charter or by-laws of First Security or of any law,
governmental rule, or regulation of the State of Utah or the United States
of America governing the banking or trust powers of First Security or, to
our knowledge, of any indenture, mortgage, bank credit agreement, note or
bond purchase agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or, to our
knowledge, of any judgment or order of the State of Utah or the United
States of America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the laws
of the State of Utah or any political subdivision thereof in existence on
the date hereof on, based on or measured by any payments under the
Certificates or the beneficial interests in the Lessor's Estate, by reason
of the creation of the trust under the Trust Agreement, pursuant to the
laws of the State of Utah or the Owner Trustee's performance of its duties
under the Trust Agreement, within the State of Utah, which would not have
been imposed if First Security did not have its principal place of business
and did not perform its obligations under the Owner Trustee Documents in
the State of Utah.
11. Neither a Utah court nor a federal court applying federal law or
Utah law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the
Trust Agreement, except in accordance with its terms or with the consent of
the Indenture Trustee, as long as the Lien of the Indenture on the Trust
Estate has not been released or payment of the principal of, and Make-Whole
Premium, if any, and interest on, the Certificates have not been made in
full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively, the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the
rights of such Owner Participant under the Trust Agreement or in the
Trust Estate, and do not have, and may not through the enforcement of
such Creditor's rights acquire, any greater rights than such Owner
Participant with respect to the Trust Agreement or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its properties
in any court or before any administrative agency or arbitrator, which, if
adversely determined, would materially adversely affect the ability of
First Security or the Owner Trustee, as the case may be, to perform its
obligations under any of the Owner Trustee Documents, and there are no
pending or, to our knowledge, threatened actions or proceedings before any
court, administrative agency or tribunal involving First Security or the
Owner Trustee, as the case may be, in connection with the transactions
contemplated by any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the
banking and trust powers of First Security and Title II of the United States
Code entitled "Bankruptcy". In addition, we express no opinion with respect
to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as
amended (except with respect to the opinion set forth in paragraph 1 above
concerning the citizenship of First Security) and (iii) state securities or
blue sky laws. Insofar as the foregoing opinions relate to the validity
and enforceability in the State of Utah of the Certificates and the other
Owner Trustee Documents expressed to be governed by the laws of the State
of New York, we have assumed that the laws of New York are identical to the
laws of Utah in all material respects, and that the Certificates and such
other Owner Trustee Documents constitute legal, valid, binding and
enforceable documents or instruments under such laws (as to which we
express no opinion). No opinion is expressed as to the priority of any
security interest or as to title to any part of the Trust Estate.
B. The foregoing opinions regarding enforceability of any document or
instrument, except for the opinions set forth in paragraphs 11 and 12 above,
are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery by
each of the parties thereto, other than First Security and the Owner Trustee,
of the Owner Trustee Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Vice President, the facts set forth
in which we have not independently verified.
E. We have assumed the due authentication of the Certificates by the
Indenture Trustee.
F. We have assumed that all signatures (other than those of the Owner
Trustee or First Security) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express any
opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment acquired by the Owner
Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated August 28, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT A(6)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N667FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of June 1, 1996 (the "Pass Through Trust
Agreement"), as supplemented by the Series Supplements dated the date hereof
between Federal Express Corporation and the Pass Through Trustee, designated
as Series Supplement 1996-B1 and 1996-B2, respectively (the "Series
Supplements") and in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N667FE), dated as of August 1, 1996, as amended and restated as of October 15,
1996 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"); Morgan Guaranty Trust Company of New York, Bank of
America National Trust & Savings Association, The Chase Manhattan Bank,
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants; First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement; State Street, not in its individual capacity but solely
as Indenture Trustee under the Indenture; and State Street, not in its
individual capacity, except as otherwise stated therein, but solely as Pass
Through Trustee. This opinion is being delivered pursuant to Section
4.01(l)(ix) of the Participation Agreement. Except as otherwise defined
herein, all capitalized terms used herein shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel for the
purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street or the
Pass Through Trustee, as the case may be, is a party, the Pass Through Trust
Agreement and the Series Supplements (collectively, the "Pass Through Trustee
Documents"), the Certificate of the Massachusetts Commissioner of Banks
relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Pass Through Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street and the Pass Through Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such agreement
is the legal, valid and binding obligation of each other party thereto;
(ii) the enforceability of any obligation of State Street and the Pass
Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific or
equitable relief may in all cases by subject to an implied duty of good faith
and to general principals of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
In rendering the opinion set forth below in paragraph 6 as to certain
Massachusetts tax matters, we have assumed that, for Federal income tax
purposes, the trusts created by the Series Supplements are not classified as
associations taxable as corporations and that the trusts created by the Series
Supplements are grantor trusts under subpart E, Part I of Subchapter J of
Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended.
This opinion is rendered solely for the benefit of those institutions
listed on Schedule A hereto and their respective successors and assigns in
connection with the transactions contemplated by the Operative Agreements and
may not be used or relied upon by any other person or for any other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly organized
and validly existing in good standing with the Massachusetts Commissioner of
Banks under the laws of the Commonwealth of Massachusetts, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Pass Through Trustee
Documents and, in its capacity as Pass Through Trustee, to authenticate the
Pass Through Certificates delivered on the Refunding Date.
2. The execution and delivery of the Pass Through Trustee Documents
(other than the Pass Through Trust Agreement) by State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not and will not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the Pass
Through Trustee, or any order or judgment known to us, of any Massachusetts or
Federal court or governmental authority applicable to or binding on State
Street, individually or as Pass Through Trustee, or contravene the provisions
of, or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Pass Through Trustee under, its charter
documents or By-Laws or any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, in each case
known to us, or any other agreement or instrument, in each case known to us,
to which State Street, individually or as Pass Through Trustee, is a party or
by which it or any of its property may be bound or affected, other than the
Lien of the Indenture.
3. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than the Pass
Through Trust Agreement) has been duly authorized, executed and delivered by
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, and each such document constitutes a legal, valid and binding
obligation of State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, enforceable against State Street, in its
individual capacity or as Pass Through Trustee, as the case may be, in
accordance with its terms.
5. The Pass Through Certificates have been duly authorized and
validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates are enforceable against the
Pass Through Trustee and the holders thereof are entitled to the benefits of
the Pass Through Trust Agreement and the related Series Supplements.
6. There are no fees, taxes or other governmental charges ("Taxes")
payable under the laws of the Commonwealth of Massachusetts with respect to the
execution and delivery by State Street, in its individual capacity or as Pass
Through Trustee, as the case may be, of any of the Pass Through Trustee
Documents (except for Taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts. Neither State Street, in its individual capacity or as the
Pass Through Trustee, as the case may be, the Owner Participant, the Owner
Trustee, nor the trusts created by the Series Supplements will, as a result of
the transactions contemplated thereby, be subject to any Taxes under the laws
of the Commonwealth of Massachusetts or any political subdivision thereof
(except for Taxes on any fees payable to State Street in its individual
capacity) which would not have been imposed if State Street did not have its
principal place of business in Massachusetts or did not perform its
administrative duties under the Pass Through Trustee Documents in
Massachusetts, and there are no Taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for Taxes on any
fees payable to State Street in its individual capacity) upon or with respect
to the Aircraft or any Engine or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession, presence, use,
operation, condition, storage, maintenance, modification, alteration, repair,
sale, return, transfer or other disposition of the Aircraft which would not
have been imposed if State Street did not have its principal place of business
in Massachusetts or did not perform its administrative duties under the Pass
Through Trustee Documents in Massachusetts. We express no opinion as to
whether or not any fees, tax or other charges are now or hereafter may be
payable by the Owner Participant to the Commonwealth of Massachusetts or any
political subdivision thereof in connection with (a) the execution, delivery,
or performance of the Series Supplements, the Participation Agreement or any
of the other Operative Agreements and (b) the making by the Owner Participant
of its investment in the Aircraft.
7. To the best of our knowledge, there are no pending or threatened
actions or proceedings against State Street before any court or administrative
agency which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of State Street, individually or
as Pass Through Trustee, to perform its obligations under the Pass Through
Trustee Documents.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America National Trust & Savings Association
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017-2070
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, Tennessee 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
BA Securities, Inc.
231 South LaSalle Street
Chicago, Illinois 60697
First Chicago Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.e]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.b.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.d]
EXHIBIT E-1
[FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT]
BENEFICIAL INTEREST TRANSFER AGREEMENT (this "Document"), dated as of
_______ __, ____, between ______________, a ______________ corporation
("Transferor") and ______________, a ______________ corporation ("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer by
Transferor to Transferee of all of the rights, title and interest of
Transferor in and to its interest (the "Beneficial Interest") under the Trust
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August
1, 1996, as amended and restated as of October 15, 1996 (the "Trust
Agreement"), between Transferor and First Security Bank, National Association,
and the Lessor's Estate created thereunder, and all of Transferor's rights and
obligations under the Participation Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, as amended and restated as of
October 15, 1996 (the "Participation Agreement"), among Federal Express
Corporation, as Lessee, First Security Bank, National Association, as Owner
Trustee, PMCC Leasing Corporation, as Owner Participant, State Street Bank and
Trust Company, as Indenture Trustee, Morgan Guaranty Trust Company of New
York, Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South),
as Original Loan Participants and State Street Bank and Trust Company, as Pass
Through Trustee, and under the other Operative Agreements and (b) the
acceptance by Transferee of such transfer and the assumption by Transferee of
such obligations of Transferor thereunder; and
WHEREAS, Section 7.03(d) of the Participation Agreement permits such
transfer and assumption upon satisfaction of certain conditions heretofore or
concurrently herewith being observed;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings ascribed thereto in the Participation
Agreement.
2. Transfer. Transferor does hereby sell, convey, assign,
transfer and set over, unto Transferee, as of the Effective Time (as defined
below), all of Transferor's present and future right, title and interest in
and to (a) all of the Beneficial Interest and (b) all of the Owner
Participant's rights and obligations under the Participation Agreement, the
Tax Indemnity Agreement, the Trust Agreement and the other Operative
Agreements and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
rights of Transferor as have arisen or accrued to Transferor prior to the
Effective Time (including without limitation, the right to receive any amounts
due or accrued to Transferor under the Operative Agreements as of a time prior
to the Effective Time and the right to receive any indemnity payment pursuant
to the Participation Agreement or the Tax Indemnity Agreement, with respect to
events occurring prior to such time); all of the foregoing that is being
transferred under this paragraph 2, the "Transferred Interest".
3. Assumption. Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of Transferor and the other parties
to the Participation Agreement, assumes and undertakes and agrees to perform
and discharge all of the duties and obligations of Transferor with respect to
the Transferred Interest whenever and wherever accrued (other than duties and
obligations of Transferor required to be performed by it on or prior to the
Effective Time). Transferee hereby confirms that, from and after the
Effective Time, Transferee (a) shall be deemed, to the extent set forth in
Section 2 hereof, the "Owner Participant" party to the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements and (b) shall be bound by all of the terms of the
Operative Agreements to the extent the same relate to the Transferred Interest.
4. Release of Transferor. At the Effective Time, Transferor shall
be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
Transferor shall in no event be released from any such duty or obligations
arising or relating to any event occurring prior to the Effective Time, or on
account of any breach by Transferor of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements, or for any
fraudulent or willful misconduct engaged in by it prior to the Effective Time,
or from any obligation that relates to any indemnity claimed by Transferor or
any Lessor's Lien attributable to Transferor.
5. Fees and Expenses. The fees, expenses and charges of the
parties to the Participation Agreement incurred in connection with the
transfer effected hereby shall be for the account of [specify
Transferor/Transferee].
6. Payments. Transferor hereby covenants and agrees to pay over to
Transferee, if and when received following the Effective Time, any amounts
(including any sums payable as interest in respect thereof) paid on account of
the Transferred Interest to or for the benefit of Transferor, and Transferee
hereby covenants and agrees to pay over to Transferor, if and when received
following the Effective Time, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Transferee that are
not attributable to the Transferred Interest and to which Transferor is
otherwise entitled.
7. Investment Purpose. Transferee hereby represents and warrants
that, as of the date hereof, it is acquiring the Transferred Interest for its
account with no present intention of distributing such Transferred Interest
or any part thereof in any manner which would violate the Securities Act of
1933, as amended, but without prejudice, however, to the right of Transferee
at all times to sell or otherwise dispose of all or any part of such
Transferred Interest in compliance with Section 7.03(d) of the
Participation Agreement.
8. Representations and Warranties of Transferor. Transferor
represents and warrants to Transferee that as of the Effective Time:
(a) Organization and Power. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power, authority and
legal right to execute, deliver and perform this Agreement and to
enter into and carry out the transactions contemplated hereby and in
the other Operative Agreements (the "Transactions").
(b) Authorization, Execution and Validity. This Agreement has been
duly authorized, executed and delivered by Transferor and constitutes
the legal, valid and binding obligation of Transferor, enforceable
against it in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity.
(c) Conflict. The execution, delivery and performance by
Transferor of this Agreement and compliance by Transferor with all of
the provisions hereof do not contravene any regulation or any order
of any governmental authority applicable to or binding on Transferor,
or contravene the provisions, or constitute a default by Transferor
under, its certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
Transferor is a party or by which Transferor or any of its Properties
is bound or affected.
(d) Consents. No consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice or the
taking of any other action with respect to, any governmental
authority on the part of Transferor is required in connection with
the execution, delivery and performance by Transferor of this
Agreement.
(e) Litigation. There are no proceedings pending or, to the
knowledge of Transferor, threatened against Transferor before any
governmental authority that would materially and adversely affect the
ability of Transferor to consummate the Transactions.
(f) No Liens. The Trust Estate is free of Lessor's Liens
attributable to Transferor.
(g) Compliance with Operative Agreements. Transferor has fully
performed all of its obligations under the Participation Agreement
and under each other Operative Agreement which obligations by their
terms are required to be satisfied or performed prior to the
Effective Time or prior to the consummation of the Transactions.
(h) Default. As a result of the transfer effected hereby, no
Indenture Default attributable to the Owner Participant or the Owner
Trustee has occurred and is continuing.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement
with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee,
including, without limitation, the airworthiness, value, condition,
workmanship, design, patent or trademark infringement, operation,
merchantability or fitness for use of the Aircraft.
9. Representations and Warranties of Transferee. Transferee
represents and warrants to Transferor and to the other parties to the
Participation Agreement that as of the Effective Time:
(a) Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of [ ], has
the full corporate power, authority and legal right to carry on its
business as now conducted, and has full corporate power, authority
and legal right to execute, deliver and perform this Agreement and to
enter into and carry out the transactions contemplated hereby and in
the other Operative Agreements (the "Transactions");
(b) Transferee has full corporate power, authority and legal right
to execute, deliver and enter into this Agreement and the other
Operative Agreements and full corporate power and authority to
perform its obligations thereunder, and such execution, delivery and
performance do not and will not contravene any applicable law or any
order of any governmental authority applicable to or binding on the
Transferee, or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien upon the property of the
Transferee under, its articles of incorporation or by-laws or any
material indenture, mortgage, contract or other agreement or
instrument to which the Transferee is a party or by which it or any
of its property may be bound or affected;
(c) the execution, delivery and performance of this Agreement by the
Transferee (i) has been duly authorized by all necessary corporate
action and (ii) does not require any approval of the shareholders of
the Transferee or any approval or consent of, or notice to, any
trustee or holders of any indebtedness or obligation of the
Transferee, except for such approvals and consents as have already
been obtained;
(d) this Agreement has been duly executed and delivered by the
Transferee, and constitutes the legal, valid and binding obligation
of the Transferee, enforceable against the Transferee in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity;
(e) there are no proceedings or actions pending or, to the
knowledge of the Transferee, threatened against the Transferee before
any governmental authority in which there is a reasonable probability
of an adverse determination that individually or in the aggregate
would materially and adversely impair the ability of the Transferee
to perform its obligations under this Agreement or the Operative
Agreements, or which involve the Transactions or question the
validity of any Operative Agreement to which the Owner Participant is
a party or any action taken or to be taken pursuant thereto; and the
Transferee is not in default with respect to any order of any
governmental authority which involves the Transactions or the default
under which would materially and adversely affect the ability of the
Transferee to perform its obligations under this Agreement or any of
the Operative Agreements;
(f) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any governmental authority is required under any law for
the execution and delivery by the Transferee of this Agreement, or
the carrying out by the Transferee of any of the Transactions, other
than any such consent, approval, order, authorization, registration,
notice or action as has been duly obtained, given or taken;
(g) the Lessor's Estate is free of any Lessor's Liens attributable
to the Transferee;
(h) the Transferee, upon execution of this Agreement, will not be
in default under any of the Operative Agreements;
(i) no part of the funds to be used by it to acquire the interests
acquired by the Owner Participant under the Participation Agreement
constitutes assets (within the meaning of ERISA and any applicable
rules and regulations) of any employee benefit plan subject to Title
I of ERISA or of any plan or individual retirement account subject to
Section 4975 of the Code;
(j) Transferee is a "U.S. Person" as defined in Section 7701(a)(30)
of the Code and is not a tax resident of another country and if it
shall at any time cease to be such a "U.S. Person" or shall become a
tax resident of another country, it shall furnish to the Agent and
each Loan Certificate Holder an indemnity, in form and substance
reasonably satisfactory to such Loan Certificate Holder, for any
Taxes that may be imposed on such Holder as a result of its failure
to be such a "U.S. Person" or as a result of its being a tax resident
of another country, and it shall be personally liable for any debt
service to the extent that the receipt of rentals is reduced by
reason of any withholding Taxes that result from such failure to be
such a "U.S. Person" or from being a tax resident of another country;
(k) [After giving effect to a voting trust or similar agreement(1),
Transferee is a Citizen of the United States] [applicable if
Aircraft is registered in the United States or is proposed to be
so registered]
-----------------------
(1) Such voting trust or similar agreement must be reasonably
satisfactory to the Lessor and the Indenture Trustee.
(l) On and as of the Effective Date, the representations and
warranties of the Owner Participant in Article 7 of the Participation
Agreement are true and correct as to the Transferee; and
(m) Transferee satisfies the conditions applicable to a transferee
of the Beneficial Interest set forth in Section 7.03(d) of the
Participation Agreement, including without limitation, the condition
set forth in the last sentence thereof [and to the extent the same
has been requested by the Lessee or the Indenture Trustee, Transferee
has heretofore provided to the Lessee and the Indenture Trustee its
most recent audited financial statements, which show a consolidated
tangible net worth or combined capital and surplus of at least
$75,000,000] [remove bracketed language if an Owner Participant
Guaranty is provided].
(n) the Transferee has, independently and without reliance upon any
other party (including without limitation the Transferor) and based
on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement,
and the Transferee has established adequate means of obtaining from
Lessee on a continuing basis information pertaining to, and is now
and on a continuing basis will be completely familiar with, the
financial condition, operations, properties and prospects of Lessee.
Notwithstanding the foregoing or anything else contained in this Agreement, it
makes no representation or warranty in this Agreement with respect to laws,
rules or regulations relating to aviation or to the nature or use of the
equipment owned by the Owner Trustee, including, without limitation, the
airworthiness, value, condition, workmanship, design, patent or trademark
infringement, operation, merchantability or fitness for use of the Aircraft,
other than such laws, rules or regulations relating to the citizenship
requirements of it under applicable aviation law.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Effectiveness. This Agreement shall be effective upon the mutual
execution and delivery of this Agreement (the "Effective Time").
12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by both parties so long
as each party shall sign at least one counterpart.
13. Beneficiaries. Each of the Owner Trustee, the Indenture Trustee,
the Original Loan Participants and the Lessee, together with their respective
successors and permitted assigns, is and shall be deemed a third party
beneficiary of this Agreement entitled to enforce this Agreement directly and
in its own name and enforce any rights or claims of the parties hereto.
14. Further Assurances. Each party agrees that from time to time
after the Effective Time, it shall execute and deliver or cause to be executed
and delivered such instruments, documents and papers, and take all such
further action as may be reasonably required in order to consummate fully the
purposes of this Agreement and to implement the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
[TRANSFEROR]
By:____________________________
Name:
Title:
[TRANSFEREE]
By:____________________________
Name:
Title:
EXHIBIT E-2
[FORM OF OWNER PARTICIPANT GUARANTY]
TRANSFEREE'S PARENT GUARANTY, dated as of ___________ __, ____, (this
"Guaranty") by ____________________, a ___________ corporation (the
"Guarantor"), to First Security Bank, National Association, in its individual
capacity and as Owner Trustee, State Street Bank and Trust Company, as
Indenture Trustee, the Original Loan Participants and the Lessee referred to
in the Participation Agreement described below (collectively, together with
their successors and assigns and the holders from time to time of the Loan
Certificates, the "Beneficiaries").
W I T N E S S E T H :
WHEREAS, ___________, a ____________ corporation (the "Transferor"), is
party to the Participation Agreement (Federal Express Corporation Trust No.
N667FE), dated as of August 1, 1996, as amended and restated as of October 15,
1996 (as amended, modified or supplemented from time to time, the
"Participation Agreement"), among Federal Express Corporation, as Lessee, PMCC
Leasing Corporation, as Owner Participant, First Security Bank, National
Association, as Owner Trustee, State Street Bank and Trust Company, as
Indenture Trustee, Morgan Guaranty Trust Company of New York, Bank of America
National Trust & Savings Association, The Chase Manhattan Bank, Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants and State Street Bank and Trust Company, as Pass Through Trustee;
and
WHEREAS, the Transferor wishes to transfer, among other things, all of
the rights, title and interest of the Transferor in and to the Beneficial
Interest under the Trust Agreement and the Lessor's Estate created thereunder,
and all of the Transferor's rights and obligations under the Participation
Agreement, the Trust Agreement and the other Operative Agreements to
__________________, a _______________ [corporation] (together with its
successors and assigns, the "Transferee"), a subsidiary of the Guarantor,
pursuant to the Beneficial Interest Transfer Agreement, dated as of the date
hereof (the "Transfer Agreement"), between the Transferor and the Transferee;
and
WHEREAS, the terms of the Participation Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guaranty by the Guarantor;
NOW, THEREFORE, in order that the Transferor may make the aforementioned
transfer to the Transferee, the Guarantor hereby agrees with and for the
benefit of the Beneficiaries as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings assigned thereto in the Participation
Agreement or the Transfer Agreement.
2. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees, as primary obligor and not merely surety, to the Beneficiaries the
prompt and complete payment by the Transferee when due of all payment
obligations of the Transferee under the Operative Agreements without offset or
deduction and the timely performance of all other obligations of the
Transferee thereunder (such payment and other obligations, the "Obligations"),
and the Guarantor further agrees to pay any and all expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be paid
or incurred by the Beneficiaries in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guaranty.
The Guarantor will not exercise any rights that it may now or
hereafter acquire against Transferee that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty,
the Transferred Interest or the Operative Agreements, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against Transferee or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from Transferee,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations have been performed in full and all
other amounts payable under this Guaranty shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the final payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of any Beneficiary and shall forthwith
be paid to such Beneficiary to be credited and applied to the Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured,
in accordance with the terms of the Operative Agreements, or to be held as
collateral for any Obligations or other amounts payable under this Guaranty
thereafter arising.
3. No Subrogation. Notwithstanding anything to the contrary in
this Guaranty, the Guarantor hereby agrees not to assert any rights which may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the Bankruptcy Code, under common law or
otherwise) of any Beneficiary against the Transferee for the payment of the
obligations until all of the Obligations shall have been satisfied by payment
and performance in full.
4. Amendments with Respect to the Obligations; Waiver of Rights.
The Guarantor shall remain fully obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to
or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the obligations continued, and the Obligations, may, from time to
time, in whole or part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any
Operative Agreement may be amended, modified, supplemented or terminated, in
whole or in part, in accordance with the provisions thereof from time to time.
When making any demand hereunder against the Guarantor, a Beneficiary may, but
shall be under no obligation to, make a similar demand on the Transferee, and
any failure by a Beneficiary to make any such demand or to collect any
payments from the Transferee or any release of the Transferee shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a
matter of law, of any Beneficiary against the Guarantor. For the purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings. The Guarantor represents and warrants that it is the parent of
the Transferee, and agrees that its obligations hereunder shall continue
unimpaired, even if the Guarantor is no longer an Affiliate of the Transferee.
5. Guaranty Absolute and Unconditional. The Guarantor guarantees
that the Obligations will be paid and performed strictly in accordance with
the terms of the Transfer Agreement and the Operative Agreements, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any such terms or the rights of any Beneficiary with respect
thereto. The obligations of the Guarantor under this Guaranty are independent
of the Obligations or any other obligations of any other party, and a separate
action or actions may be brought and prosecuted against the Guarantor to
enforce this Guaranty, irrespective of whether the Transferee or any other
party is joined in any such action or actions. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guaranty or acceptance of this Guaranty; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guaranty; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guaranty. The Guarantor waives, to the fullest extent permitted by
applicable law, diligence, presentment, promptness, protest, mitigation of
damages by the Beneficiaries demand for payment and notice of default or
nonpayment to or upon the Transferee or the Guarantor with respect to the
Obligations. The Guarantor further waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to all
Obligations, whether existing now or in the future. The Guarantor understands
and agrees that, to the fullest extent permitted by applicable law, this
Guaranty shall be construed as a continuing, absolute and unconditional
guaranty of payment and performance (and not merely of collectibility) without
regard to:
(a) the validity, regularity or enforceability of the Transfer
Agreement, any Operative Agreement, or any of the Obligations at any
time or from time to time held by any Beneficiary;
(b) any defense, set-off, rebate, adjustment, withholding,
deduction or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by
the Transferee against any Beneficiary or any agreement or instrument
relating thereto or;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations or any other
obligations of any other party under the Transfer Agreement, the
Operative Agreements, or any other amendment or waiver of or any
consent to departure from the Transfer Agreement or other Operative
Agreements;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(e) any change, restructuring or termination of the corporate
structure or existence of the Guarantor or the Transferee or any of
the Affiliates of either;
(f) any defect in the title, condition, design, operation or
fitness of, or any interference with the operation, use or possession
of, the Aircraft;
(g) any failure to establish, perfect or preserve title to or any
security interest in or to the Aircraft or any other collateral
security for the Obligations; or
(h) any other circumstance whatsoever or any existence of or
reliance on any representation by any Beneficiary that might
otherwise constitute a defense available to, or a discharge of, the
Guarantor or any other guarantor or surety.
When pursuing its rights and remedies hereunder against the Guarantor,
any Beneficiary may, but shall be under no obligation to, pursue such rights
and remedies as it may have against the Transferee for the Obligations, and
any failure by any Beneficiary to pursue such other rights or remedies or to
collect any payments from the Transferee, or any release of the Transferee,
shall not, to the fullest extent permitted by applicable law, relieve the
Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of any Beneficiary against the Guarantor. This Guaranty is a continuing
guaranty and shall remain in full force and effect until the earlier of (x)
the date that all of the Obligations are satisfied by payment and performance
in full and (y) the date that all right, title and interest of the Transferee
shall have been transferred to a Person meeting the requirements of Section
7.03(d) of the Participation Agreement in accordance with said section;
provided that this Guaranty shall remain in full force and effect with respect
to obligations relating to the period prior to such transfer.
6. Reinstatement. This Guaranty shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored
or returned by any Beneficiary upon the insolvency, bankruptcy dissolution,
liquidation or reorganization of the Transferee or the Guarantor, or upon or
as a result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Transferee or the Guarantor or any
substantial part of its property, or otherwise, all as though such payments
had not been made and the Guarantor agrees that it will indemnify any such
Beneficiary on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) by such
Beneficiary in connection with such rescission or restoration.
7. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction, rebate,
adjustment or withholding, and shall be made in U.S. Dollars in immediately
available funds.
8. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and the Transferee is currently a subsidiary of the
Guarantor;
(b) the Guarantor has the power and authority and the legal right
to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally;
(d) the execution, delivery and performance of this Guaranty will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor or any of its constitutive documents;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no
consent of any other person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty;
(f) the Guarantor is a [a bank, savings institution, finance
company, leasing company or trust company, national banking
association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or
similar trust or fund, insurance company, fraternal benefit society
or corporation acting for its own account having a combined capital
and surplus (or, if applicable, consolidated tangible net worth or
its equivalent)] of not less than $75,000,000 [and has, if the same
have been requested by the Lessee or the Indenture Trustee,
heretofore furnished to the Lessee and the Indenture Trustee copies
of its most recent audited financial statements];
(g) there are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived; and
(h) the Guarantor has, independently and without reliance upon any
Beneficiary and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to
enter into this Guaranty, and the Guarantor has established adequate
means of obtaining from Transferee on a continuing basis information
pertaining to, and is now and on a continuing basis will be
completely familiar with, the financial condition, operations,
properties and prospects of Transferee.
9. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. Jurisdiction; Waiver of Jury Trial, Etc.
(a) The Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America
sitting in New York, New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to
this Guaranty, the Transfer Agreement or any Operative Agreement to
which it is or is to be a party, or for recognition or enforcement
of any judgment, and the Guarantor hereby irrevocably and
unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The
Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this Guaranty shall affect any right that any
party may otherwise have to bring any action or proceeding relating
to this Guaranty, the Transfer Agreement or any Operative Agreement
to which it is or is to be a party in the courts of any jurisdiction.
(b) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection
that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Guaranty, the
Transfer Agreement or any Operative Agreement to which it is or is to
be a party in any New York State or federal court. The Guarantor
hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
11. Section Headings. The Section headings used in this Guaranty
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any Beneficiary, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right power or privilege. A waiver by a
Beneficiary of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that such Beneficiary would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. Amendments and Waivers. None of the terms or provisions of
this Guaranty may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by the Guarantor and each
Beneficiary.
14. Successors and Assigns. This Guaranty shall be binding upon
the successors and assigns of the Guarantor and shall inure to the benefit
of the Beneficiaries and their respective successors and permitted assigns
but Guarantor may not assign this Guaranty without prior written consent of
the Beneficiaries except to an assignee making, as of the date of such
assignment, (i) representations and warranties substantially similar to
those contained in Section 8 hereof and (ii) a representation that it is a
U.S. citizen, unless, in the case of the preceding clause (ii) any of (a)
the aircraft is not then registered in the United States nor contemplated
to be so registered or (b) a voting trust or similar arrangement reasonably
satisfactory to the Beneficiaries is in place with respect to such
registration or (c) it is not necessary for the Guarantor to be a U.S.
citizen in order for the aircraft to remain registered in the United
States.
15. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given
or made, when delivered by hand or by mail, upon receipt, or, when delivered
by facsimile transmission, upon being sent and confirmed, addressed (a) in the
case of the Guarantor, to the Guarantor at the address set forth under its
signature below, and (b) in the case of any Beneficiary, to such Beneficiary
at the address provided for such Beneficiary in or pursuant to the
Participation Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
[NAME OF GUARANTOR]
_________________________________
Name:
Title:
__________________________________
__________________________________
__________________________________
Address for Notices:
EXHIBIT 4.d
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
Dated as of April 1, 1996
Amended and Restated as of September 1, 1996 and as further
Amended and Restated as of October 15, 1996
between
AMERITECH CREDIT CORPORATION,
Trustor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48487, REGISTRATION NO. N586FE
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee............. 2
Section 1.02. Declaration of Trust..................................... 2
Section 1.03. Conditions Precedent..................................... 2
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc................................................ 3
Section 2.02. Excepted Payments........................................ 3
Section 2.03. Other Receipts........................................... 3
Section 2.04. Distributions after Default.............................. 4
Section 2.05. Distributions after Release of Lien of Indenture......... 4
Section 2.06. Manner of Making Distributions........................... 5
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties........................... 5
Section 3.02. Limitation on Authority of Owner Trustee................. 6
Section 3.03. Notice of Default........................................ 6
Section 3.04. Action Upon Instructions................................. 7
Section 3.05. Certain Duties and Responsibilities of Owner Trustee..... 8
Section 3.06. Certain Rights of Owner Trustee.......................... 9
Section 3.07. No Representations or Warranties as to Certain Matters... 11
Section 3.08. Status of Moneys Received................................ 12
Section 3.09. Self-Dealing............................................. 12
Section 3.10. Definition of a Responsible Officer...................... 12
Section 3.11. Resignation or Removal of Owner Trustee.................. 12
Section 3.12. Estate and Rights of Successor Owner Trustee............. 13
Section 3.13. Merger or Consolidation of FSB........................... 13
Section 3.14. Co-Trustees.............................................. 13
Section 3.15. Interpretation of Agreements............................. 15
Section 3.16. Not Acting in Individual Capacity........................ 15
Section 3.17. Tax Returns.............................................. 15
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination.............................................. 16
Section 4.02. Termination at Option of the Trustor..................... 17
Section 4.03. Distribution of Lessor's Estate upon Termination......... 17
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification.......................................... 19
Section 6.02. Supplements and Amendments............................... 20
Section 6.03. Nature of Title of Trustor............................... 21
Section 6.04. Power of Owner Trustee to Convey......................... 21
Section 6.05. Notices.................................................. 21
Section 6.06. Situs of Trust; Applicable Law; Severability............. 22
Section 6.07. Successors and Assigns................................... 22
Section 6.08. Headings and Table of Contents........................... 23
Section 6.09. Definitions.............................................. 23
Section 6.10. Identification of Trust.................................. 23
Section 6.11. Counterparts............................................. 23
Section 6.12. Trustor Interest......................................... 23
Schedule I Definitions
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N586FE) dated
as of April 1, 1996, as amended and restated as of September 1, 1996 and as
further amended and restated as of October 15, 1996 (this "Agreement") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association (in
its individual capacity, "FSB", and not in its individual capacity but solely
as trustee hereunder, the "Owner Trustee"), and AMERITECH CREDIT CORPORATION,
a Delaware corporation (together with its successors and permitted assigns,
the "Trustor");
W I T N E S S E T H :
WHEREAS, the Trustor and FSB have heretofore entered into the Trust
Agreement (Federal Express Corporation Trust No. N586FE), dated as of April 1,
1996 between the Trustor and First Security Bank of Utah, National
Association, as was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996 by the Original Trust Agreement;
WHEREAS, the Trustor and FSB have heretofore entered into the Original
Trust Agreement;
WHEREAS, the Original Trust Agreement was duly filed with the Federal
Aviation Administration on September 23, 1996;
WHEREAS, the Original Loan Participants participated in the payment
of the Purchase Price by providing financing as evidenced by the Original Loan
Certificates;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Trustor and the Owner Trustee desire to refinance
all of the Original Loan Certificates on the Refunding Date; and
WHEREAS, the Trustor and FSB desire, in connection with such
refinancing, to amend and restate the Original Trust Agreement in its entirety
as herein provided.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSB and the Trustor agree that the Original Trust Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs (or has authorized and directed) the
Owner Trustee, not individually but solely as the Owner Trustee hereunder:
(a) on the Refunding Date to execute and deliver this Agreement and
each of the other Operative Agreements to which the Owner Trustee is a
party and to enter into and perform the transactions contemplated thereby;
(b) to execute and deliver from time to time the Certificates in the
manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in the
Operative Agreements and the Original Agreements to which the Owner Trustee
is a party or which the Owner Trustee is required to deliver pursuant to
the Operative Agreements and the Original Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the transactions contemplated hereby, the taking of any
such action by the Owner Trustee in the presence of the Trustor or its
counsel to evidence, conclusively, the direction of the Trustor.
Section 1.02. Declaration of Trust. FSB hereby confirms, in its
individual capacity, that it holds and will continue to hold, in its capacity
as the Owner Trustee, the Lessor's Estate upon the trusts herein set forth for
the use and benefit of the Trustor, subject, however, to the provisions of,
and the Lien created by, the Indenture.
Section 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 of the
Participation Agreement shall have been complied with in a manner satisfactory
to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the
Owner Trustee under the Lease (other than Excepted Payments) are to be paid to
the Indenture Trustee while the Lien of the Indenture is in effect. Except as
otherwise provided in Section 2.04 hereof, the Owner Trustee shall promptly
apply each payment of Rent (other than Excepted Payments), Stipulated Loss
Value, Termination Value, and any proceeds from the sale, requisition or
disposition of the Aircraft received by it as follows:
(a) prior to the release of the Lien of the Indenture, each such
payment shall be payable directly to the Indenture Trustee (and if any of
the same are received by the Owner Trustee shall, upon receipt, be paid
over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V
of the Indenture; provided, that any payments received by the Owner Trustee
from (i) the Lessee with respect to FSB's or the Owner Trustee's fees and
disbursements under this Agreement, or (ii) the Trustor pursuant to Section
6.01 hereof shall not be paid over to the Indenture Trustee but shall be
retained by the Owner Trustee and applied toward the purpose for which such
payments were made;
(b) any amount remaining after application in full in accordance with
paragraph (a) of this Section 2.01 and which represents payments for which
provision as to the application thereof is made in any other Operative
Agreement shall be applied promptly to the purpose for which such payment
shall have been made in accordance with the terms of such Operative
Agreement; and
(c) after application in accordance with paragraphs (a) and (b) of
this Section 2.01, or to the extent received from the Indenture Trustee
under the terms of the Indenture, the balance, if any, remaining shall be
paid to the Trustor.
Section 2.02. Excepted Payments. All Excepted Payments at any time
received by the Owner Trustee shall be distributed promptly to the applicable
Person, and such payment shall not be deemed under any circumstances to be
part of the Lessor's Estate.
Section 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee shall, upon receipt,
be paid over to the Indenture Trustee without deduction, set off or adjustment
of any kind) for distribution in accordance with the provisions of Article V
of the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
Section 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture or the Lease shall have become or been declared in default
(including, without limitation, any amounts realized by the Owner Trustee or
the Trustor from the exercise of any remedies pursuant to Section 17.01 of the
Lease), as well as (ii) all funds then held or thereafter received by the
Owner Trustee as part of this Trust Agreement, the Lease or otherwise, shall be
distributed to the Indenture Trustee.
Section 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or
any part thereof (including, without limitation, all payments
received pursuant to Section 17.01 of the Lease and amounts realized
upon the sale or lease of the Aircraft or any part thereof after the
termination of the Lease with respect thereto), to the extent
received or realized at any time after the Lien of the Indenture
shall have been released pursuant to the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after the Lien of the
Indenture has been released,
shall, to the extent required, be retained by the Owner Trustee as
reimbursement for all expenses hereunder or under the Lease not theretofore
reimbursed under this Agreement, the Lease or otherwise and to which the Owner
Trustee is entitled to be reimbursed pursuant to the provisions thereof, and
any balance remaining thereafter shall be distributed to the Trustor.
Section 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to such account or accounts of
the Trustor as it may designate from time to time by written notice to the
Owner Trustee (and the Owner Trustee shall use best efforts to cause such
funds to be transferred by wire transfer on the same day as received, but in
any case not later than the next succeeding Business Day), and (ii) the
Indenture Trustee pursuant to this Article 2 by paying the amount to be
distributed to the Indenture Trustee in the manner specified in the Indenture;
provided, that the Owner Trustee shall invest overnight, for the benefit of
the Trustor, in investments that would be permitted by Article 23 of the Lease
(but only to the extent funds are received on or prior to 1:00 P.M. (Eastern
Time) and such investments are available and, if such investments are not
available to the Owner Trustee, in investments which, after consultation with
the Trustor, the Trustor shall direct) all funds not transferred by wire
transfer on the same day as they were received. Notwithstanding the foregoing
but subject always to the provisions of, and the Lien created by, the
Indenture, the Owner Trustee will, if so requested by the Trustor by written
notice, pay any and all amounts payable by the Owner Trustee hereunder to the
Trustor either (i) by crediting, or causing the Indenture Trustee to credit,
such amount or amounts to an account or accounts maintained by the Trustor
with the Owner Trustee in its individual capacity or with the Indenture
Trustee in its individual capacity, as the case may be, in immediately
available funds, or (ii) by wire transfer of immediately available funds to
such other bank account as the Trustor shall notify the Owner Trustee in
writing with sufficient information to identify the source and application of
such funds.
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties. FSB accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the
Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof
as herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Article 5 of the
Lease, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the Participation
Agreement or its representations, warranties and covenants in Sections 3.05
and 3.08 of the Indenture, (c) the failure to use ordinary care in receiving,
handling and disbursing funds, (d) Lessor's Liens attributable to it in its
individual capacity, and (e) taxes, fees, or other charges on, based on, or
measured by, any fees, commissions or compensation received by FSB or the
Owner Trustee in connection with the transactions contemplated by the Lease,
the Indenture and the Operative Agreements including this Agreement.
Section 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to manage, control,
possess, use, sell, lease, dispose of or otherwise deal with the Aircraft,
Airframe, Engines, any Part thereof or any other property at any time
constituting a part of the Lessor's Estate, or otherwise to take or refrain
from taking any action under or in connection with the Operative Agreements,
except (i) to execute and deliver the Operative Agreements to which it is a
party, (ii) to exercise and carry out or cause to be exercised or carried out
the rights, duties and obligations of the Owner Trustee hereunder and under
the other Operative Agreements, or (iii) as expressly provided in written
instructions from the Trustor given pursuant to Section 1.01, 3.03 or 3.04
hereof; provided, that nothing in this Section 3.02 shall limit in any manner
the obligation of the Owner Trustee to perform and observe all the terms of
the Operative Agreements or the obligations of the Owner Trustee under this
Agreement.
Section 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Department of the Owner Trustee shall have
actual knowledge of a Default or an Event of Default, or an Indenture Default
or an Indenture Event of Default, the Owner Trustee shall give or cause to be
given to the Trustor and the Indenture Trustee prompt notice (in any event,
within one Business Day of the discovery thereof) of such Default, Event of
Default, Indenture Default or Indenture Event of Default by telegram, telex,
or facsimile followed by prompt written notice thereof by first-class
certified mail, postage prepaid, return receipt requested in accordance with
Article 14 of the Participation Agreement. Subject to the terms of Section
3.06(e) hereof and the rights of the Indenture Trustee under the Indenture, the
Owner Trustee shall take such action with respect to such Default, Event of
Default, Indenture Default or Indenture Event of Default as shall be specified
in written instructions from the Trustor, and if the Owner Trustee shall not
have received instructions from the Trustor within 20 days after giving notice
of such Default, Event of Default, Indenture Default or Indenture Event of
Default to the Trustor, the Owner Trustee may take such action, or refrain
from taking such action, with respect to such Default, Event of Default,
Indenture Default or Indenture Event of Default as it shall deem advisable in
the best interests of the Trustor; provided, that the Owner Trustee shall be
under no duty to take or refrain from taking any such action in the event the
Owner Trustee shall not have received instructions from the Trustor. For all
purposes of this Agreement and the Lease, in the absence of actual knowledge
of a Responsible Officer of the Owner Trustee, the Owner Trustee shall not be
deemed to have knowledge of a Default, Event of Default, Indenture Default or
Indenture Event of Default unless notified in writing by the Lessee, the
Trustor, the Indenture Trustee or any Certificate Holder.
Section 3.04. Action Upon Instructions. Subject in all respects to
the terms of the Operative Agreements, and subject further to the terms of
Article 2 and Sections 3.03, 3.05 and 3.06 hereof, upon the written
instructions at any time and from time to time of the Trustor (which the
Trustor agrees shall not be inconsistent with the provisions of the Indenture
so long as the Lien of the Indenture has not been discharged), the Owner
Trustee will take such of the following actions as may be specified in such
instructions:
(a) give such notice or direction or exercise such right, remedy or
power under the Operative Agreements, or take such other action, as shall
be specified in such instructions;
(b) take such action to preserve or protect the Lessor's Estate
(including the discharge of Liens and encumbrances) as may be specified in
such instructions;
(c) approve as satisfactory to it all matters required by the terms
of the Operative Agreements to be satisfactory to the Owner Trustee (it
being understood that without written instructions of the Trustor, the
Owner Trustee shall not approve any matter as satisfactory to it), except
such approvals as may be required with respect to the Trustor's transfer of
its Beneficial Interest pursuant to Article 5;
(d) upon or after the expiration or earlier termination of the Term
of the Lease, convey in accordance with such instructions, the Aircraft and
all of the Owner Trustee's right, title and interest in and to the Aircraft
or any part thereof for such amount, on such terms and to such purchaser or
purchasers as shall be designated in such instructions, or retain, lease or
otherwise dispose of the Aircraft or any part thereof as shall be specified
in such instructions;
(e) execute and file any financing statement (and any continuation
statement with respect to any such financing statement) or any other similar
document relating to the Lessor's Estate or the security interests and
assignments created by the Operative Agreements, as may be specified in
such instructions (which instructions shall be accompanied by an execution
form of such financing statement or such continuation statement, as the
case may be); and
(f) any other action as specified by the Trustor.
Section 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such
duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with instructions given by
the Trustor hereunder, and no implied duties, covenants or obligations shall
be read into this Agreement, any such instructions or the Operative Agreements
against the Owner Trustee, and the Owner Trustee agrees that it will not
manage, control, possess, use, sell, lease, dispose of or otherwise deal with
the Aircraft or any part of the Lessor's Estate except as required by the
terms of the Operative Agreements, any such instructions and as otherwise
provided herein; and
(ii)in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Owner Trustee and conforming to the requirements of this Agreement or
the other Operative Agreements, but in the case of any such certificates or
opinions which by any provisions hereof or thereof are specifically
required to be furnished to the Owner Trustee, the Owner Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Trust Agreement or the Operative Agreements.
(b) No provision hereof shall require FSB in its individual
capacity to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Notwithstanding the
foregoing, FSB agrees in its individual capacity that it will, at its own cost
and expense, promptly take such action as may be necessary to discharge duly
all Lessor's Liens attributable to it in its individual capacity and will
claim no indemnity therefor hereunder, or under the Participation Agreement or
any Operative Agreement.
(c) Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Owner Trustee shall be subject to the provisions
of this Section 3.05, except that in the event of a conflict between this
Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee
hereunder or under the other Operative Agreements or the Original Agreements
(including those furnished to the Indenture Trustee pursuant to the terms of
the Indenture) and not otherwise furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner
Trustee shall not be authorized and shall have no power to "vary the
investment" of the Trustor within the meaning of Treasury Regulations Section
301.7701-4(c)(1), it being understood that the Owner Trustee shall have the
power and authority to fulfill its obligations under Section 2.06 hereof and
Article 23 of the Lease.
Section 3.06. Certain Rights of Owner Trustee. Except as otherwise
provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction or authorization by the Trustor or any
other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered to
the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder or under any of
the other Operative Agreements, the Owner Trustee (unless other evidence be
herein or therein specifically prescribed), absent actual knowledge of a
Responsible Officer of the Owner Trustee to the contrary, may rely in good
faith upon a certificate in writing, delivered to the Owner Trustee and
signed by any of the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee
and notice of such need for such proof or establishment shall be delivered
to the Trustor, who may advise the Owner Trustee in respect of such matter
and the Owner Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it shall appoint with
due care, and it shall be entitled to rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by the
advice of such counsel in anything done or omitted to be done in accordance
with such advice;
(e) the Owner Trustee shall not be under any obligation to take any
action under this Agreement or under any of the other Operative Agreements
at the request or direction of the Trustor unless the Persons making such
request or direction shall have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; nor
shall the Owner Trustee be required to take any action and this Agreement
shall not be deemed to impose on the Owner Trustee any obligation to take
any action, if the Owner Trustee shall have been advised by its counsel
that such action is unlawful or is contrary to the terms of this Agreement
or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or
other paper or document unless a Responsible Officer of the Owner Trustee
has actual knowledge that the facts or matters stated therein are false or
inaccurate, but the Owner Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to the
Lessor under the Lease, to examine the books and records of the Lessee to
reasonably determine whether the Lessee is in compliance with the terms and
conditions of the Lease and to examine the Aircraft, Airframe, Engines or
any Part thereof personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof, except as
otherwise provided in written instructions given to the Owner Trustee by the
Trustor or as otherwise provided in the Indenture or the Participation
Agreement, the Owner Trustee shall not have any duty (i) to see to any
recording or filing of the Lease or of this Agreement or any financing
statement or other notice or document relating thereto or contemplated
under the Operative Agreements or to see to the maintenance of any such
recording or filing (other than FAA reporting requirements contained in 14
C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the
Aircraft or any part thereof or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect thereto, other
than to forward to the Trustor and (to the extent provided in the
Indenture) the Indenture Trustee copies of all certificates, reports and
other written information which it receives from the Lessee pursuant to the
Lease, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charges or any Lien (except any Lessor's Lien
attributable to it in its individual capacity) owing with respect to, or
assessed or levied against any part of the Lessor's Estate, (iv) to confirm
or verify any financial statements or reports of the Lessee, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease.
Section 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSB MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that FSB represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever right, title and interests in, to and under the
Aircraft were conveyed to it by the Lessee and FSB represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is
a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or FSB and except that FSB
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor)
the other Operative Agreements to which the Owner Trustee is a party have been
(or at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by FSB and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of FSB enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.
Section 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which
they were paid or are held, but need not be segregated in any manner from any
other moneys except to the extent required by law and may be deposited by the
Owner Trustee under such conditions as may be prescribed or permitted by law
for trust funds, or may be invested in direct obligations of the United States.
Section 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
Section 3.10. Definition of a Responsible Officer. For purposes of
this Trust Agreement only, "Responsible Officer" when used with respect to the
Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title
"Vice President"), the Secretary, any Assistant Secretary, or any other
officer in the Corporate Trust Department of FSB customarily performing
functions similar to those performed by any of the above designated officers.
Section 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, but subject to Section
11.01 of the Participation Agreement, the Trustor may at any time remove the
Owner Trustee without cause by an instrument in writing delivered to the Owner
Trustee and the Indenture Trustee, such removal to be effective only upon the
appointment by the Trustor of a successor Owner Trustee and the acceptance of
such appointment by such successor. Upon the giving of notice of resignation
or removal of the Owner Trustee, the Trustor may appoint a successor Owner
Trustee by an instrument signed by the Trustor. If the Trustor shall not have
so appointed a successor Owner Trustee within 30 days after such resignation or
removal, the Owner Trustee, the Indenture Trustee or the Trustor may apply to
any court of competent jurisdiction to appoint a successor Owner Trustee to
act until such time, if any, as a successor or successors shall have been
appointed by the Trustor as above provided. Any successor Owner Trustee so
appointed by a court shall be superseded by any successor Owner Trustee
subsequently appointed by the Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
Section 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, and thereupon each
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trust of the predecessor Owner
Trustee in the trusts hereunder with like effect as if originally named as an
Owner Trustee herein, but nevertheless upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trust herein expressed, all estates, properties, rights, powers, duties,
property or moneys then held by such predecessor Owner Trustee upon the trusts
herein expressed. Upon any such transfer by a predecessor Owner Trustee, such
predecessor Owner Trustee shall provide the successor Owner Trustee and
Trustor an accounting of the Lessor's Estate and the trusts hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of
the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner
Trustee in complying, with the provisions of Section 11.01 of the
Participation Agreement.
Section 3.13. Merger or Consolidation of FSB. Any corporation into
which FSB in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which FSB shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 3.12 hereof, be the Owner Trustee under this
Agreement without further act; provided, that such corporation shall not also
be the Indenture Trustee.
Section 3.14. Co-Trustees. At any time, subject to Section 7.13 of
the Participation Agreement, if the Owner Trustee and the Trustor shall deem
it necessary or prudent or desirable in order to conform to legal requirements
of any jurisdiction in which any part of the Lessor's Estate may at the time
be located, the Trustor and the Owner Trustee jointly shall have the power,
and shall execute and deliver all instruments, to appoint one or more Persons
approved by the Trustor and the Owner Trustee, to act as co-trustee, or
co-trustees, jointly with the Owner Trustee, or separate trustee or separate
trustees (except insofar as local law makes it necessary or prudent or
desirable for any such co-trustee or separate trustee to act alone), of all or
any part of the Lessor's Estate, and to vest in such Person or Persons, in such
capacity, such title to the Lessor's Estate or any part thereof, and such
rights, powers, duties, trusts or obligations as the Trustor and the Owner
Trustee may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in the
Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument
in writing, constitute the Owner Trustee its or his attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the
conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the
Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Lessor's Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which is provided hereby may be exercised
by, any such additional trustee, except jointly with, or with the consent
in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder except as otherwise
provided hereunder; and
(E) the Trustor, at any time, by an instrument in writing may
remove any such additional trustee.
Section 3.15. Interpretation of Agreements. In the event that the
Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is
silent or incomplete as to the course of action which the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
shall request in writing instructions of the Trustor and, to the extent that
the Owner Trustee acts in good faith in accordance with any instructions
received from the Trustor, shall not be liable to any Person; provided, that
in the event that no response is made to the Owner Trustee by the Trustor
within 25 Business Days after such request, the Owner Trustee shall not be
liable to any Person for acts taken by the Owner Trustee in good faith or for
any failure to act, except to the extent provided in the last sentence of
Section 3.01 hereof.
Section 3.16. Not Acting in Individual Capacity. In carrying out
the trusts hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Lessor's Estate for payment or satisfaction
thereof, except to the extent provided in the last sentence of Section 3.01
hereof.
Section 3.17. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt
and disbursement of all moneys under this Agreement or any Operative
Agreement. The Trustor shall be responsible for causing to be prepared and
filed all income tax returns required to be filed by the Trustor. The Owner
Trustee, upon request of the Trustor and at the expense of the Lessee, will
furnish the Trustor with all such information as may be reasonably required or
advisable from the Owner Trustee in connection with the preparation of such
tax returns and in connection with any other filing or audit and related
litigation obligations. The Owner Trustee shall be responsible for causing to
be prepared at the request of the Trustor, but at the expense of the Lessee,
all income tax returns required to be filed with respect to the trust created
hereby and shall execute and file such returns; provided, that the Owner
Trustee shall deliver a completed copy of all such returns to the Trustor not
more than 60 nor less than 30 days prior to the due date of the return
(provided that the Owner Trustee shall have timely received all necessary
information to complete such return). The Trustor, upon request, will furnish
the Owner Trustee with all such information as may be reasonably required from
the Trustor that is in its possession in connection with the preparation of
such income tax returns.
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination. This Agreement and the trust created and
provided for hereby shall cease and be terminated in any one of the following
events, whichever shall first occur:
(a) The sale or other final disposition by the Owner Trustee of all
of its interest in all property constituting or included in the Lessor's
Estate and, if the Indenture shall then be in effect, the sale or other
disposition by the Indenture Trustee of all of its interest in all property
constituting or included in the Lessor's Estate, and the final disposition
by the Owner Trustee and, if the Indenture shall then be in effect, the
Indenture Trustee, of all moneys or other property or proceeds constituting
part of the Lessor's Estate in accordance with the terms hereof; or
(b) 21 years from the death of the last survivor of the descendants
of Queen Victoria of England living on the date of this Agreement;
provided, however, that if the Trust shall be or become valid under
applicable law for a period subsequent to 21 years from the death of the
last survivor of the descendants of Queen Victoria of England living on the
date of this Agreement or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity
or permitting the effective grant of such trust for a period, in gross,
exceeding the period for which such trust is hereinabove stated to extend
and be valid, then such trust shall not terminate as provided in the first
part of this sentence but shall extend to and continue in effect until, but
only if such non-termination and extension shall then be valid under
applicable law, such time as the same shall, under applicable law, cease to
be valid.
Section 4.02. Termination at Option of the Trustor. Notwithstanding
Section 4.01 hereof, this Agreement and the trust created hereby shall
terminate and the Trust Estate shall be distributed to the Trustor, and this
Agreement shall be of no further force and effect, upon the election of the
Trustor by notice to the Owner Trustee, if such notice shall be accompanied by
the written agreement (in form and substance satisfactory to the Owner
Trustee) of the Trustor assuming all the obligations of the Owner Trustee
under or contemplated by the Operative Agreements or incurred by it as trustee
hereunder and releasing the Owner Trustee therefrom; provided, however, that
such notice may be given only after the time the Lien of the Indenture is
discharged under Section 14.01 of the Indenture unless the Trustor shall have
received the prior written consent of the Indenture Trustee to any such
termination in which case such notice may be given while the Lien of the
Indenture is outstanding.
Section 4.03. Distribution of Lessor's Estate upon Termination.
Upon any termination of this trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that (i) if
at the time of any termination the Lease remains in force and effect, then the
Lessor's Estate shall be sold as a unit (and not in parcels) and subject to
the Lease, and (ii) in the event such written instructions are not delivered
to the Owner Trustee on or before the date of termination, the Owner Trustee
shall transfer title to the Lessor's Estate to the Trustor. Upon making such
transfer or sale and accounting for all funds which have come into its hands,
the Owner Trustee shall be entitled to receipt of any sums due and owing to
the Owner Trustee for expenses incurred pursuant hereto as set forth in
Section 2.05 hereof.
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
The Trustor may assign, convey or otherwise transfer to a single
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee, the Indenture Trustee and the Owner Trustee
at least 10 Business Days' notice of such assignment, conveyance or other
transfer and provided, further that the Trustor agrees by a written instrument
in form and substance reasonably satisfactory to the Lessee, the Indenture
Trustee and the Owner Trustee to remain liable for all obligations of the
Trustor under this Agreement and the other Operative Agreements to which the
Trustor is a party to the extent (but only to the extent) incurred on or before
the date of such transfer and provided that the transferee agrees by a written
instrument in form and substance reasonably satisfactory to the Lessee, the
Indenture Trustee and the Owner Trustee to assume primary liability for all
obligations as a trustor under this Agreement and the other Operative
Agreements to which such trustor is a party incurred after the date of
transfer; provided, further, that (a) such transferee is (i) a bank, savings
institution, finance company, leasing company or trust company or national
banking association acting for its own account (subject to the transferee's
ability to satisfy the requirements set forth in clause (c) below) or in a
fiduciary capacity as trustee or agent under any pension, retirement, profit
sharing or similar trust or fund, insurance company, fraternal benefit society
or corporation acting for its own account having a combined capital and
surplus (or, if applicable, consolidated tangible net worth or its equivalent)
of not less than $75,000,000, (ii) a subsidiary of any Person described in
clause (i) where such Person provides (A) support for the obligations assumed
by such transferee subsidiary satisfactory to the Lessee, the Owner Trustee
and the Indenture Trustee or (B) an unconditional guaranty satisfactory to the
Lessee, the Owner Trustee and the Indenture Trustee of such transferee
subsidiary's obligations, or (iii) an Affiliate of the original Trustor, so
long as such Affiliate has a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (b) such transferee is legally capable of binding itself to the
obligations of the Trustor and expressly agrees to assume all obligations of
the Trustor under the Participation Agreement and this Agreement and (c) such
transferee shall provide representations substantially similar to those
contained in Sections 7.02(a) and 7.03(a) of the Participation Agreement. In
the event of any such assignment, conveyance or transfer, the transferee shall
become a party to this Agreement and shall agree to be bound by all the terms
of and will undertake all of the obligations of the Trustor contained in this
Agreement and the other Operative Agreements in such manner as is reasonably
satisfactory to the Owner Trustee and the Indenture Trustee. A transferee
hereunder shall be (i) a "U.S. Person" as defined in Section 7701(a)(30) of
the Code (or any successor provision thereto) or if the transferee shall not
be such a "U.S. Person" then each Certificate Holder shall be provided an
indemnity (from the transferee trustor or the Trustor but not from the Lessee)
in form and substance satisfactory to each such Certificate Holder, for any
Taxes that may be imposed on such Certificate Holders (currently or in the
future) due to such transferee's failure to be such a "U.S. Person" and (ii) a
Citizen of the United States or shall have established a voting trust, voting
powers or other arrangement reasonably satisfactory to the Indenture Trustee
to permit the Owner Trustee to be the registered owner of the Aircraft under
the Transportation Code. Assuming the truth of the representations made in
Sections 6.01(m) and 7.09 of the Participation Agreement and compliance with
Section 10.06 of the Indenture, no such assignment, conveyance or transfer
shall violate any provision of law or regulation or create a relationship which
would be in violation thereof. The Owner Trustee shall not be on notice of or
otherwise bound by any such assignment, conveyance or transfer unless and
until it shall have received an executed counterpart of the instrument of such
assignment, conveyance or transfer. Upon any such disposition by the Trustor
to a transferee as above provided, the transferee shall be deemed the
"Trustor" for all purposes hereof, and shall be deemed to have made all the
payments previously made by its transferor and to have acquired the same
interest in the Lessor's Estate as theretofore held by its transferor; and
each reference herein to the "Trustor" shall thereafter be deemed a reference
to such transferee. Notwithstanding anything to the contrary contained in
this Article 5, in no event shall the Trustor transfer its interest in the
Beneficial Interest to any entity whose business is that of a nationwide or
worldwide overnight or expedited delivery small package air courier, cargo or
freight deliverer or which competes with the Lessee in one of its principal
lines of business (except for any line of business in the financial services
industry).
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification. The Trustor agrees to reimburse and
save FSB harmless against any and all loss, damage, liability, claims, demands,
disbursements and expenses, including taxes (excluding taxes imposed against
FSB upon or with respect to any fees or compensation for services rendered by
the Owner Trustee and FSB hereunder) and reasonable counsel fees (any "Loss"),
which may be incurred by reason of its being the Owner Trustee or acting
hereunder or under the Operative Agreements or the Original Agreements, but
solely by reason thereof and arising out of or relating solely to this
Agreement or the other Operative Agreements or the Original Agreements or the
Aircraft or the Rent and other sums payable therefor, or by reason of any
occurrence directly relating thereto while so acting, and to secure the
payment thereof, the Owner Trustee, in its individual capacity, shall have a
Lien on the Lessor's Estate and the proceeds thereof, including income, prior
to any interest therein of the Trustor and its assigns (but subject to the
rights of the Lessee under the Operative Agreements or the Original Agreements
and subject and subordinate to the Lien of the Indenture); provided, that the
Trustor shall have no obligation hereunder to indemnify FSB for any Losses
arising from or the result of (A) the Owner Trustee's willful misconduct or
gross negligence (in its individual capacity or as trustee), (B) any
inaccuracy of any representation of the Owner Trustee or any breach by the
Owner Trustee of its warranties and covenants given in its individual capacity
in this Agreement, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the
Participation Agreement and its representations and warranties in Section 3.08
of the Indenture or elsewhere in the Operative Agreements, (C) the failure to
use ordinary care in receiving, handling and disbursing funds, (D) Lessor's
Liens attributable to it in its individual capacity, (E) taxes, fees, or other
charges on, based on, or measured by, any fees, commissions or compensation
received by FSB or the Owner Trustee in connection with the transactions
contemplated by the Lease, the Indenture and this Agreement, (F) taxes
excluded from indemnification pursuant to Section 8.01(b) of the Participation
Agreement (disregarding for the purposes of this Section 6.01, subsections
(iii) and (vi) of Section 8.01(b) of the Participation Agreement) and
subsections (ii), (iv), (vi), and (viii) of Section 9.01(b) of the
Participation Agreement); provided, that, before asserting any right to
payment or indemnification hereunder, the Owner Trustee shall first demand
(but need not exhaust its remedies with respect to) its corresponding right
to payment or indemnification from the Lessee pursuant to the Participation
Agreement. It is further understood that the distribution by the Owner
Trustee of all or any part of the Lessor's Estate as provided in Section 4.02
of this Agreement shall not impair the right of FSB to indemnity, payment and
reimbursement as herein provided. In the event FSB makes any advances at any
time to pay or to provide for the payment of any such Loss, then FSB shall be
entitled, in addition to reimbursement for the principal of the sum so
advanced, to interest on the amount of such advances at the Prime Rate. The
provisions of this Section shall continue in force and effect notwithstanding
the termination of this trust or the resignation, inability or incapacity to
act or removal of the Owner Trustee. The Owner Trustee (in its individual
capacity or as trustee) agrees that it shall have no right against (except as
provided in this Section 6.01) the Trustor or (subject to the provisions of
the Indenture) the Trust Indenture Estate for any fee as compensation for its
services hereunder.
Section 6.02. Supplements and Amendments. At any time and from time
to time, only upon the written request of the Trustor (a) FSB and the Trustor
shall execute a supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Agreement as specified in such
request and (b) the Owner Trustee shall, subject to the provisions of Article
XIII of the Indenture, enter into or consent to such written amendment or
modification of or supplement to any of the Operative Agreements as the
Indenture Trustee and any other necessary parties may agree to in writing and
as may be specified in such request, or execute and deliver such written
waiver of the terms of any of the Operative Agreements as may be agreed to in
writing by the Indenture Trustee and as may be specified in such request;
provided, that (i) the Owner Trustee shall not execute any such supplement,
amendment, waiver or modification without the prior written consent of the
Trustor, (ii) if in the reasonable opinion of the Owner Trustee any document
required to be executed by it pursuant to this Section adversely affects any
right or duty of, or immunity or indemnity in favor of, the Owner Trustee
under this Agreement or any other Operative Agreement, the Owner Trustee may
in its discretion decline to execute such document and (iii) any amendment or
supplement to this Agreement that would adversely affect the rights of the
Indenture Trustee or the Holders shall be subject to the prior written consent
of the Indenture Trustee. It shall not be necessary that any request pursuant
to this Section specify the particular form of the proposed document to be
executed pursuant to such request, but it shall be sufficient if such request
shall indicate the substance thereof. Promptly after the execution by FSB or
the Owner Trustee of any document pursuant to this Section, the Owner Trustee
shall mail a conformed copy thereof to the Trustor, the Indenture Trustee and
the Lessee, but the failure of the Owner Trustee to mail such conformed copies
shall not impair or affect the validity of such document.
Section 6.03. Nature of Title of Trustor. The Trustor shall not
have any legal title to any part of the Lessor's Estate. No transfer, by
operation of law or otherwise, of the right, title and interest of the Trustor
in and to the Lessor's Estate or the trusts hereunder shall operate to
terminate this Agreement or Lessor's Estate, except as provided in Section
4.01 hereof.
Section 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Trustor
in and to the Operative Agreements or the Aircraft or such part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Owner Trustee.
Section 6.05. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service or other means, when
received or personally delivered, addressed:
If to the Owner Trustee: First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone: (801) 246-5630
Facsimile: (801) 246-5053
If to the Trustor: Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, Illinois 60008
Attention: R. Scott Horsley
Telephone: (847) 290-5010
Facsimile: (847) 290-9290
If to the Indenture
Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5414
Facsimile: (617) 664-5371
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
Section 6.06. Situs of Trust; Applicable Law; Severability.
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS
OF VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement
shall be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective; provided, that such remaining provisions do
not increase the obligations or liabilities of the Owner Trustee or the
Trustor.
Section 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Article 5 of this Agreement.
Section 6.08. Headings and Table of Contents. The headings of
the Articles and Sections of this Agreement and the Table of Contents are
inserted for convenience only and shall not affect the meaning or construction
of any of the provisions hereof.
Section 6.09. Definitions. The capitalized terms used herein,
unless otherwise herein defined or the context hereof shall otherwise require,
shall have the respective meanings set forth in Schedule I attached hereto.
Section 6.10. Identification of Trust. This trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N586FE."
Section 6.11. Counterparts. This instrument may be executed
in any number of counterparts or upon separate signature pages bound together
in several counterparts, each of which when so executed shall be deemed to be
an original, and such counterparts together shall constitute and be one and
the same instrument.
Section 6.12. Trustor Interest. The Trustor has only a
beneficial interest in any specific property of this trust. No creditor of
the Trustor shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the property of this
trust (as opposed to the Trustor's beneficial interest in this trust).
IN WITNESS WHEREOF, FSB and the Trustor have caused this
Agreement to be duly executed all as of the date first above written.
AMERITECH CREDIT CORPORATION
By: _______________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
By: _______________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Additional Leverage Amount. An amount equal to 5.506252521% of the
outstanding principal amount of the Original Loan Certificates to be
refinanced on the Refunding Date.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person 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. In the case of amounts
payable to the Lessor, the Owner Participant, or any corporate Affiliate of
the Owner Participant, it shall be presumed that such Person is at all times
subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe)
together with three Engines (whether any of which is an initial Engine or a
Replacement Engine) whether or not any of such initial or Replacement Engines
may from time to time be installed on such Airframe or may be installed on any
other airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any replacement airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N586FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N586FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N586FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant on the Delivery Date pursuant to Section 4.01(n) of
the Original Participation Agreement.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent for the Interim Term and the
Basic Term payable for the Aircraft throughout the Basic Term pursuant to
Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on March 22, 2017, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty
Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N586FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
EBO Date. As defined in Section 4.02(a)(F) of the Lease.
EBO Price. Has the meaning specified in Section 4.02(a)(F) of the
Lease.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
due to theft or disappearance for a period in excess of 30 days (or such
longer period not to exceed 60 days from the end of such 30 day period if and
so long as the location of such property is known and the Lessee is pursuing
the recovery thereof) or to the end of the Term, if less, unless such event
constitutes an Event of Loss under clause (i)(B) or clause (ii) below, or (B)
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by the government of Canada, France, Germany, Japan,
the Netherlands, Sweden, Switzerland or the United Kingdom, or instrumentality
or agency of any such foreign government, for a period in excess of 180 days,
(B) by a foreign government (other than any such government referred to in the
immediately preceding clause (A)), or instrumentality or agency of any such
foreign government, or any purported government or instrumentality or agency
thereof, or (C) by the Government for a period extending beyond the Term
provided that no Event of Loss shall be deemed to have occurred, and the Term
shall be extended automatically for a period of up to six months beyond the
end of the Term in the event that the Aircraft or the Airframe or any Engine
is requisitioned by the Government pursuant to an activation as part of the
CRAF Program described in Section 7.02(a)(iv) of the Lease; or (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited for a period of six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward all steps which are necessary and desirable to
permit the normal use of the Aircraft or Airframe provided, however, that an
Event of Loss shall be deemed to have occurred if (x) the Lessee fails to
continue diligently carrying forward all such steps or (y) the use of the
Aircraft or the Airframe in the normal course of air transportation of cargo
shall have been prohibited for a period of an additional 12 months following
such 6 month period or (z) unless waived by the Lessor, the Term shall have
expired. The date of such Event of Loss shall be (t) the 30th day or the 90th
day, as the case may be, following loss of such property or its use due to
theft or disappearance; (u) the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal
use; (v) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (w) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (x) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
and the date of such condemnation, confiscation, seizure or requisition in the
case of any other foreign government or instrumentality or agency thereof; (y)
the last day of the Term in the case of requisition for use of such property
by the Government or (z) the last day of the 6 month or additional 12 month
period, referred to in clause (iv) above. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments of
expenses paid or payable by the Lessee in respect of the Owner Participant,
the Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to Article 8, 9, or 10 and Section 15.01 of the
Participation Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to
Section 7.01(e), Article 9 or Section 11.03(a) of the Lease or Section 15.01
of the Participation Agreement, (ii) proceeds of public liability insurance
(or government indemnities in lieu thereof) in respect of the Aircraft payable
as a result of insurance claims paid for the benefit of, or losses suffered
by, the Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained with
respect to the Aircraft by the Owner Participant (whether directly or through
the Owner Trustee) maintained in accordance with the provisions of but not
required under Article 13 of the Lease, (iv) all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to
the Owner Participant or the Owner Trustee in its individual capacity, after
the release thereof from the Lien of the Indenture, (vi) subject to Section
3.05 of the Lease, payments constituting increases in Basic Rent attributable
to payments arising pursuant to Section 5 of the Tax Indemnity Agreement,
(vii) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (vi) above and (viii)
any payments in respect of interest to the extent attributable to the payments
referred to in clauses (i) through (vi) above.
Exempt Recipient. A person described in Section 6049(b)(4) of the
Code.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
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 the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Joseph International Sales Corporation, a United States Virgin
Islands corporation.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, except for purposes of Section 17.01 of the
Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft pursuant to such
Section 17.01, in which case an appraiser shall not be appointed and such Fair
Market Rental shall be deemed to be zero.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Value shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft free and clear
of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in
which case an appraiser shall not be appointed and such Fair Market Value
shall be deemed to be zero.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, and any successor (including any trustee which may succeed to
the Lessor's interest under the Lease), Affiliate, assign, officer, director,
employee, agent and servant of any of the foregoing, the Lessor's Estate and
the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N586FE), dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N586FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N586FE), dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, the
GTA, the Engine Warranty Assignment, the Engine Consent, any Ancillary
Agreement, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of either the Owner Trustee in its individual capacity or the
Owner Participant) and requisition, indemnity or other payments of any kind
for or with respect to the Aircraft (except amounts owing to the Owner
Participant or to the Owner Trustee in its individual capacity, or to any of
their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) "Lessor's Estate" shall include all property intended to be subjected to
the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, the Owner Participant or any Affiliate of the
Owner Participant, in each case not related to the transactions contemplated
by the Operative Agreements, (ii) acts or omissions of the Lessor in its
individual capacity or as Owner Trustee, and, in the case of the Lessor in its
individual capacity, arising from its gross negligence or willful misconduct
either not related to the transactions contemplated by or expressly prohibited
under the Operative Agreements and any act or omission of the Owner
Participant or any Affiliate of the Owner Participant which is not related to
the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, (iii) Taxes or Expenses
imposed against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant or any Affiliate of the Owner Participant, the Lessor's
Estate or the trust created by the Trust Agreement which are not required to
be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement
or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. McDonnell Douglas Corporation, a Maryland corporation,
and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Modification Agreement. The Aircraft Modification Agreement dated as
of December 1, 1995 between the Lessee and the Manufacturer providing for the
refurbishing and reconfiguration of the Aircraft including any warranties
relating thereto, as originally executed or as modified, supplemented, amended
or supplemented in accordance with the terms thereof, but only to the extent
that the foregoing relates to the Aircraft, to the extent assigned to the
Owner Trustee pursuant to the Warranty Bill of Sale.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to be
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, if any, the Owner Trustee Guaranty, if any, any Ancillary Agreement
entered into by or with the written consent of the Indenture Trustee, which by
its terms is an Operative Agreement, the Certificates outstanding at the time
of reference, the Indenture, the Indenture and Security Agreement Supplement,
the Engine Consent and the Tax Indemnity Agreement, each as amended from time
to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N586FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012951.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N586FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012952.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N586FE), dated as of April 1, 1996, as
amended and restated as of September 1, 1996, among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N586FE), between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996, between the Owner Participant and the Owner
Trustee as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996, and filed with the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Interim Term and
the Basic Term, utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996 and as further amended and restated as of
October 15, 1996, among the Lessee, the Original Loan Participants, the Owner
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as owner trustee, the Owner Participant, the Indenture
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as indenture trustee and the Pass Through Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as pass through trustee, as amended, modified or supplemented, or the
terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 30 and July 30 commencing on January 30,
1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, October 23, 2006 and with respect to the Certificates having
a Maturity in 2015, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term with
respect to which the Lessee has exercised its option to renew the Lease
pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 30 and July 30 commencing on January
30, 1997, and continuing thereafter during the Term.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent and, accordingly, no further accrual or credit
shall be required whenever Stipulated Loss Value is to be calculated with
reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Factors."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to FSB, the Lessor, the Owner Participant,
the Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, EBO Price and amounts calculated by reference to
Termination Value, and all amounts required to be paid by Lessee under the
agreements, covenants and indemnities contained in the Lease or in the
Participation Agreement or the Tax Indemnity Agreement or any other Operative
Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term, the Basic Term and any Renewal Term unless
the Lease is terminated earlier pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after the seventh anniversary of the Commencement Date in the case of
Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the
Lease, July 30, 2013, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, July 30, 2011.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996,
between the Owner Participant and the Owner Trustee in its individual
capacity, as from time to time modified, amended or supplemented pursuant to
its applicable provisions and in accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
Warranty Bill of Sale. The full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the Lessee,
as seller in favor of the Owner Trustee, as buyer, and dated the Delivery Date.
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
between
PMCC LEASING CORPORATION,
Trustor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 761, REGISTRATION NO. N662FE
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee............. 2
Section 1.02. Declaration of Trust..................................... 2
Section 1.03. Conditions Precedent..................................... 2
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc................................................ 3
Section 2.02. Excepted Payments........................................ 3
Section 2.03. Other Receipts........................................... 4
Section 2.04. Distributions after Default.............................. 4
Section 2.05. Distributions after Release of Lien of Indenture......... 4
Section 2.06. Manner of Making Distributions........................... 5
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties........................... 5
Section 3.02. Limitation on Authority of Owner Trustee................. 6
Section 3.03. Notice of Default........................................ 6
Section 3.04. Action Upon Instructions................................. 6
Section 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7
Section 3.06. Certain Rights of Owner Trustee.......................... 8
Section 3.07. No Representations or Warranties as to Certain Matters... 10
Section 3.08. Status of Moneys Received................................ 10
Section 3.09. Self-Dealing............................................. 11
Section 3.10. Definition of a Responsible Officer...................... 11
Section 3.11. Resignation or Removal of Owner Trustee.................. 11
Section 3.12. Estate and Rights of Successor Owner Trustee............. 11
Section 3.13. Merger or Consolidation of FSB........................... 12
Section 3.14. Co-Trustees.............................................. 12
Section 3.15. Interpretation of Agreements............................. 13
Section 3.16. Not Acting in Individual Capacity........................ 14
Section 3.17. Tax Returns.............................................. 14
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination.............................................. 14
Section 4.02. Termination at Option of the Trustor..................... 15
Section 4.03. Distribution of Lessor's Estate upon Termination......... 15
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification.......................................... 16
Section 6.02. Supplements and Amendments............................... 17
Section 6.03. Nature of Title of Trustor............................... 18
Section 6.04. Power of Owner Trustee to Convey......................... 18
Section 6.05. Notices.................................................. 18
Section 6.06. Situs of Trust; Applicable Law; Severability............. 19
Section 6.07. Successors and Assigns................................... 19
Section 6.08. Headings and Table of Contents........................... 19
Section 6.09. Identification of Trust.................................. 19
Section 6.10. Counterparts............................................. 19
Section 6.11. Trustor Interest......................................... 19
Section 6.12. Performance by the Trustor............................... 20
Schedule I Definitions
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N662FE) dated
as of September 1, 1996 (the "Original Trust Agreement"), as amended and
restated as of October 15, 1996 (this "Agreement") between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association (in its individual
capacity, "FSB", and not in its individual capacity but solely as trustee
hereunder, the "Owner Trustee"), and PMCC LEASING CORPORATION, a Delaware
corporation (together with its successors and permitted assigns, the
"Trustor"). The capitalized terms used herein, unless otherwise herein
defined or the context hereof shall otherwise require, shall have the
respective meanings set forth in Schedule I attached hereto.
W I T N E S S E T H :
WHEREAS, the Trustor and FSB have heretofore entered into the Original
Trust Agreement;
WHEREAS, the Original Trust Agreement was duly filed with the Federal
Aviation Administration on September 23, 1996;
WHEREAS, the Original Loan Participants participated in the payment
of the Purchase Price by providing financing as evidenced by the Original Loan
Certificates;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Trustor and the Owner Trustee desire to refinance
all of the Original Loan Certificates on the Refunding Date; and
WHEREAS, the Trustor and the Owner Trustee desire, in connection with
such refinancing, to amend and restate the Original Trust Agreement in its
entirety as herein provided.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSB and the Trustor agree that the Original Trust Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs (or has authorized and directed) the
Owner Trustee, not individually but solely as the Owner Trustee hereunder:
(a) to execute and deliver each of the other Operative Agreements to
which the Owner Trustee is a party and to enter into and perform the
transactions contemplated thereby;
(b) to execute and deliver from time to time the Certificates in the
manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in the
Operative Agreements and the Original Agreements to which the Owner Trustee
is a party or which the Owner Trustee is required to deliver pursuant to
the Operative Agreements and the Original Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the transactions contemplated hereby, the taking of any
such action by the Owner Trustee in the presence of the Trustor or its
counsel to evidence, conclusively, the direction of the Trustor.
Section 1.02. Declaration of Trust. FSB hereby confirms, in its
individual capacity, that it holds and will continue to hold, in its capacity
as the Owner Trustee, the Lessor's Estate upon the trusts herein set forth for
the use and benefit of the Trustor, subject, however, to the provisions of,
and the Lien created by, the Indenture.
Section 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 of the
Participation Agreement shall have been complied with in a manner satisfactory
to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the
Owner Trustee under the Lease (other than Excepted Payments) are to be first
paid to the Indenture Trustee while the Lien of the Indenture is in effect,
for distribution in accordance with the terms of Article V of the Indenture.
Except as otherwise provided in Section 2.04 hereof (and except for amounts
received from the Indenture Trustee, which shall be applicable only in
accordance with clause (c) below), the Owner Trustee shall promptly apply each
payment of Rent (other than Excepted Payments), Stipulated Loss Value,
Termination Value, and any proceeds from the sale, requisition or disposition
of the Aircraft received by it as follows:
(a) prior to the release of the Lien of the Indenture, each such
payment shall be payable directly to the Indenture Trustee (and if any of
the same are received by the Owner Trustee shall, upon receipt, be paid
over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V
of the Indenture; provided, that any payments received by the Owner Trustee
from (i) the Lessee with respect to FSB's or the Owner Trustee's fees and
disbursements under this Agreement, or (ii) the Trustor pursuant to Section
6.01 hereof shall not be paid over to the Indenture Trustee but shall be
retained by the Owner Trustee and applied toward the purpose for which such
payments were made;
(b) after the release of the Lien of the Indenture, any amount
remaining after application in full in accordance with paragraph (a) of
this Section 2.01 and which represents payments for which provision as to
the application thereof is made in any other Operative Agreement shall be
applied promptly to the purpose for which such payment shall have been made
in accordance with the terms of such Operative Agreement; and
(c) after application in accordance with paragraphs (a) and (b) of
this Section 2.01, or to the extent received from the Indenture Trustee
under the terms of the Indenture, the balance, if any, remaining shall be
paid to the Trustor.
Section 2.02. Excepted Payments. Notwithstanding any other provision
contained herein, all Excepted Payments at any time received by the Owner
Trustee shall be distributed promptly to the applicable Person entitled
thereto, and such payment shall not be deemed under any circumstances to be
part of the Lessor's Estate.
Section 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee shall, upon receipt,
be paid over to the Indenture Trustee without deduction, set off or adjustment
of any kind) for distribution in accordance with the provisions of Article V
of the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
Section 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture (including, without limitation, any amounts realized by the Owner
Trustee or the Trustor from the exercise of any remedies pursuant to Section
17.01 of the Lease), as well as (ii) all funds then held or thereafter
received by the Owner Trustee as part of this Trust Agreement, the Lease or
otherwise, shall be distributed to the Indenture Trustee for distribution in
accordance with the provisions of Article V of the Indenture.
Section 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or
any part thereof (including, without limitation, all payments
received pursuant to Section 17.01 of the Lease and amounts realized
upon the sale or lease of the Aircraft or any part thereof after the
termination of the Lease with respect thereto), to the extent
received or realized at any time after the Lien of the Indenture
shall have been released pursuant to the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after the Lien of the
Indenture has been released,
shall, to the extent required, be retained by the Owner Trustee as
reimbursement for all expenses hereunder or under the Lease not theretofore
reimbursed under this Agreement, the Lease or otherwise and to which the Owner
Trustee is entitled to be reimbursed pursuant to the provisions thereof, and
any balance remaining thereafter shall be distributed to the Trustor.
Section 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to the account set forth in the
Participation Agreement or to such other account or accounts of the Trustor as
it may designate from time to time by written notice to the Owner Trustee (and
the Owner Trustee shall use best efforts to cause such funds to be transferred
by wire transfer on the same day as received, but in any case not later than
the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to
this Article 2 by paying the amount to be distributed to the Indenture Trustee
in the manner specified in the Indenture; provided, that the Owner Trustee
shall invest overnight, for the benefit of the Trustor, in investments that
would be permitted by Article 23 of the Lease (but only to the extent funds
are received on or prior to 2:00 P.M. (Eastern Time) and such investments are
available and, if such investments are not available to the Owner Trustee in
investments which, after consultation with the Trustor, the Trustor shall
direct) all funds not transferred by wire transfer on the same day as they
were received. Notwithstanding the foregoing but subject always to the
provisions of, and the Lien created by, the Indenture, the Owner Trustee will,
if so requested by the Trustor by written notice, pay in immediately available
funds any and all amounts payable by the Owner Trustee hereunder to the
Trustor as directed by the Trustor.
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties. FSB accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the
Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof
as herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Article 5 of the
Lease, Sections 7.02(a) and (b) and 7.04 of the Participation Agreement or its
representations, warranties and covenants given in its individual capacity in
Sections 3.05 and 3.08 of the Indenture, (c) the failure to use ordinary care
in receiving, handling and disbursing funds, (d) Lessor's Liens attributable
to it in its individual capacity, and (e) taxes, fees, or other charges on,
based on, or measured by, any fees, commissions or compensation received by
FSB or the Owner Trustee in connection with the transactions contemplated by
the Lease, the Indenture and the Operative Agreements including this Agreement.
Section 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to, and agrees that it
will not, manage, control, possess, use, sell, lease, dispose of or otherwise
deal with the Aircraft, Airframe, Engines, any Part thereof or any other
property at any time constituting a part of the Lessor's Estate, or otherwise
to take or refrain from taking any action under or in connection with the
Operative Agreements, except (i) to execute and deliver the Operative
Agreements to which it is a party, (ii) to exercise and carry out or cause to
be exercised or carried out the rights, duties and obligations of the Owner
Trustee hereunder and under the other Operative Agreements, or (iii) as
expressly provided in written instructions from the Trustor given pursuant to
Section 3.03 or 3.04 hereof; provided, that nothing in this Section 3.02 shall
limit in any manner the obligations of the Owner Trustee hereunder.
Section 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Department of the Owner Trustee shall have
actual knowledge of a Default or an Event of Default, or an Indenture Default
or an Indenture Event of Default, the Owner Trustee shall give or cause to be
given to the Trustor and the Indenture Trustee prompt telephone or facsimile
notice, followed by prompt confirmation thereof by certified mail, postage
prepaid (in any event within two Business Days of the discovery thereof), in
accordance with Article 14 of the Participation Agreement, of such Default,
Event of Default, Indenture Default or Indenture Event of Default. Subject to
the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee
under the Indenture, the Owner Trustee shall take such action with respect to
such Default, Event of Default, Indenture Default or Indenture Event of
Default as shall be specified in written instructions from the Trustor;
provided that the Owner Trustee shall have no duty to take any (and shall take
no) action whatsoever in the absence of written instructions from the Trustor.
For all purposes of this Agreement and the Lease, in the absence of actual
knowledge of a Responsible Officer of the Owner Trustee, the Owner Trustee
shall not be deemed to have knowledge of a Default, Event of Default,
Indenture Default or Indenture Event of Default unless notified in writing by
the Lessee, the Trustor, the Indenture Trustee or any Certificate Holder.
Section 3.04. Action Upon Instructions. Upon the written
instructions at any time and from time to time of the Trustor, the Owner
Trustee will take or refrain from taking such action, not inconsistent with
provisions of the Indenture, as may be specified in such instructions.
Section 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such
duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with written instructions
given by the Trustor hereunder, and no implied duties, covenants or
obligations shall be read into this Agreement, any such instructions or the
Operative Agreements against the Owner Trustee, and the Owner Trustee agrees
that it will not manage, control, possess, use, sell, lease, dispose of or
otherwise deal with the Aircraft or any part of the Lessor's Estate except as
required by the terms of the Operative Agreements, any such instructions and as
otherwise provided herein; and
(ii)in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Owner Trustee and conforming to the requirements of this Agreement or
the other Operative Agreements, but in the case of any such certificates or
opinions which by any provisions hereof or thereof are specifically
required to be furnished to the Owner Trustee, the Owner Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Trust Agreement or the Operative Agreements.
(b) No provision hereof shall require FSB in its individual capacity
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Notwithstanding the foregoing, FSB agrees in
its individual capacity that it will, at its own cost and expense, promptly
take such action as may be necessary to discharge duly all Lessor's Liens
attributable to it in its individual capacity and will claim no indemnity
therefor hereunder, or under the Participation Agreement or any Operative
Agreement.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Owner Trustee shall be subject to the provisions
of this Section 3.05, except that in the event of a conflict between this
Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee hereunder or under the other Operative
Agreements or the Original Agreements (including those furnished to the
Indenture Trustee pursuant to the terms of the Indenture) and not otherwise
furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner Trustee
shall not be authorized and shall have no power to "vary the investment" of the
Trustor within the meaning of Treasury Regulations Section 301.7701-4(c)(1),
it being understood that the Owner Trustee shall have the power and authority
to fulfill its obligations under Section 2.06 hereof and Article 23 of the
Lease.
Section 3.06. Certain Rights of Owner Trustee. Except as otherwise
provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction or authorization by the Trustor or any
other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered to
the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder or under any of the
other Operative Agreements, the Owner Trustee (unless other evidence be
herein or therein specifically prescribed), absent actual knowledge of a
Responsible Officer of the Owner Trustee to the contrary, may rely in good
faith upon a certificate in writing, delivered to the Owner Trustee and
signed by any of the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee
and notice of such need for such proof or establishment shall be delivered
to the Trustor, who may advise the Owner Trustee in respect of such matter
and the Owner Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it shall appoint with
due care, and it shall be entitled to rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by the
advice of such counsel in anything done or omitted to be done in accordance
with such advice;
(e) the Owner Trustee shall not be under any obligation to take any
action under this Agreement or under any of the other Operative Agreements
at the request or direction of the Trustor unless the Persons making such
request or direction shall have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; nor
shall the Owner Trustee be required to take any action deemed to impose on
the Owner Trustee any obligation to take any action, if the Owner Trustee
shall have been advised by its counsel that such action is unlawful or is
contrary to the terms of this Agreement or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or
other paper or document unless a Responsible Officer of the Owner Trustee
has actual knowledge that the facts or matters stated therein are false or
inaccurate, but the Owner Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to the
Lessor under the Lease, to examine the books and records of the Lessee to
reasonably determine whether the Lessee is in compliance with the terms and
conditions of the Lease and to examine the Aircraft, Airframe, Engines or
any Part thereof personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof, except as
otherwise provided in written instructions given to the Owner Trustee by the
Trustor or as otherwise provided in the Indenture or the Participation
Agreement, the Owner Trustee shall not have any duty (i) to see to any
recording or filing of the Lease or of this Agreement or any financing
statement or other notice or document relating thereto or contemplated
under the Operative Agreements or to see to the maintenance of any such
recording or filing (other than FAA reporting requirements contained in 14
C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the
Aircraft or any part thereof or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect thereto, other
than to forward to the Trustor and (to the extent provided in the
Indenture) the Indenture Trustee copies of all certificates, reports and
other written information which it receives from the Lessee pursuant to the
Lease, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charges or any Lien (except any Lessor's Lien
attributable to it in its individual capacity) owing with respect to, or
assessed or levied against any part of the Lessor's Estate, (iv) to confirm
or verify any financial statements or reports of the Lessee, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease.
Section 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSB MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that FSB represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever right, title and interests in, to and under the
Aircraft that were conveyed to it by AVSA and FSB represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is
a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or FSB and except that FSB
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor)
the other Operative Agreements to which the Owner Trustee is a party have been
(or at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by FSB and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of FSB enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.
Section 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which
they were paid or are held, but need not be segregated in any manner from any
other moneys except to the extent required by law and may be deposited by the
Owner Trustee under such conditions as may be prescribed or permitted by law
for trust funds, or may be invested in direct obligations of the United States.
Section 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
Section 3.10. Definition of a Responsible Officer. For purposes of
this Trust Agreement only, "Responsible Officer" when used with respect to the
Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title
"Vice President"), the Secretary, any Assistant Secretary, or any other
officer in the Corporate Trust Department of FSB customarily performing
functions similar to those performed by any of the above designated officers.
Section 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, the Trustor may at any
time remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee and the Indenture Trustee, such removal to be
effective only upon the appointment by the Trustor of a successor Owner
Trustee and the acceptance of such appointment by such successor. Upon the
giving of notice of resignation or removal of the Owner Trustee, the Trustor
may appoint a successor Owner Trustee by an instrument signed by the Trustor.
If the Trustor shall not have so appointed a successor Owner Trustee within 30
days after such resignation or removal, the Owner Trustee, the Indenture
Trustee or the Trustor may apply to any court of competent jurisdiction to
appoint a successor Owner Trustee to act until such time, if any, as a
successor or successors shall have been appointed by the Trustor as above
provided. Any successor Owner Trustee so appointed by a court shall be
superseded by any successor Owner Trustee subsequently appointed by the
Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
Section 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, in form and substance
acceptable to the predecessor Owner Trustee and the Trustor and thereupon each
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trust of the predecessor Owner
Trustee in the trust hereunder with like effect as if originally named as an
Owner Trustee herein, but nevertheless upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trust herein expressed, all estates, properties, rights, powers, duties,
property or moneys then held by such predecessor Owner Trustee upon the trust
herein expressed. Upon any such transfer by a predecessor Owner Trustee, such
predecessor Owner Trustee shall provide the successor Owner Trustee and
Trustor an accounting of the Lessor's Estate and the trust hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of
the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner
Trustee in complying, with the provisions of Section 11.01 of the
Participation Agreement.
Section 3.13. Merger or Consolidation of FSB. Any corporation into
which FSB in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which FSB shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
Section 3.14. Co-Trustees. At any time, if the Owner Trustee or the
Trustor shall deem it necessary or prudent or desirable in order to conform to
legal requirements of any jurisdiction in which any part of the Lessor's
Estate may at the time be located, the Owner Trustee by an instrument in
writing signed by it, shall appoint one or more Persons approved by the
Trustor to act as co-trustee, or co-trustees, jointly with the Owner Trustee,
or separate trustee or separate trustees (except insofar as local law makes it
necessary or prudent or desirable for any such co-trustee or separate trustee
to act alone), of all or any part of the Lessor's Estate, and to vest in such
Person or Persons, in such capacity, such title to the Lessor's Estate or any
part thereof, and such rights, powers, duties, trusts or obligations as the
Trustor may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in
the Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument
in writing, constitute the Owner Trustee its or his attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the
conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the
Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Lessor's Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which is provided hereby may be exercised
by, any such additional trustee, except jointly with, or with the consent
in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder except as otherwise provided
hereunder; and
(E) the Trustor, at any time, by an instrument in writing may remove
any such additional trustee.
Section 3.15. Interpretation of Agreements. In the event that the
Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is
silent or incomplete as to the course of action which the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
shall request in writing sent in accordance with Article 14 of the
Participation Agreement instructions of the Trustor and, to the extent that
the Owner Trustee acts in good faith in accordance with any instructions
received from the Trustor, shall not be liable to any Person; provided, that
in the event that no response is made to the Owner Trustee by the Trustor
within 25 Business Days after such request, the Owner Trustee shall not be
liable to any Person for acts taken by the Owner Trustee in good faith in what
it deems to be the best interests of the Trustor or for any failure to act in
any situation described above in this Section 3.15. The provisions of this
Section 3.15 shall not be applicable to the Owner Trustee's obligations set
forth in the last sentence of Section 3.01 hereof.
Section 3.16. Not Acting in Individual Capacity. In carrying out
the trust hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Lessor's Estate for payment or satisfaction
thereof, except to the extent provided in the last sentence of Section 3.01
hereof.
Section 3.17. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to its receipt
and disbursement of all moneys under this Agreement or any Operative
Agreement. The Trustor shall be responsible for causing to be prepared and
filed all income tax returns required to be filed by the Trustor. The Owner
Trustee, upon request, will furnish the Trustor with all such information as
may be reasonably required or necessary from the Owner Trustee in connection
with the preparation of such tax returns and in connection with any other
filing or audit and related litigation obligations. The Owner Trustee shall be
responsible for causing to be prepared at the request of the Trustor and at
the expense of the Lessee all income tax returns required to be filed with
respect to the trust created hereby and shall execute and file such returns;
provided, however, that the Owner Trustee shall send a completed copy of each
such return to the Trustor not more than 60 nor less than 30 days prior to the
due date of such return; provided that the Owner Trustee shall have timely
received all necessary information to complete and deliver to the Trustor such
return. The Trustor, upon request, will furnish the Owner Trustee with all
such information as may be required from the Trustor in connection with the
preparation of such income tax returns.
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination. This Agreement and the trust created and
provided for hereby shall cease and be terminated in any one of the following
events, whichever shall first occur:
(a) The sale or other final disposition by the Owner Trustee of all
of its interest in all property constituting or included in the Lessor's
Estate and, if the Indenture shall then be in effect, the sale or other
disposition by the Indenture Trustee of all of its interest in all property
constituting or included in the Lessor's Estate, and the final disposition
by the Owner Trustee and, if the Indenture shall then be in effect, the
Indenture Trustee, of all moneys or other property or proceeds constituting
part of the Lessor's Estate in accordance with the terms hereof; or
(b) 21 years from the death of the last survivor of the descendants of
Queen Victoria of England living on the date of this Agreement; provided,
however, that if the Trust shall be or become valid under applicable law
for a period subsequent to 21 years from the death of the last survivor of
the descendants of Queen Victoria of England living on the date of this
Agreement or, without limiting the generality of the foregoing, if
legislation shall become effective providing for the validity or permitting
the effective grant of such trust for a period, in gross, exceeding the
period for which such trust is hereinabove stated to extend and be valid,
then such trust shall not terminate as provided in the first part of this
sentence but shall extend to and continue in effect until, but only if such
non-termination and extension shall then be valid under applicable law,
such time as the same shall, under applicable law, cease to be valid.
Section 4.02. Termination at Option of the Trustor. Notwithstanding
Section 4.01 hereof, this Agreement and the trust created hereby shall
terminate and the Trust Estate shall be distributed to the Trustor, and this
Agreement shall be of no further force and effect, upon the election of the
Trustor by notice to the Owner Trustee, if such notice shall be accompanied by
the written agreement (in form and substance satisfactory to the Owner
Trustee) of the Trustor assuming all the obligations of the Owner Trustee
under or contemplated by the Operative Agreements or incurred by it as trustee
hereunder and releasing the Owner Trustee therefrom; provided, however, that
such notice may be given only after the time the Lien of the Indenture is
discharged under Section 14.01 of the Indenture unless the Trustor shall have
received the prior written consent of the Indenture Trustee to any such
termination in which case such notice may be given while the Lien of the
Indenture is outstanding.
Section 4.03. Distribution of Lessor's Estate upon Termination.
Upon any termination of this trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that (i) if
at the time of any termination the Lease remains in force and effect, then the
Lessor's Estate shall be sold as a unit (and not in parcels) and subject to
the Lease, and (ii) in the event such written instructions are not delivered
to the Owner Trustee on or before the date of termination, the Owner Trustee
shall transfer title to the Lessor's Estate to the Trustor. Upon making such
transfer or sale and accounting for all funds which have come into its hands,
the Owner Trustee shall be entitled to receipt of any sums due and owing to
the Owner Trustee for expenses incurred pursuant hereto as set forth in
Section 2.05 hereof.
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification. The Trustor and its assigns agree to
reimburse and save FSB, in its individual capacity, harmless against any and
all loss, damage, liability, claims, demands, disbursements and expenses,
including Taxes (excluding Taxes imposed against FSB upon or with respect to
any fees for services rendered in its capacity as Trustee hereunder) and
reasonable counsel fees which may be incurred by reason of its being the Owner
Trustee or acting hereunder or under the Operative Agreements or the Original
Agreements, but solely by reason thereof and arising out of or relating solely
to this Agreement or the other Operative Agreements or the Original Agreements
or the Aircraft or the Rents and other sums payable therefor, or by reason of
any occurrence directly relating thereto while so acting, and to secure the
payment thereof, FSB, in its individual capacity, shall have a Lien on the
Lessor's Estate and the proceeds thereof, including income, prior to any
interest therein of the Trustor and its assigns (but subject to the rights of
the Lessee under the Operative Agreements and the Original Agreements and
subject and subordinate to the Lien of the Indenture), except that FSB shall
not have any such Lien (and the Trustor shall have no obligation) in respect
of any such loss, damage, liability, claims, demands, disbursements and
expenses, including Taxes and counsel fees, arising from or as a result of (A)
FSB's or the Owner Trustee's willful misconduct or gross negligence (in its
individual capacity or as trustee), (B) any inaccuracy of any representation
of FSB or any breach by FSB of its warranties and covenants given in its
individual capacity in this Agreement, Article 5 of the Lease, Sections
7.02(a) and (b) and 7.04 of the Participation Agreement and its
representations and warranties in Sections 3.05 and 3.08 of the Indenture or
elsewhere in the Operative Agreements, (C) the failure to use ordinary care in
receiving, handling and disbursing funds, (D) Lessor's Liens attributable to
it in its individual capacity, (E) Taxes, fees, or other charges on, based on,
or measured by, any fees, commissions or compensation received by FSB in
connection with the transactions contemplated by the Lease, the Indenture and
this Agreement, (F) Taxes excluded from indemnification pursuant to Section
8.01(b) of the Participation Agreement (disregarding for the purposes of this
Section 6.01, subsections (ii) and (v) of Section 8.01(b) of the Participation
Agreement) or (G) Expenses excluded from indemnification pursuant to Section
9.01(b) of the Participation Agreement; provided, that, before asserting any
right to payment or indemnification hereunder, FSB shall first demand its
corresponding right to payment or indemnification from the Lessee pursuant to
the Participation Agreement. It is further understood that the distribution
by the Owner Trustee of all or any part of the Lessor's Estate as provided in
Section 4.02 of this Agreement shall not impair the right of FSB to indemnity,
payment and reimbursement as herein provided. The provisions of this Section
shall continue in force and effect notwithstanding the termination of this
trust or the resignation, inability or incapacity to act or removal of the
Owner Trustee. FSB or the Owner Trustee (in its individual capacity or as
trustee, as the case may be) agrees that it shall have no right against the
Trustor or the Trust Indenture Estate for any fee as compensation for its
services hereunder. Upon any assignment, conveyance or transfer of all of the
Beneficial Interest, the transferor Trustor shall, upon such assignment,
conveyance or transfer, be released and discharged without further act or
formality whatsoever from the indemnification obligations imposed under this
Section 6.01 arising after such transfer date.
Section 6.02. Supplements and Amendments. At any time and from time
to time, only upon the written request of the Trustor (a) FSB and the Trustor
shall execute a supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Agreement as specified in such
request and (b) the Owner Trustee shall, subject to the provisions of Section
8.01 of the Indenture, enter into or consent to such written amendment or
modification of or supplement to any of the Operative Agreements as the
Trustor and any other necessary parties may agree to in writing and as may be
specified in such request, or execute and deliver such written waiver of the
terms of any of the Operative Agreements as may be agreed to in writing by the
Trustor and as may be specified in such request; provided, that (i) the Owner
Trustee shall not execute any such supplement, amendment, waiver or
modification without the prior written consent of the Trustor, (ii) if in the
reasonable opinion of the Owner Trustee any document required to be executed
by it pursuant to this Section adversely affects any right or duty of, or
immunity or indemnity in favor of, the Owner Trustee under this Agreement or
any other Operative Agreement, the Owner Trustee may in its discretion
decline to execute such document and (iii) any amendment or supplement to this
Agreement shall comply with the provisions of Section 7.13 of the
Participation Agreement. It shall not be necessary that any request pursuant
to this Section specify the particular form of the proposed document to be
executed pursuant to such request, but it shall be sufficient if such request
shall indicate the substance thereof. Promptly after the execution by FSB or
the Owner Trustee of any document pursuant to this Section, the Owner Trustee
shall mail a conformed copy thereof to the Trustor, the Indenture Trustee and
the Lessee, but the failure of the Owner Trustee to mail such conformed copies
shall not impair or affect the validity of such document.
Section 6.03. Nature of Title of Trustor. The Trustor shall not
have any legal title to any part of the Lessor's Estate. No transfer, by
operation of law or otherwise, of the right, title and interest of the Trustor
in and to the Lessor's Estate or the trust hereunder shall operate to
terminate this Agreement or Lessor's Estate.
Section 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee in and to the
Operative Agreements or the right, title and interest of the Owner Trustee and
the Trustor in and to the Aircraft or such part thereof. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such assignment, sale, transfer or conveyance or
as to the application of any sale or other proceeds with respect thereto by
the Owner Trustee.
Section 6.05. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service or other means, when
received or personally delivered, addressed:
If to the Owner Trustee:First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone: (801) 246-5630
Facsimile: (801) 246-5053
If to the Trustor: PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573-1301
Attention: Vice President Leasing
with a copy to Director, Portfolio Administration
Telephone: (914) 335-5000
Facsimile: (914) 335-1287
If to the Indenture
Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5414
Facsimile: (617) 664-5371
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
Section 6.06. Situs of Trust; Applicable Law; Severability. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement
shall be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective; provided, that such remaining provisions do not
increase the obligations or liabilities of the Owner Trustee or the Trustor.
Section 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Section 7.03(d) of the Participation Agreement.
Section 6.08. Headings and Table of Contents. The headings of the
Articles and Sections of this Agreement and the Table of Contents are inserted
for convenience only and shall not affect the meaning or construction of any
of the provisions hereof.
Section 6.09. Identification of Trust. This trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N662FE."
Section 6.10. Counterparts. This instrument may be executed in any
number of counterparts or upon separate signature pages bound together in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute and be one and the
same instrument.
Section 6.11. Trustor Interest. The Trustor has only a beneficial
interest in any specific property of this trust. No creditor of the Trustor
shall have any right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, the property of this trust (as opposed to
the Trustor's beneficial interest in this trust).
Section 6.12. Performance by the Trustor. Any obligation of the
Owner Trustee hereunder or under any Operative Agreement or other document
contemplated herein may be performed by the Trustor and any such performance
shall not be construed as a revocation of the trust created hereby.
IN WITNESS WHEREOF, FSB and the Trustor have caused this Agreement to
be duly executed all as of the date first above written.
PMCC LEASING CORPORATION
By: _________________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
By: _________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N662FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N662FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N662FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on December 23, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N662FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
September 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N662FE) dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N662FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270116.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270117.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N662FE) between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N662FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of September 1, 1996 and filed with
the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N662FE), dated as of September 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2017, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, as amended and restated as
of October 15, 1996, between the Owner Participant and the Owner Trustee in
its individual capacity, as from time to time modified, amended or
supplemented pursuant to its applicable provisions and in accordance with the
Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
Dated as of August 1, 1996
Amended and Restated as of October 15, 1996
between
PMCC LEASING CORPORATION,
Trustor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 771, REGISTRATION NO. N667FE
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee............. 2
Section 1.02. Declaration of Trust..................................... 2
Section 1.03. Conditions Precedent..................................... 2
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc................................................ 3
Section 2.02. Excepted Payments........................................ 3
Section 2.03. Other Receipts........................................... 4
Section 2.04. Distributions after Default.............................. 4
Section 2.05. Distributions after Release of Lien of Indenture......... 4
Section 2.06. Manner of Making Distributions........................... 5
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties........................... 5
Section 3.02. Limitation on Authority of Owner Trustee................. 6
Section 3.03. Notice of Default........................................ 6
Section 3.04. Action Upon Instructions................................. 6
Section 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7
Section 3.06. Certain Rights of Owner Trustee.......................... 8
Section 3.07. No Representations or Warranties as to Certain Matters... 10
Section 3.08. Status of Moneys Received................................ 10
Section 3.09. Self-Dealing............................................. 11
Section 3.10. Definition of a Responsible Officer...................... 11
Section 3.11. Resignation or Removal of Owner Trustee.................. 11
Section 3.12. Estate and Rights of Successor Owner Trustee............. 11
Section 3.13. Merger or Consolidation of FSB........................... 12
Section 3.14. Co-Trustees.............................................. 12
Section 3.15. Interpretation of Agreements............................. 13
Section 3.16. Not Acting in Individual Capacity........................ 14
Section 3.17. Tax Returns.............................................. 14
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination.............................................. 14
Section 4.02. Termination at Option of the Trustor..................... 15
Section 4.03. Distribution of Lessor's Estate upon Termination......... 15
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification.......................................... 16
Section 6.02. Supplements and Amendments............................... 17
Section 6.03. Nature of Title of Trustor............................... 18
Section 6.04. Power of Owner Trustee to Convey......................... 18
Section 6.05. Notices.................................................. 18
Section 6.06. Situs of Trust; Applicable Law; Severability............. 19
Section 6.07. Successors and Assigns................................... 19
Section 6.08. Headings and Table of Contents........................... 19
Section 6.09. Identification of Trust.................................. 19
Section 6.10. Counterparts............................................. 19
Section 6.11. Trustor Interest......................................... 19
Section 6.12. Performance by the Trustor............................... 20
Schedule I Definitions
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N667FE) dated
as of August 1, 1996 (the "Original Trust Agreement"), as amended and restated
as of October 15, 1996 (this "Agreement") between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association (in its individual
capacity, "FSB", and not in its individual capacity but solely as trustee
hereunder, the "Owner Trustee"), and PMCC LEASING CORPORATION, a Delaware
corporation (together with its successors and permitted assigns, the
"Trustor"). The capitalized terms used herein, unless otherwise herein
defined or the context hereof shall otherwise require, shall have the
respective meanings set forth in Schedule I attached hereto.
W I T N E S S E T H :
WHEREAS, the Trustor and FSB have heretofore entered into the Original
Trust Agreement;
WHEREAS, the Original Trust Agreement was duly filed with the Federal
Aviation Administration on August 28, 1996;
WHEREAS, the Original Loan Participants participated in the payment
of the Purchase Price by providing financing as evidenced by the Original Loan
Certificates;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Trustor and the Owner Trustee desire to refinance
all of the Original Loan Certificates on the Refunding Date; and
WHEREAS, the Trustor and the Owner Trustee desire, in connection with
such refinancing, to amend and restate the Original Trust Agreement in its
entirety as herein provided.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSB and the Trustor agree that the Original Trust Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs (or has authorized and directed) the
Owner Trustee, not individually but solely as the Owner Trustee hereunder:
(a) to execute and deliver each of the other Operative Agreements to
which the Owner Trustee is a party and to enter into and perform the
transactions contemplated thereby;
(b) to execute and deliver from time to time the Certificates in the
manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in the
Operative Agreements and the Original Agreements to which the Owner Trustee
is a party or which the Owner Trustee is required to deliver pursuant to
the Operative Agreements and the Original Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the transactions contemplated hereby, the taking of any
such action by the Owner Trustee in the presence of the Trustor or its
counsel to evidence, conclusively, the direction of the Trustor.
Section 1.02. Declaration of Trust. FSB hereby confirms, in its
individual capacity, that it holds and will continue to hold, in its capacity
as the Owner Trustee, the Lessor's Estate upon the trusts herein set forth for
the use and benefit of the Trustor, subject, however, to the provisions of,
and the Lien created by, the Indenture.
Section 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 of the
Participation Agreement shall have been complied with in a manner satisfactory
to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the
Owner Trustee under the Lease (other than Excepted Payments) are to be first
paid to the Indenture Trustee while the Lien of the Indenture is in effect,
for distribution in accordance with the terms of Article V of the Indenture.
Except as otherwise provided in Section 2.04 hereof (and except for amounts
received from the Indenture Trustee, which shall be applicable only in
accordance with clause (c) below), the Owner Trustee shall promptly apply each
payment of Rent (other than Excepted Payments), Stipulated Loss Value,
Termination Value, and any proceeds from the sale, requisition or disposition
of the Aircraft received by it as follows:
(a) prior to the release of the Lien of the Indenture, each such
payment shall be payable directly to the Indenture Trustee (and if any of
the same are received by the Owner Trustee shall, upon receipt, be paid
over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V
of the Indenture; provided, that any payments received by the Owner Trustee
from (i) the Lessee with respect to FSB's or the Owner Trustee's fees and
disbursements under this Agreement, or (ii) the Trustor pursuant to Section
6.01 hereof shall not be paid over to the Indenture Trustee but shall be
retained by the Owner Trustee and applied toward the purpose for which such
payments were made;
(b) after the release of the Lien of the Indenture, any amount
remaining after application in full in accordance with paragraph (a) of
this Section 2.01 and which represents payments for which provision as to
the application thereof is made in any other Operative Agreement shall be
applied promptly to the purpose for which such payment shall have been made
in accordance with the terms of such Operative Agreement; and
(c) after application in accordance with paragraphs (a) and (b) of
this Section 2.01, or to the extent received from the Indenture Trustee
under the terms of the Indenture, the balance, if any, remaining shall be
paid to the Trustor.
Section 2.02. Excepted Payments. Notwithstanding any other provision
contained herein, all Excepted Payments at any time received by the Owner
Trustee shall be distributed promptly to the applicable Person entitled
thereto, and such payment shall not be deemed under any circumstances to be
part of the Lessor's Estate.
Section 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee shall, upon receipt,
be paid over to the Indenture Trustee without deduction, set off or adjustment
of any kind) for distribution in accordance with the provisions of Article V
of the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
Section 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture (including, without limitation, any amounts realized by the Owner
Trustee or the Trustor from the exercise of any remedies pursuant to Section
17.01 of the Lease), as well as (ii) all funds then held or thereafter
received by the Owner Trustee as part of this Trust Agreement, the Lease or
otherwise, shall be distributed to the Indenture Trustee for distribution in
accordance with the provisions of Article V of the Indenture.
Section 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or
any part thereof (including, without limitation, all payments
received pursuant to Section 17.01 of the Lease and amounts realized
upon the sale or lease of the Aircraft or any part thereof after the
termination of the Lease with respect thereto), to the extent
received or realized at any time after the Lien of the Indenture
shall have been released pursuant to the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after the Lien of the
Indenture has been released,
shall, to the extent required, be retained by the Owner Trustee as
reimbursement for all expenses hereunder or under the Lease not theretofore
reimbursed under this Agreement, the Lease or otherwise and to which the Owner
Trustee is entitled to be reimbursed pursuant to the provisions thereof, and
any balance remaining thereafter shall be distributed to the Trustor.
Section 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to the account set forth in the
Participation Agreement or to such other account or accounts of the Trustor as
it may designate from time to time by written notice to the Owner Trustee (and
the Owner Trustee shall use best efforts to cause such funds to be transferred
by wire transfer on the same day as received, but in any case not later than
the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to
this Article 2 by paying the amount to be distributed to the Indenture Trustee
in the manner specified in the Indenture; provided, that the Owner Trustee
shall invest overnight, for the benefit of the Trustor, in investments that
would be permitted by Article 23 of the Lease (but only to the extent funds
are received on or prior to 2:00 P.M. (Eastern Time) and such investments are
available and, if such investments are not available to the Owner Trustee in
investments which, after consultation with the Trustor, the Trustor shall
direct) all funds not transferred by wire transfer on the same day as they
were received. Notwithstanding the foregoing but subject always to the
provisions of, and the Lien created by, the Indenture, the Owner Trustee will,
if so requested by the Trustor by written notice, pay in immediately available
funds any and all amounts payable by the Owner Trustee hereunder to the
Trustor as directed by the Trustor.
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties. FSB accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the
Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof
as herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Article 5 of the
Lease, Sections 7.02(a) and (b) and 7.04 of the Participation Agreement or its
representations, warranties and covenants given in its individual capacity in
Sections 3.05 and 3.08 of the Indenture, (c) the failure to use ordinary care
in receiving, handling and disbursing funds, (d) Lessor's Liens attributable
to it in its individual capacity, and (e) taxes, fees, or other charges on,
based on, or measured by, any fees, commissions or compensation received by
FSB or the Owner Trustee in connection with the transactions contemplated by
the Lease, the Indenture and the Operative Agreements including this Agreement.
Section 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to, and agrees that it
will not, manage, control, possess, use, sell, lease, dispose of or otherwise
deal with the Aircraft, Airframe, Engines, any Part thereof or any other
property at any time constituting a part of the Lessor's Estate, or otherwise
to take or refrain from taking any action under or in connection with the
Operative Agreements, except (i) to execute and deliver the Operative
Agreements to which it is a party, (ii) to exercise and carry out or cause to
be exercised or carried out the rights, duties and obligations of the Owner
Trustee hereunder and under the other Operative Agreements, or (iii) as
expressly provided in written instructions from the Trustor given pursuant to
Section 3.03 or 3.04 hereof; provided, that nothing in this Section 3.02 shall
limit in any manner the obligations of the Owner Trustee hereunder.
Section 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Department of the Owner Trustee shall have
actual knowledge of a Default or an Event of Default, or an Indenture Default
or an Indenture Event of Default, the Owner Trustee shall give or cause to be
given to the Trustor and the Indenture Trustee prompt telephone or facsimile
notice, followed by prompt confirmation thereof by certified mail, postage
prepaid (in any event within two Business Days of the discovery thereof), in
accordance with Article 14 of the Participation Agreement, of such Default,
Event of Default, Indenture Default or Indenture Event of Default. Subject to
the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee
under the Indenture, the Owner Trustee shall take such action with respect to
such Default, Event of Default, Indenture Default or Indenture Event of
Default as shall be specified in written instructions from the Trustor;
provided that the Owner Trustee shall have no duty to take any (and shall take
no) action whatsoever in the absence of written instructions from the Trustor.
For all purposes of this Agreement and the Lease, in the absence of actual
knowledge of a Responsible Officer of the Owner Trustee, the Owner Trustee
shall not be deemed to have knowledge of a Default, Event of Default,
Indenture Default or Indenture Event of Default unless notified in writing by
the Lessee, the Trustor, the Indenture Trustee or any Certificate Holder.
Section 3.04. Action Upon Instructions. Upon the written
instructions at any time and from time to time of the Trustor, the Owner
Trustee will take or refrain from taking such action, not inconsistent with
provisions of the Indenture, as may be specified in such instructions.
Section 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such
duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with written instructions
given by the Trustor hereunder, and no implied duties, covenants or
obligations shall be read into this Agreement, any such instructions or the
Operative Agreements against the Owner Trustee, and the Owner Trustee agrees
that it will not manage, control, possess, use, sell, lease, dispose of or
otherwise deal with the Aircraft or any part of the Lessor's Estate except as
required by the terms of the Operative Agreements, any such instructions and as
otherwise provided herein; and
(ii)in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Owner Trustee and conforming to the requirements of this Agreement or
the other Operative Agreements, but in the case of any such certificates or
opinions which by any provisions hereof or thereof are specifically
required to be furnished to the Owner Trustee, the Owner Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Trust Agreement or the Operative Agreements.
(b) No provision hereof shall require FSB in its individual capacity
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Notwithstanding the foregoing, FSB agrees in
its individual capacity that it will, at its own cost and expense, promptly
take such action as may be necessary to discharge duly all Lessor's Liens
attributable to it in its individual capacity and will claim no indemnity
therefor hereunder, or under the Participation Agreement or any Operative
Agreement.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Owner Trustee shall be subject to the provisions
of this Section 3.05, except that in the event of a conflict between this
Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee hereunder or under the other Operative
Agreements or the Original Agreements (including those furnished to the
Indenture Trustee pursuant to the terms of the Indenture) and not otherwise
furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner Trustee
shall not be authorized and shall have no power to "vary the investment" of the
Trustor within the meaning of Treasury Regulations Section 301.7701-4(c)(1),
it being understood that the Owner Trustee shall have the power and authority
to fulfill its obligations under Section 2.06 hereof and Article 23 of the
Lease.
Section 3.06. Certain Rights of Owner Trustee. Except as otherwise
provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction or authorization by the Trustor or any
other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered to
the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder or under any of the
other Operative Agreements, the Owner Trustee (unless other evidence be
herein or therein specifically prescribed), absent actual knowledge of a
Responsible Officer of the Owner Trustee to the contrary, may rely in good
faith upon a certificate in writing, delivered to the Owner Trustee and
signed by any of the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee
and notice of such need for such proof or establishment shall be delivered
to the Trustor, who may advise the Owner Trustee in respect of such matter
and the Owner Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it shall appoint with
due care, and it shall be entitled to rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by the
advice of such counsel in anything done or omitted to be done in accordance
with such advice;
(e) the Owner Trustee shall not be under any obligation to take any
action under this Agreement or under any of the other Operative Agreements
at the request or direction of the Trustor unless the Persons making such
request or direction shall have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; nor
shall the Owner Trustee be required to take any action deemed to impose on
the Owner Trustee any obligation to take any action, if the Owner Trustee
shall have been advised by its counsel that such action is unlawful or is
contrary to the terms of this Agreement or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or
other paper or document unless a Responsible Officer of the Owner Trustee
has actual knowledge that the facts or matters stated therein are false or
inaccurate, but the Owner Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to the
Lessor under the Lease, to examine the books and records of the Lessee to
reasonably determine whether the Lessee is in compliance with the terms and
conditions of the Lease and to examine the Aircraft, Airframe, Engines or
any Part thereof personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof, except as
otherwise provided in written instructions given to the Owner Trustee by the
Trustor or as otherwise provided in the Indenture or the Participation
Agreement, the Owner Trustee shall not have any duty (i) to see to any
recording or filing of the Lease or of this Agreement or any financing
statement or other notice or document relating thereto or contemplated
under the Operative Agreements or to see to the maintenance of any such
recording or filing (other than FAA reporting requirements contained in 14
C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the
Aircraft or any part thereof or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect thereto, other
than to forward to the Trustor and (to the extent provided in the
Indenture) the Indenture Trustee copies of all certificates, reports and
other written information which it receives from the Lessee pursuant to the
Lease, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charges or any Lien (except any Lessor's Lien
attributable to it in its individual capacity) owing with respect to, or
assessed or levied against any part of the Lessor's Estate, (iv) to confirm
or verify any financial statements or reports of the Lessee, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease.
Section 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSB MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that FSB represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever right, title and interests in, to and under the
Aircraft that were conveyed to it by AVSA and FSB represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is
a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or FSB and except that FSB
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor)
the other Operative Agreements to which the Owner Trustee is a party have been
(or at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by FSB and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of FSB enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.
Section 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which
they were paid or are held, but need not be segregated in any manner from any
other moneys except to the extent required by law and may be deposited by the
Owner Trustee under such conditions as may be prescribed or permitted by law
for trust funds, or may be invested in direct obligations of the United States.
Section 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
Section 3.10. Definition of a Responsible Officer. For purposes of
this Trust Agreement only, "Responsible Officer" when used with respect to the
Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title
"Vice President"), the Secretary, any Assistant Secretary, or any other
officer in the Corporate Trust Department of FSB customarily performing
functions similar to those performed by any of the above designated officers.
Section 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, the Trustor may at any
time remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee and the Indenture Trustee, such removal to be
effective only upon the appointment by the Trustor of a successor Owner
Trustee and the acceptance of such appointment by such successor. Upon the
giving of notice of resignation or removal of the Owner Trustee, the Trustor
may appoint a successor Owner Trustee by an instrument signed by the Trustor.
If the Trustor shall not have so appointed a successor Owner Trustee within 30
days after such resignation or removal, the Owner Trustee, the Indenture
Trustee or the Trustor may apply to any court of competent jurisdiction to
appoint a successor Owner Trustee to act until such time, if any, as a
successor or successors shall have been appointed by the Trustor as above
provided. Any successor Owner Trustee so appointed by a court shall be
superseded by any successor Owner Trustee subsequently appointed by the
Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
Section 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, in form and substance
acceptable to the predecessor Owner Trustee and the Trustor and thereupon each
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trust of the predecessor Owner
Trustee in the trust hereunder with like effect as if originally named as an
Owner Trustee herein, but nevertheless upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trust herein expressed, all estates, properties, rights, powers, duties,
property or moneys then held by such predecessor Owner Trustee upon the trust
herein expressed. Upon any such transfer by a predecessor Owner Trustee, such
predecessor Owner Trustee shall provide the successor Owner Trustee and
Trustor an accounting of the Lessor's Estate and the trust hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of
the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner
Trustee in complying, with the provisions of Section 11.01 of the
Participation Agreement.
Section 3.13. Merger or Consolidation of FSB. Any corporation into
which FSB in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which FSB shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
Section 3.14. Co-Trustees. At any time, if the Owner Trustee or the
Trustor shall deem it necessary or prudent or desirable in order to conform to
legal requirements of any jurisdiction in which any part of the Lessor's
Estate may at the time be located, the Owner Trustee by an instrument in
writing signed by it, shall appoint one or more Persons approved by the
Trustor to act as co-trustee, or co-trustees, jointly with the Owner Trustee,
or separate trustee or separate trustees (except insofar as local law makes it
necessary or prudent or desirable for any such co-trustee or separate trustee
to act alone), of all or any part of the Lessor's Estate, and to vest in such
Person or Persons, in such capacity, such title to the Lessor's Estate or any
part thereof, and such rights, powers, duties, trusts or obligations as the
Trustor may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in
the Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument
in writing, constitute the Owner Trustee its or his attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the
conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the
Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Lessor's Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which is provided hereby may be exercised
by, any such additional trustee, except jointly with, or with the consent
in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder except as otherwise provided
hereunder; and
(E) the Trustor, at any time, by an instrument in writing may remove
any such additional trustee.
Section 3.15. Interpretation of Agreements. In the event that the
Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is
silent or incomplete as to the course of action which the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
shall request in writing sent in accordance with Article 14 of the
Participation Agreement instructions of the Trustor and, to the extent that
the Owner Trustee acts in good faith in accordance with any instructions
received from the Trustor, shall not be liable to any Person; provided, that
in the event that no response is made to the Owner Trustee by the Trustor
within 25 Business Days after such request, the Owner Trustee shall not be
liable to any Person for acts taken by the Owner Trustee in good faith in what
it deems to be the best interests of the Trustor or for any failure to act in
any situation described above in this Section 3.15. The provisions of this
Section 3.15 shall not be applicable to the Owner Trustee's obligations set
forth in the last sentence of Section 3.01 hereof.
Section 3.16. Not Acting in Individual Capacity. In carrying out
the trust hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Lessor's Estate for payment or satisfaction
thereof, except to the extent provided in the last sentence of Section 3.01
hereof.
Section 3.17. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to its receipt
and disbursement of all moneys under this Agreement or any Operative
Agreement. The Trustor shall be responsible for causing to be prepared and
filed all income tax returns required to be filed by the Trustor. The Owner
Trustee, upon request, will furnish the Trustor with all such information as
may be reasonably required or necessary from the Owner Trustee in connection
with the preparation of such tax returns and in connection with any other
filing or audit and related litigation obligations. The Owner Trustee shall be
responsible for causing to be prepared at the request of the Trustor and at
the expense of the Lessee all income tax returns required to be filed with
respect to the trust created hereby and shall execute and file such returns;
provided, however, that the Owner Trustee shall send a completed copy of each
such return to the Trustor not more than 60 nor less than 30 days prior to the
due date of such return; provided that the Owner Trustee shall have timely
received all necessary information to complete and deliver to the Trustor such
return. The Trustor, upon request, will furnish the Owner Trustee with all
such information as may be required from the Trustor in connection with the
preparation of such income tax returns.
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination. This Agreement and the trust created and
provided for hereby shall cease and be terminated in any one of the following
events, whichever shall first occur:
(a) The sale or other final disposition by the Owner Trustee of all
of its interest in all property constituting or included in the Lessor's
Estate and, if the Indenture shall then be in effect, the sale or other
disposition by the Indenture Trustee of all of its interest in all property
constituting or included in the Lessor's Estate, and the final disposition
by the Owner Trustee and, if the Indenture shall then be in effect, the
Indenture Trustee, of all moneys or other property or proceeds constituting
part of the Lessor's Estate in accordance with the terms hereof; or
(b) 21 years from the death of the last survivor of the descendants of
Queen Victoria of England living on the date of this Agreement; provided,
however, that if the Trust shall be or become valid under applicable law
for a period subsequent to 21 years from the death of the last survivor of
the descendants of Queen Victoria of England living on the date of this
Agreement or, without limiting the generality of the foregoing, if
legislation shall become effective providing for the validity or permitting
the effective grant of such trust for a period, in gross, exceeding the
period for which such trust is hereinabove stated to extend and be valid,
then such trust shall not terminate as provided in the first part of this
sentence but shall extend to and continue in effect until, but only if such
non-termination and extension shall then be valid under applicable law,
such time as the same shall, under applicable law, cease to be valid.
Section 4.02. Termination at Option of the Trustor. Notwithstanding
Section 4.01 hereof, this Agreement and the trust created hereby shall
terminate and the Trust Estate shall be distributed to the Trustor, and this
Agreement shall be of no further force and effect, upon the election of the
Trustor by notice to the Owner Trustee, if such notice shall be accompanied by
the written agreement (in form and substance satisfactory to the Owner
Trustee) of the Trustor assuming all the obligations of the Owner Trustee
under or contemplated by the Operative Agreements or incurred by it as trustee
hereunder and releasing the Owner Trustee therefrom; provided, however, that
such notice may be given only after the time the Lien of the Indenture is
discharged under Section 14.01 of the Indenture unless the Trustor shall have
received the prior written consent of the Indenture Trustee to any such
termination in which case such notice may be given while the Lien of the
Indenture is outstanding.
Section 4.03. Distribution of Lessor's Estate upon Termination.
Upon any termination of this trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that (i) if
at the time of any termination the Lease remains in force and effect, then the
Lessor's Estate shall be sold as a unit (and not in parcels) and subject to
the Lease, and (ii) in the event such written instructions are not delivered
to the Owner Trustee on or before the date of termination, the Owner Trustee
shall transfer title to the Lessor's Estate to the Trustor. Upon making such
transfer or sale and accounting for all funds which have come into its hands,
the Owner Trustee shall be entitled to receipt of any sums due and owing to
the Owner Trustee for expenses incurred pursuant hereto as set forth in
Section 2.05 hereof.
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification. The Trustor and its assigns agree to
reimburse and save FSB, in its individual capacity, harmless against any and
all loss, damage, liability, claims, demands, disbursements and expenses,
including Taxes (excluding Taxes imposed against FSB upon or with respect to
any fees for services rendered in its capacity as Trustee hereunder) and
reasonable counsel fees which may be incurred by reason of its being the Owner
Trustee or acting hereunder or under the Operative Agreements or the Original
Agreements, but solely by reason thereof and arising out of or relating solely
to this Agreement or the other Operative Agreements or the Original Agreements
or the Aircraft or the Rents and other sums payable therefor, or by reason of
any occurrence directly relating thereto while so acting, and to secure the
payment thereof, FSB, in its individual capacity, shall have a Lien on the
Lessor's Estate and the proceeds thereof, including income, prior to any
interest therein of the Trustor and its assigns (but subject to the rights of
the Lessee under the Operative Agreements and the Original Agreements and
subject and subordinate to the Lien of the Indenture), except that FSB shall
not have any such Lien (and the Trustor shall have no obligation) in respect
of any such loss, damage, liability, claims, demands, disbursements and
expenses, including Taxes and counsel fees, arising from or as a result of (A)
FSB's or the Owner Trustee's willful misconduct or gross negligence (in its
individual capacity or as trustee), (B) any inaccuracy of any representation
of FSB or any breach by FSB of its warranties and covenants given in its
individual capacity in this Agreement, Article 5 of the Lease, Sections
7.02(a) and (b) and 7.04 of the Participation Agreement and its
representations and warranties in Sections 3.05 and 3.08 of the Indenture or
elsewhere in the Operative Agreements, (C) the failure to use ordinary care in
receiving, handling and disbursing funds, (D) Lessor's Liens attributable to
it in its individual capacity, (E) Taxes, fees, or other charges on, based on,
or measured by, any fees, commissions or compensation received by FSB in
connection with the transactions contemplated by the Lease, the Indenture and
this Agreement, (F) Taxes excluded from indemnification pursuant to Section
8.01(b) of the Participation Agreement (disregarding for the purposes of this
Section 6.01, subsections (ii) and (v) of Section 8.01(b) of the Participation
Agreement) or (G) Expenses excluded from indemnification pursuant to Section
9.01(b) of the Participation Agreement; provided, that, before asserting any
right to payment or indemnification hereunder, FSB shall first demand its
corresponding right to payment or indemnification from the Lessee pursuant to
the Participation Agreement. It is further understood that the distribution
by the Owner Trustee of all or any part of the Lessor's Estate as provided in
Section 4.02 of this Agreement shall not impair the right of FSB to indemnity,
payment and reimbursement as herein provided. The provisions of this Section
shall continue in force and effect notwithstanding the termination of this
trust or the resignation, inability or incapacity to act or removal of the
Owner Trustee. FSB or the Owner Trustee (in its individual capacity or as
trustee, as the case may be) agrees that it shall have no right against the
Trustor or the Trust Indenture Estate for any fee as compensation for its
services hereunder. Upon any assignment, conveyance or transfer of all of the
Beneficial Interest, the transferor Trustor shall, upon such assignment,
conveyance or transfer, be released and discharged without further act or
formality whatsoever from the indemnification obligations imposed under this
Section 6.01 arising after such transfer date.
Section 6.02. Supplements and Amendments. At any time and from time
to time, only upon the written request of the Trustor (a) FSB and the Trustor
shall execute a supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Agreement as specified in such
request and (b) the Owner Trustee shall, subject to the provisions of Section
8.01 of the Indenture, enter into or consent to such written amendment or
modification of or supplement to any of the Operative Agreements as the
Trustor and any other necessary parties may agree to in writing and as may be
specified in such request, or execute and deliver such written waiver of the
terms of any of the Operative Agreements as may be agreed to in writing by the
Trustor and as may be specified in such request; provided, that (i) the Owner
Trustee shall not execute any such supplement, amendment, waiver or
modification without the prior written consent of the Trustor, (ii) if in the
reasonable opinion of the Owner Trustee any document required to be executed
by it pursuant to this Section adversely affects any right or duty of, or
immunity or indemnity in favor of, the Owner Trustee under this Agreement or
any other Operative Agreement, the Owner Trustee may in its discretion
decline to execute such document and (iii) any amendment or supplement to this
Agreement shall comply with the provisions of Section 7.13 of the
Participation Agreement. It shall not be necessary that any request pursuant
to this Section specify the particular form of the proposed document to be
executed pursuant to such request, but it shall be sufficient if such request
shall indicate the substance thereof. Promptly after the execution by FSB or
the Owner Trustee of any document pursuant to this Section, the Owner Trustee
shall mail a conformed copy thereof to the Trustor, the Indenture Trustee and
the Lessee, but the failure of the Owner Trustee to mail such conformed copies
shall not impair or affect the validity of such document.
Section 6.03. Nature of Title of Trustor. The Trustor shall not
have any legal title to any part of the Lessor's Estate. No transfer, by
operation of law or otherwise, of the right, title and interest of the Trustor
in and to the Lessor's Estate or the trust hereunder shall operate to
terminate this Agreement or Lessor's Estate.
Section 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee in and to the
Operative Agreements or the right, title and interest of the Owner Trustee and
the Trustor in and to the Aircraft or such part thereof. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such assignment, sale, transfer or conveyance or
as to the application of any sale or other proceeds with respect thereto by
the Owner Trustee.
Section 6.05. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service or other means, when
received or personally delivered, addressed:
If to the Owner Trustee:First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone: (801) 246-5630
Facsimile: (801) 246-5053
If to the Trustor: PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573-1301
Attention: Vice President Leasing
with a copy to Director, Portfolio Administration
Telephone: (914) 335-5000
Facsimile: (914) 335-1287
If to the Indenture
Trustee: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5414
Facsimile: (617) 664-5371
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
Section 6.06. Situs of Trust; Applicable Law; Severability. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement
shall be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective; provided, that such remaining provisions do not
increase the obligations or liabilities of the Owner Trustee or the Trustor.
Section 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Section 7.03(d) of the Participation Agreement.
Section 6.08. Headings and Table of Contents. The headings of the
Articles and Sections of this Agreement and the Table of Contents are inserted
for convenience only and shall not affect the meaning or construction of any
of the provisions hereof.
Section 6.09. Identification of Trust. This trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N667FE."
Section 6.10. Counterparts. This instrument may be executed in any
number of counterparts or upon separate signature pages bound together in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute and be one and the
same instrument.
Section 6.11. Trustor Interest. The Trustor has only a beneficial
interest in any specific property of this trust. No creditor of the Trustor
shall have any right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, the property of this trust (as opposed to
the Trustor's beneficial interest in this trust).
Section 6.12. Performance by the Trustor. Any obligation of the
Owner Trustee hereunder or under any Operative Agreement or other document
contemplated herein may be performed by the Trustor and any such performance
shall not be construed as a revocation of the trust created hereby.
IN WITNESS WHEREOF, FSB and the Trustor have caused this Agreement to
be duly executed all as of the date first above written.
PMCC LEASING CORPORATION
By: _______________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
By: _______________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N667FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N667FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N667FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
August 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on November 28, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N667FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of August
1, 1996 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. August 28, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
August 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996, as amended
and restated as of October 15, 1996, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N667FE) dated August 28, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N667FE) dated as of August 1, 1996, as amended and restated as of October 15,
1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August
1, 1996, between the Owner Trustee and the Indenture Trustee, which together
with the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE), dated August 28, 1996 attached thereto was
recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269964.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N667FE), dated August 28, 1996 attached thereto
was recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269965.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of August 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N667FE) between the Lessee and the
Owner Participant as it was originally executed as of August 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N667FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of August 1, 1996 and filed with the
FAA on August 28, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N667FE), dated as of August 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2015, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, as amended and restated as of
October 15, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
EXHIBIT 4.e
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48487, REGISTRATION NO. N586FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, HAS
BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF
STATE STREET BANK AND TRUST COMPANY, AS INDENTURE TRUSTEE UNDER THE TRUST
INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N586FE) DATED AS OF SEPTEMBER 1, 1996, AS AMENDED AND RESTATED AS OF OCTOBER
15, 1996 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN
SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL"
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY STATE STREET BANK AND
TRUST COMPANY, AS INDENTURE TRUSTEE ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank................................. 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 2
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and EBO Price After the Delivery
Date................................................... 3
Section 3.05. Minimum Basic Rent....................................... 4
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 11
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 13
Section 7.02. Possession and Permitted Transfer and Sublease........... 15
Section 7.03. Insignia................................................. 19
Section 7.04. Change of U.S. Registration Number....................... 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 20
Section 8.02. Pooling of Parts......................................... 21
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 22
Section 9.02. Other Alterations and Modifications...................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 24
Section 10.02. Retention of Aircraft by the Lessor..................... 26
Section 10.03. Voluntary Termination as to Engines..................... 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 28
Section 11.02. Payment of Stipulated Loss Value........................ 28
Section 11.03. Replacement of Airframe and Engines..................... 29
Section 11.04. Event of Loss with Respect to an Engine................. 33
Section 11.05. Application of Payments from the Government or Others... 35
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government..................................... 36
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................. 36
Section 11.08. Application of Payments During Existence of Certain
Defaults.............................................. 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 37
Section 12.02. Return of Engines....................................... 38
Section 12.03. Return of Manuals....................................... 39
Section 12.04. Condition of Aircraft................................... 39
Section 12.05. Delayed Return of Aircraft.............................. 40
Section 12.06. Storage................................................. 41
Section 12.07. Special Markings........................................ 42
Section 12.08. Lessor's Option to Purchase Parts....................... 42
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance..................................... 42
Section 13.02. Insurance Against Loss or Damage to Aircraft
and Engines........................................... 44
Section 13.03. Application of Insurance Proceeds....................... 47
Section 13.04. Reports................................................. 48
Section 13.05. Lessor's Insurance...................................... 48
Section 13.06. Self-Insurance.......................................... 49
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 49
Section 14.02. No Obligation to Inspect................................ 50
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 50
Section 15.02. Citizenship............................................. 50
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 53
Section 17.02. Cumulative Remedies..................................... 55
Section 17.03. Waiver.................................................. 56
Section 17.04. Lessor's Right to Perform for Lessee.................... 56
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 57
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 59
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 59
Section 22.02. Intentionally Left Blank................................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 60
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 61
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 62
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 62
Section 26.02. References.............................................. 62
Section 26.03. APPLICABLE LAW.......................................... 62
Section 26.04. Severability............................................ 62
Section 26.05. No Oral Modification.................................... 63
Section 26.06. Agreement as Chattel Paper.............................. 63
Section 26.07. Counterparts............................................ 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 63
Section 27.02. Section 1110 Compliance................................. 63
Section 27.03. Finance Lease........................................... 64
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Additional Purchase Option Provisions
Schedule VI Description of Original Lease
Exhibit A Form of Lease Supplement
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N586FE) dated
as of September 1, 1996, as amended and restated as of October 15, 1996 (this
"Lease") between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and
FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of September 1, 1996 as supplemented by the Lease
Supplement;
WHEREAS, the Original Lease was recorded by the FAA and assigned a
Conveyance Number as more particularly described on Schedule VI attached
hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from the Lessee on the Delivery Date
and having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated. This Lease
shall last for the Term, at all times during which full legal title to the
Aircraft shall remain vested in the Lessor to the exclusion of the Lessee,
notwithstanding the possession and use thereof by the Lessee or any other
Person.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank.
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft for the Interim Term and the Basic Term, each payment being set forth
on Schedule II hereto opposite the applicable Rent Payment Date, subject to
increase or decrease as provided in Section 3.04 of this Lease. Each payment
of Basic Rent shall be made in arrears or in advance, all as stated in
Schedule II hereto. Each payment of Basic Rent designated as advance rent
shall be allocated over the six-month period beginning on the Rent Payment
Date on which such advance rent payment is scheduled to be made, and each
installment of Basic Rent that is designated as payable in arrears shall be
accrued over the six-month period ending on and including the day immediately
preceding the Rent Payment Date on which such arrears payment is scheduled to
be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease or in any other Operative
Agreement, or by law or equity or otherwise in the case of nonpayment of Basic
Rent. The Lessee will also pay to the Person entitled thereto, on demand, as
Supplemental Rent, to the extent permitted by applicable law, an amount equal
to interest at the Past Due Rate on any part of any installment of Basic Rent
not paid when due, for any period until the same shall be paid and on any
payment of Supplemental Rent not paid when due, for the period until the same
shall be paid. In addition, the Lessee will pay to the Lessor, as Supplemental
Rent, in the case of any prepayment of the Certificates pursuant to Section
6.02 of the Indenture (other than in connection with any prepayment or
purchase of the Certificates pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture), an amount equal to the aggregate amount of
any Make-Whole Premium payable on such prepayment or purchase. The expiration
or other termination of the Lessee's obligation to pay Basic Rent shall not
limit or otherwise modify the obligations of the Lessee with respect to the
payment of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and EBO Price After the Delivery Date. The percentages for
Basic Rent referred to in Schedule II hereto and the percentages for
Stipulated Loss Value and Termination Value in Schedule III and Schedule IV
hereto, respectively, and the EBO Price shall be adjusted (upward or downward)
subject to the minimum value established by Section 3.05 hereof and the
definitions of Stipulated Loss Value, Termination Value and EBO Price, to
reflect (i) any costs and expenses paid by the Lessor or the Owner Participant
pursuant to Section 10.01 of the Participation Agreement being greater or less
than the Estimated Expense Amount, (ii) any Refinancing pursuant to Section
15.01 of the Participation Agreement, (iii) any reoptimization pursuant to
Section 15.02 of the Participation Agreement or (iv) payments pursuant to
Section 5 of the Tax Indemnity Agreement by an adjustment of Basic Rent. Each
such adjustment pursuant to clause (i), (ii) or (iv) of the first sentence of
this Section 3.04 shall maintain the Owner's Economic Return (and, while
maintaining such Return, minimize the aggregate Net Present Value of Rents to
the Lessee); provided, that in no event may the EBO Price be an amount less
than the estimate set forth in the Appraisal of the Fair Market Value of the
Aircraft at the time of exercise of the purchase option under Section
4.02(a)(F) hereof. In the event of an adjustment pursuant to clause (iii) of
the first sentence of this Section 3.04, the Owner Participant may recalculate
Basic Rent as set forth in Schedule II hereto in order to maintain the Owner's
Economic Return and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto in a manner
consistent with such recalculation of Basic Rent and EBO Price; provided that
any such recalculations may not (A) increase the Net Present Value of Rents to
the Lessee, (B) increase as of any date the sum of (1) the Net Present Value
of Rents to the Lessee payable through such date plus (2) the present value of
the Stipulated Loss Value or the Termination Value or the EBO Price as of such
date, in each case discounted at the Debt Rate, beyond such net present values
prior to such adjustment, or (C) otherwise result in any adverse impact
(including tax consequences) to the Lessee for which the Owner Participant has
not agreed to indemnify the Lessee in a manner satisfactory to the Lessee.
The Owner Participant shall promptly notify the Lessee and the Lessor and the
Lessee shall promptly notify the Owner Participant and the Lessor of the need
for any such adjustment. As promptly as feasible after any such notification,
the Lessor shall furnish the Lessee with a notice setting forth the amount of
any such adjustments together with the calculations upon which the adjustments
are based; provided, however, that the Lessor and the Owner Participant shall
not be required to disclose to the Lessee in such notice any confidential or
proprietary information (including methodology or assumptions) relating to
such calculations. At the request and, subject to the next succeeding
sentence, expense of the Lessee, the accuracy of the calculation of such
adjustments and the consistency of the calculation with the calculation used
to determine Basic Rent, Stipulated Loss Values, Termination Values and EBO
Price shall be verified first, by First Chicago Leasing Corporation or such
other financial advisor chosen by the Lessee (it being agreed that the Owner
Participant shall not be obligated to provide to First Chicago Leasing
Corporation or such other financial advisor any information reasonably deemed
confidential by the Owner Participant) and second, if such adjustments are
still believed to be in error and are not reconciled with the Owner
Participant within fifteen (15) Business Days, by a firm of nationally
recognized independent public accountants selected by the Lessee and reasonably
acceptable to the Owner Participant and, in order to enable them to verify such
adjustments, the Owner Participant shall make available to such accountants
(for their own confidential use and not to be disclosed to the Lessee or any
other Person and subject to the execution of a confidentiality agreement
reasonably satisfactory to the Owner Participant) all information reasonably
necessary for such verification, including the name of the lease analysis
program used by the Owner Participant to calculate such adjustments. The
Lessee will pay the reasonable costs and expenses of the verification process
by the independent public accountants under this Section 3.04 unless as a
result of such verification process by the independent public accountants
Basic Rent is adjusted and such adjustment causes the Net Present Value of
Rents to decline by 10 or more basis points (in which event the Owner
Participant shall pay the reasonable costs and expenses of such verification
process by the independent public accountants). The Lessor and the Lessee
shall execute and deliver an amendment to this Lease to reflect each
adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code and the Treasury Regulations promulgated thereunder.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 79
South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Lien of the Indenture shall not have been discharged the Lessor hereby
directs, and the Lessee agrees, that all Rent (other than Excepted Payments,
which shall be paid by the Lessee directly to the Person entitled thereto)
shall be paid directly (all without set-off or counterclaim as and to the
extent provided in Article 20 hereof) to the Indenture Trustee at its
principal office at Two International Place, 4th Floor, Boston, Massachusetts,
Attention: Corporate Trust Department, or as the Indenture Trustee may
otherwise direct by wire transfer of immediately available funds in U.S.
Dollars no later than 10:30 a.m., New York time, on the due date of such
payment. In any case where a scheduled Rent Payment Date shall not be a
Business Day such Rent Payment Date shall be adjourned to the next succeeding
Business Day without interest thereon for the period of such extension
(provided that payment is made on such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (each a "Preliminary
Notice") not more than 360 and not less than 180 days prior to the end of the
Basic Term or any Renewal Term, whether it will exercise its options either to
renew this Lease pursuant to this Section 4.01 or to purchase the Aircraft
pursuant to Section 4.02(a)(B) or (C) hereof, as applicable. Provided that
(i) no Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, by irrevocable
written notice delivered to the Lessor not less than 60 days prior to the end
of the Basic Term, extend the Term for a Fixed Renewal Term of one (1) or two
(2) years commencing on the expiration of the Basic Term. If the Lessee
elects to extend the Term for a Fixed Renewal Term of one (1) year as
described in the preceding sentence and so elects upon 60 days' written notice
to the Lessor prior to the end of such one-year Fixed Renewal Term, the Lessee
may elect to extend the Term for a further Fixed Renewal Term of one year,
provided that the conditions of clauses (i), (ii) and (iii) of the preceding
sentence are met. The Lessee shall pay the Fixed Renewal Rent during any
Fixed Renewal Term.
In addition, provided that (i) no Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing at the time of
renewal, (ii) this Lease has not otherwise expired or terminated, and (iii)
the Lessee shall have timely delivered the respective Preliminary Notice, the
Lessee may by irrevocable written notice delivered to the Lessor not less than
60 days prior to the end of the Basic Term or any Fixed Renewal Term, elect to
extend the Term for a Fair Market Renewal Term of one (1) or two (2) years.
If the Lessee elects to extend the Term for a Fair Market Renewal Term of one
(1) year as described in the preceding sentence, the Lessee may by irrevocable
written notice delivered to the Lessor not less than 60 days prior to the end
of such one-year Fair Market Renewal Term, elect to extend the Term for a
further Fair Market Renewal Term of one (1) year, provided that the conditions
of clauses (i), (ii) and (iii) of the preceding sentence are met. The Lessee
shall pay the Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii) the
Lessee shall have previously given the Preliminary Notice under Section
4.01(a) hereof in the case of paragraph (B) below or the applicable notice for
each other paragraph below, as the case may be, and (iii) if the Lessee shall
have elected to assume the Certificates in accordance with Section 7.11 of the
Participation Agreement, no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing on the applicable Termination
Date, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 360 days and not less than 60 days prior to the
applicable Termination Date, elect to terminate the Lease and purchase the
Aircraft on the Rent Payment Date falling on July 30, 2013, for, at the
Lessee's option, either (1) an amount in immediately available funds equal
to the greater of the Fair Market Value and the Termination Value on the
applicable Termination Date or (2)(i) the assumption by the Lessee,
pursuant to Section 7.11 of the Participation Agreement, of all of the
obligations of the Lessor under the Indenture, the Certificates and Section
7.04 of the Participation Agreement and under the other Operative
Agreements and (ii) the payment to the Lessor of an amount in immediately
available funds equal to the excess of (A) the greater of (I) the
Termination Value for the Aircraft, computed as of the applicable
Termination Date and (II) the Fair Market Value of the Aircraft on the
Termination Date, over (B) the unpaid principal of the Certificates plus
accrued interest as of such Termination Date. Such notice (which shall be
revocable by the Lessee upon written notice no later than the Business Day
prior to the date 15 days prior to the applicable Rent Payment Date) shall
either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount equal to the Fair Market Value thereof on such day; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to purchase the Aircraft on the first day following such
Renewal Term at a price equal to the Fair Market Value of the Aircraft on
such day; provided, however, that the Lessee shall have paid all Rent due
and payable under this Lease on or prior to the expiration of any such
Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be an option to purchase for an amount
not less than the greater of the amount specified in Schedule V hereto and
the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be an option to purchase for an amount
not less than the greater of the amount specified in Schedule V hereto and
the Fair Market Value of the Aircraft; or
(F) elect to purchase the Aircraft on July 30, 2011 (the "EBO Date")
for an amount specified therefor in the Ancillary Agreement II (the "EBO
Price") and which is not less than the estimate set forth in the Appraisal
of the Fair Market Value of the Aircraft at the time of exercise of the
purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 120 days and not less than 60 days' prior
written notice of its election to purchase pursuant to Section 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof. Such notice shall be revocable by the Lessee
upon written notice no later than the Business Day prior to the date 15 days
prior to the applicable Rent Payment Date and such notice shall either direct
the Lessor to prepay the Certificates in full on such Termination Date
pursuant to Section 6.02 of the Indenture or state that the Lessee shall
exercise its option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture. In the event that
the Lessee shall have given notice to purchase the Aircraft under Section
4.02(a)(A), 4.02(a)(D), 4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make
payment (and, if applicable, assume the Certificates) on the applicable
Termination Date, the Lease shall continue and the Lessee shall pay to the
Owner Trustee any losses, costs and expenses of the Owner Participant incurred
in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (if payable in
arrears but not if in advance), the applicable purchase price together with
any amounts past due hereunder and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate (if such purchase occurs
prior to the Premium Termination Date for such Certificate) and amounts due
under the Participation Agreement and the Tax Indemnity Agreement, whereupon
(and upon discharge of the Lien of the Indenture in accordance with Section
14.01 thereof), the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens (it being understood
that, in connection with such transfer, the Owner Participant shall be
responsible for removal of Lessor's Liens attributable to it, FSB shall be
responsible for removal of Lessor's Liens attributable to it and the Owner
Trustee shall be responsible for removal of Lessor's Liens attributable to the
Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case
may be, of the Participation Agreement)), all of the Lessor's right, title and
interest in and to the Aircraft on an "as-is, where is" basis. In connection
with such transfer, the Lessee shall prepare and the Lessor shall execute or
arrange for the execution of a bill of sale evidencing such transfer and such
other documents as the Lessee may reasonably require. In connection with any
termination or proposed termination of this Lease, the Lessee shall pay at the
time of the applicable Termination Date, all related reasonable costs and
expenses of the Owner Participant, the Lessor and the Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree
within twenty (20) days after the Lessee's notice of election to purchase the
Aircraft or notice to extend the Term, as the case may be, such amount shall
be determined by independent appraisal conducted by appraisers selected
pursuant to Section 4.03(b) hereof. At any time prior to final determination
of such amount pursuant to Section 4.03(b) hereof, the Lessee and the Lessor
shall be entitled to submit to the appraisers (and shall submit to each other
any bids submitted to the appraisers) any bids from unrelated third parties,
and such bids shall be accorded the weight such appraisers deem appropriate.
The Lessor and the Lessee shall each have an opportunity to comment on any
such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that, so
long as no Event of Default shall have occurred and be continuing, each of the
Lessee and the Owner Participant (in the case of the Lessor) shall bear any
fees, costs and expenses of its respective attorneys in connection with such
appraisal, except in the case of a revocation by the Lessee of its election to
terminate the Lease pursuant to Section 4.02 or Article 10 hereof, in which
case the Lessee shall pay all such fees, costs and expenses.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR, THE INDENTURE TRUSTEE,
THE OWNER PARTICIPANT OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH
ENGINE, AS-IS, WHERE-IS, AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF THIS
SECTION 5.01, NEITHER THE LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT
NOR ANY HOLDER MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HAS
AND WILL HAVE BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR
REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS,
WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART
THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
(E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO
THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G)
ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE
MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY
THE LESSEE. The provisions of this Section 5.01 have been negotiated by the
Lessor and the Lessee and, except as provided in Article 7 of the
Participation Agreement, are intended to be a complete exclusion and negation
of any representations or warranties of the Lessor, the Indenture Trustee and
the Owner Participant, express or implied, with respect to the Airframe and
each Engine that may arise pursuant to any law now or hereafter in effect, or
otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, the Manufacturer or the
Engine Manufacturer or any of their respective subcontractors or suppliers,
with respect to the Airframe, the Engines or any Parts incorporated or
installed in or attached to the Airframe or Engines, which, in the case of the
Manufacturer or the Engine Manufacturer, have been assigned to the Lessor by
the Lessee, or to release the Lessee, the Manufacturer or the Engine
Manufacturer or any of their respective subcontractors or suppliers from any
such representation, warranty or obligation. So long as an Event of Default
shall not have occurred and be continuing under this Lease and to the extent
permitted under the applicable warranty, patent indemnity, or service-life
policy, (i) the Lessor shall assign or otherwise make available to the Lessee
such rights as the Lessor may have under any warranty, patent indemnity, or
service-life policy made or given by the Manufacturer or the Engine
Manufacturer or any of their respective subcontractors or suppliers, and any
other claims against the Manufacturer and the Engine Manufacturer or any such
subcontractor or supplier with respect to the Aircraft, including all rights to
demand, accept and retain all rights in and to property (other than the
Aircraft), data and services of any kind which the Manufacturer and the Engine
Manufacturer are obligated to provide and do provide pursuant to the
Modification Agreement or the GTA with respect to the Aircraft; and (ii) all
payments pursuant to any manufacturer's or subcontractor's warranty, patent
indemnity, or service-life policy obligation shall be paid to the Lessee and
the Lessee shall apply such payments to the cost of repair or correction of
any condition of the Aircraft which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided in
this Lease, the security interest and Lien of the Indenture and the rights
of the Owner Participant, the Lessor and the Indenture Trustee under the
Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee under a sublease or a
transfer expressly permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material risk of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material risk of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material risk of the sale, forfeiture
or loss of the Lessor's Estate, the Aircraft, Airframe or any Engine or any
interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in the
name of the Lessor as owner, pursuant to the Transportation Code and,
subject to the proviso to Section 6.03(b) of the Participation Agreement,
to remain at all times duly registered pursuant to the Transportation Code
and at all times act in accordance with the rules and regulations of the
Aeronautics Authority or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered in
accordance with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
all applicable laws and regulations and all requirements of the Aeronautics
Authority or of the regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered and the Lessee's maintenance
program approved by the Aeronautics Authority or such agency or body, (ii)
in the same manner and with the same care used by the Lessee with respect
to other McDonnell Douglas MD-11F series aircraft and CF6-80C2-D1F series
engines (or other engines permitted by the terms of this Lease to be used on
the Aircraft) owned, operated or leased by the Lessee, to the extent that
the same regulations, and the Lessee's FAA-approved maintenance program
shall apply to any such aircraft and related engines, owned or leased by
the Lessee, and utilized in similar circumstances, and without
discriminating against the Aircraft, with respect to its use, operation or
maintenance in contemplation of the expiration or termination of this Lease
other than withdrawal of the Aircraft from use and operation as is
necessary to prepare the Aircraft for return to the Lessor upon such
expiration or termination and (iii) so as to keep the Aircraft in such
condition as may be necessary to enable its airworthiness certification to
be maintained in good standing at all times under the Transportation Code
or any applicable law, rule or regulation of the applicable regulatory
agency or body of any other jurisdiction in which the Aircraft may then be
registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language, to the extent required by the
Transportation Code (which records, logs and other materials shall, as
between the Lessor and the Lessee and all parties claiming through the
Lessee, be the property of the Lessor but shall become the property of the
Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of
this Lease or upon the occurrence of an Event of Loss and the Lessee's
compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor and the Owner Participant such
information within the Lessee's possession as may be required to enable the
Lessor and the Owner Participant to file any reports to be filed by the
Lessor and the Owner Participant with any governmental authority because of
the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
treaty, rule, regulation or order of or by any government or governmental
authority having jurisdiction over the Lessee or the Aircraft or any Engine
or for any purpose for which the Aircraft or any Engine is not designed;
provided, however, that the Lessee (or if a sublease shall then be in
effect, the sublessee thereunder) may in good faith contest the validity or
application of any such law, license, treaty, rule, regulation or order in
any manner that does not adversely affect the Lessor, its right, title or
interest in the Aircraft or any Engine or the interests of the Indenture
Trustee or the Owner Participant therein, or in any Operative Agreement
(excluding any interests indemnified for under the Tax Indemnity Agreement)
and such contest or non-compliance will not result in any material risk of
loss, forfeiture or damage to the Aircraft or in any risk of criminal
liability to the Lessor, the Indenture Trustee or the Owner Participant;
and if any such law, license, rule, regulation or order requires alteration
of the Aircraft or any Engine, the Lessee will conform the same therewith
at its own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order;
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless such operation or location is pursuant to the Civil Reserve
Air Fleet Program administrated pursuant to Executive Order No. 12056, as
amended (the "CRAF Program") or other use of the Aircraft by the Government
and (unless in the case of insurance, the Lessee certifies that such
insurance is unobtainable after diligent effort or is obtainable only on
unduly financially burdensome terms and conditions, which may include
unreasonably high rates), the Lessee has obtained, prior to the operation
or location of the Airframe or any Engine in such area, indemnification
from the Government, or other insurance, against the risks and in the
amounts required by, and in compliance with, Article 13 hereof covering
such area (and naming the Lessor, or so long as this Lease is assigned to
the Indenture Trustee, the Indenture Trustee, as sole loss payee in respect
of indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area; and
(g) not install or exchange replacement components with excessive wear
or exchange components on or of the Aircraft about to be returned to the
Lessor for other aircraft or engine components in the Lessee's possession
for use on aircraft and engines that will remain in the Lessee's possession
after such return in order to discriminate against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i)(A) in respect of subparagraph (i) of this
Section 7.02(a), no Event of Default shall have occurred and be continuing on
the date the sublease is entered into, (B) in respect of subparagraphs (ii),
(iii) and (iv) of this Section 7.02(a), no Event of Default shall have
occurred and be continuing, and (C) in respect of subparagraphs (v), (vi),
(vii) and (viii) of this Section 7.02(a), no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, (ii) the
Lessee shall comply with the provisions of Article 13 hereof, (iii) the Lien
of the Indenture is not impaired thereby, and (iv) all applicable governmental
approvals in connection therewith have been obtained, the Lessee may without
the prior written consent of the Lessor:
(i) after the seventh anniversary of the Commencement Date and so long
as the sublessee described in clause (A) or (B) below is generally meeting
its obligations as they come due and is not subject to a proceeding or
final order under applicable bankruptcy, insolvency or reorganization laws
on the date the sublease is entered into, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) sublease the Aircraft to an Air Carrier
which is principally based in and domiciled in one of the countries listed
on Schedule III of the Participation Agreement, or (C) sublease the
Aircraft to any other Air Carrier not described in this Section which shall
be reasonably acceptable to the Lessor as evidenced by its prior written
consent; provided, that, with respect to clause (B) above, at the time of
any such sublease the United States of America maintains normal diplomatic
relations with the country in which such Air Carrier is principally based
and domiciled. In the case of any sublease (w) if the sublessee is a
government or governmental body, such sublessee shall have effectively
waived its rights to sovereign immunity, (x) such sublease shall include
the provisions required by Section 7.02(b) hereof and expressly require the
sublessee to operate and maintain the Aircraft in compliance with the
applicable provisions of this Lease, (y) such sublease shall provide that
such sublessee will not further sublease or transfer possession of, or any
other rights to, the subleased Airframe or any Engine to any other Person
without the prior written consent of the Lessor (except as permitted by
subparagraphs (ii) through (viii) below) and (z) such sublease shall expire
not later than 180 days prior to the expiration of the Basic Term or any
applicable Renewal Term with respect to which the Lessee has given
irrevocable written notice and the Renewal Rent has been determined
pursuant to Section 4.01(a) hereof, unless the Lessee shall have given
irrevocable written notice of its election to purchase the Aircraft
pursuant to Section 4.02 hereof. Prior to any sublease to an Air Carrier
permitted under clause (C) of this Section 7.02(a)(i): (I) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative Agreements
and the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, and (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might have been imposed on such owner or
Persons under the laws of the United States or any state thereof (it being
understood that, in the event that such latter opinion cannot be given in a
form satisfactory to the Lessor, such opinion shall be waived if insurance
reasonably satisfactory to the Lessor is available to cover such risk to
the Owner Participant and is provided at or before the execution of such a
sublease, at the Lessee's cost and expense); (II) all necessary governmental
approvals required for the subleased equipment, the Airframe or any Engine,
as the case may be, to be imported and, to the extent reasonably
obtainable, exported from the applicable country of domicile upon
repossession of such subleased equipment by the Lessor (and the Lessee as
sublessor), shall have been procured at the Lessee's own cost and expense
by the Lessee prior to commencement of any such sublease; (III) duties and
tariffs, if applicable, shall be paid for by the Lessee; and (IV) the
Lessee shall effect or cause to be effected at the Lessee's own cost and
expense all recordings and filings that are required to continue the
Lessor's right, title and interest to the Aircraft and rights under the
Lease (and sublease) and to perfect and maintain the priority of the Lien
of the Indenture;
(ii)subject the Airframe or permit the Airframe to be subjected to
normal interchange agreements or subject the Engines or permit any Engine
to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United States
maintains normal diplomatic relations or (x) any U.S. Air Carrier or (y)
any foreign Air Carrier which is (I) organized in a country listed on
Schedule III to the Participation Agreement, (II) organized in a country
with which the United States then maintains normal diplomatic relations,
(III) is a party to the Convention on the International Recognition of
Rights in Aircraft or (IV) otherwise provides equivalent protection to
owners, lessors and mortgagees of aircraft; provided that no transfer of
the registration of the Airframe or any Engine shall be effected and that
throughout the period that the Airframe or any Engine is subjected to such
interchange or pooling agreement or arrangement the terms of this Lease
shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of the Airframe or any Engine, and if the Lessor's title to
any Engine (but in no case the Airframe) shall nonetheless be divested
under any such agreement or arrangement, such divestiture shall be deemed
to be an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 of this Lease in respect of such Engine;
(iii)deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv)transfer or permit the transfer of possession of the Airframe or
any Engine pursuant to a contract or agreement with the Government or
pursuant to the CRAF Program or any similar or substitute programs of the
Government, so long as the Lessee (or any permitted sublessee or transferee
pursuant to this Section) shall promptly notify the Lessor upon such
transfer of possession and provide the 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 Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi)install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor 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 agreement covering such airframe), whereby such
lessor, conditional vendor or secured party expressly agrees that neither
it nor its successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such
airframe at any time, and (B) such airframe is and remains free and clear
of all Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and Liens of the
type permitted by subparagraph (v) of this Section 7.02(a);
(vii)install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii)enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease to the
same extent as if such sublease or transfer had not occurred and all the other
Operative Agreements shall remain in effect. Any such sublease shall include
appropriate provisions for the maintenance, inspection (as required by Section
14.01 hereof), operation, use and insurance of the Aircraft, the Airframe and
each Engine in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee shall not
further sublease any of such equipment. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee at least 15 days' prior written
notice of any sublease of the Airframe before the execution and delivery
thereof. The Lessee shall promptly provide the Lessor, the Owner Participant
and the Indenture Trustee a copy of any sublease having a term of six months
or more, and, in the case of any other sublease, promptly after a request
therefor from any such Person.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location,
and on each Engine, a clearly visible metal nameplate bearing the inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND
LESSOR," and, so long as such Airframe or Engines shall be subject to the Lien
of the Indenture, the additional inscription "STATE STREET BANK AND TRUST
COMPANY, AS INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if
necessary, from time to time, with a nameplate reflecting the name of any
successor Lessor or successor Indenture Trustee, in each case as permitted by
the Operative Agreements).
(b) Lessee's Marks. Except as provided in clause (a) above, the
Lessee will not allow the name of any Person to be placed on the Airframe or
on any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
Section 7.04. Change of U.S. Registration Number. The Lessee shall,
at its own cost and expense, coordinate with the necessary parties and file
instruments with the Aeronautics Authority for the sole purpose of changing
the U.S. registration number of the Aircraft to a registration number reserved
by the Lessee.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii)title to such replacement part shall vest in the Lessor free and
clear of all Liens except for Liens permitted by Section 6.01 hereof (other
than clauses (d) and (f) thereof) and shall thereupon be and become a Part;
and
(iii)such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to such
replacement part for the benefit of, and transferring such title to, the
Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such alterations
and modifications in and additions to the Airframe and each Engine as may be
required from time to time to comply with all applicable laws and to meet the
applicable requirements of the Aeronautics Authority or any other governmental
authority with jurisdiction over the Lessee's operations and aircraft;
provided, however, that the Lessee may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any risk of liabilities or civil or criminal penalties being imposed
on or against the Indenture Trustee, the Owner Participant or the Lessor, that
does not involve any material risk of loss, forfeiture or sale of the Aircraft
or any Engine and that does not adversely affect the Lessor, its title or
interest in the Aircraft or any Engine, the first and prior perfected Lien and
security interest of the Indenture, or the interests of the Indenture Trustee
or the Owner Participant in the Airframe or any Engine, or in any Operative
Agreement (excluding any interests indemnified for under the Tax Indemnity
Agreement). All such alterations, modifications or additions shall be made on
or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at such
time and in such a manner so as not to discriminate against the Aircraft
whether by reason of its leased status or otherwise. Title to all alterations,
modifications and additions made pursuant to this Section 9.01 shall without
further act vest in the Lessor and become subject to this Lease.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal (without replacement) of Obsolete
Parts, provided that the aggregate original cost of all Obsolete Parts so
removed and not replaced shall not exceed $500,000, provided further that no
such alteration, modification, addition or removal, individually or in the
aggregate, shall create any adverse tax consequences for the Owner Participant
not otherwise indemnified for, diminish the value, remaining useful life, or
utility of the Airframe or the value and utility of any Engine or impair its
condition or airworthiness below its value, remaining useful life, 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 state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed and not
replaced, to the extent permitted above, and provided further that the
Aircraft may not be converted to a passenger configuration.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part (without replacing such Part) at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii)such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof;
(iii)such Part can be removed from the Airframe or such Engine without
(A) causing material damage to the Airframe or such Engine (it being
understood that the Lessee shall repair any damage caused by a permitted
removal) or diminishing or impairing the value, utility, remaining useful
life, condition or airworthiness required to be maintained by the terms of
this Lease or (B) diminishing the value, utility or remaining useful life
which the Airframe or such Engine would have had at such time had such
alteration, modification, removal or addition not occurred, assuming the
Airframe or such Engine was then in the condition required to be maintained
by the terms of this Lease; and
(iv)the cost of such Part was not paid by the Lessor.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on at least 90 days' prior written notice (which notice
shall state the proposed Termination Date (the "Proposed Termination Date"))
to the Lessor and the Owner Participant, to terminate this Lease as of a
Termination Date if the Aircraft shall have become obsolete or surplus to the
operations of the Lessee; provided that the Lessee shall have furnished to the
Lessor, the Indenture Trustee and the Owner Participant a certificate of the
Lessee's Assistant Treasurer or more senior financial officer stating the
determination of the Lessee that the Aircraft is obsolete or surplus to its
needs. Unless the Lessor has elected to retain the Aircraft as herein
provided, the Lessee shall have the right to revoke its notice of termination
no later than the Business Day prior to the date 15 days prior to the Proposed
Termination Date whereupon this Lease shall continue in full force and effect
provided however, the Lessee may not give more than three (3) additional
termination notices pursuant to this Section 10.01.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, at the Lessee's expense, shall
use its reasonable efforts to obtain bids for the cash purchase on the
Proposed Termination Date (or such earlier date of sale as shall be consented
to in writing by the Lessor) of the Aircraft. On the Proposed Termination
Date (or such earlier date of sale), the Engines shall be installed on the
Airframe (provided that the Airframe may be sold with engines meeting the
requirements set forth herein for Replacement Engines in lieu of the Engines
so long as the aggregate number of Engines and Replacement Engines being sold
with the Airframe equals three). The Lessor may, if it desires to do so, seek
to obtain such bids. The Owner Participant may inspect any bids received by
the Lessee with respect to the Aircraft and may submit a bid for the Aircraft.
The Lessee will provide the Lessor with copies of bids received by the Lessee
promptly upon the Lessee's receipt thereof. No bid may be submitted by the
Lessee or any Person affiliated with the Lessee (or with whom or which there
is any arrangement or understanding as to the subsequent use of the Aircraft
by the Lessee or any of its Affiliates) or any agent or Person acting on
behalf of the Lessee. The Lessee may reject any bid which is less than the
applicable Termination Value, the aggregate amount of any Make-Whole Premium
and all other expenses incurred by the Lessor, the Owner Participant and the
Indenture Trustee in connection with the sale. Subject to the provisions of
Section 10.02 hereof, on the Proposed Termination Date or such earlier date of
sale as shall be consented to in writing by the Lessor, the Lessee shall
deliver the Airframe which shall have the Engines installed on it (provided
that the Airframe may be delivered with installed engines meeting the
requirements set forth herein for Replacement Engines in lieu of the Engines
so long as the aggregate number of Engines and Replacement Engines being
delivered with the Airframe equals three and the Lessee shall comply with the
provisions of Section 11.04 hereof as if an Event of Loss occurred with regard
to the Engines) to the bidder which shall have submitted the highest (evaluated
on an After-Tax Basis, taking into account FSC Benefits (as defined in the Tax
Indemnity Agreement) actually available, if any) cash bid (whether certified
to the Lessor by the Lessee or directly received by the Lessor and certified
to the Lessee) in the same manner and condition as if delivery were made to
the Lessor pursuant to Article 12 hereof at a location specified by such
bidder, and shall duly transfer to the Lessor title to any such engines not
owned by the Lessor, and the Lessor shall, upon payment to the Lessor in full
of the bid price and all amounts due and owing pursuant to Section 10.01(c)
hereof by wire transfer of immediately available funds and upon discharge of
the Lien of the Indenture in accordance with Article 7 thereof, sell the
Airframe and Engines or engines to such bidder without recourse or warranty
(except as to the absence of Lessor's Liens (it being understood that, in
connection with such transfer, the Owner Participant shall be responsible for
removal of Lessor's Liens attributable to it, FSB shall be responsible for
removal of Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner Trustee,
all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the
Participation Agreement)).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date (or any earlier date of sale), the Lessee shall pay to the
Lessor (or the Indenture Trustee as long as the Indenture is in force), by
wire transfer of immediately available funds, the sum of:
(1) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date (whether or not the date of
sale is on or prior to such Termination Date) over the Net Sales Price; plus
(2) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date if payable in arrears but not if payable in
advance (whether or not the date of sale is on or prior to such Proposed
Termination Date); plus
(3) all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium, if the
Proposed Termination Date occurs prior to the applicable Premium Termination
Date) under this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens (it being understood
that, in connection with such transfer, the Owner Participant shall be
responsible for removal of Lessor's Liens attributable to it, FSB shall be
responsible for removal of Lessor's Liens attributable to it and the Owner
Trustee shall be responsible for removal of Lessor's Liens attributable to the
Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case
may be, of the Participation Agreement)), all of the Lessor's right, title and
interest in and to any Engines which were replaced with engines pursuant to
Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid as referred to above
(or to such purchaser and to the Lessee, as the case may be), without recourse
or warranty (except as to the absence of Lessor's Liens (it being understood
that, in connection with such transfer, the Owner Participant shall be
responsible for removal of Lessor's Liens attributable to it, FSB shall be
responsible for removal of Lessor's Liens attributable to it and the Owner
Trustee shall be responsible for removal of Lessor's Liens attributable to the
Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case
may be, of the Participation Agreement)), all of the Lessor's right, title and
interest in and to the Aircraft, against receipt by the Lessor of the payments
provided for.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date or, in the case of a sale
pursuant to Section 7.01(b) hereof, after the date of sale of the Aircraft and
the Term shall end effective as of the Proposed Termination Date or the date
of sale in the case of a sale pursuant to Section 7.01(b) hereof. If no sale
shall have occurred on or before the Proposed Termination Date specified in
the notice delivered by the Lessee pursuant to Section 10.01(a) hereof, this
Lease shall continue in full force and effect and, for purposes of Section
10.01(a) hereof, it shall be deemed that the Lessee has revoked its notice of
termination, and the Lessee shall pay the expenses incurred by the Lessor, the
Indenture Trustee and the Owner Participant in connection with the proposed
sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than thirty (30) days prior to the Proposed Termination
Date. If the Lessor so elects, the Lessee shall pay to the Lessor on the
Proposed Termination Date, by wire transfer of immediately available funds the
sum of:
(1) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date if payable in arrears but not if payable in
advance; plus
(2) all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement including, the aggregate amount of
any Make- Whole Premium (if the Proposed Termination Date occurs prior to
the applicable Premium Termination Date), on or prior to the Proposed
Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals three and
provided that the other requirements of Section 11.04 hereof are met as if an
Event of Loss has occurred with regard to the Engines) to the Lessor in the
same manner as if delivery were made to the Lessor pursuant to Article 12
hereof, and shall duly transfer to the Lessor right, title and interest to any
such engines not owned by the Lessor, all in accordance with Article 12
hereof. Upon such delivery of the Airframe and Engines or engines to the
Lessor and payment by the Lessee of any amounts required to be paid by the
Lessee pursuant to Section 10.02(a) hereof, the Lessor will transfer to the
Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens (it being understood that, in connection with such transfer, the Owner
Participant shall be responsible for removal of Lessor's Liens attributable to
it, FSB shall be responsible for removal of Lessor's Liens attributable to it
and the Owner Trustee shall be responsible for removal of Lessor's Liens
attributable to the Owner Trustee, all in accordance with Section 7.03(b) or
7.04(b) as the case may be, of the Participation Agreement)), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. So long as no
Event of Default shall have occurred and be continuing, the Lessee shall have
the right at its option and at any time, on at least thirty (30) days' prior
written notice to the Lessor, to terminate this Lease with respect to any
Engine not then installed or held for use on the Airframe, provided that prior
to the date of such termination, the Lessee shall comply with the terms of
Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes or 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 Lessor,
the Indenture Trustee and the Owner Participant given within 60 days of the
occurrence of any Event of Loss, the Lessee shall elect the alternative set
forth in Section 11.02 hereof or the alternative set forth in Section 11.03
hereof. The Lessee's failure to make such election within said 60-day period
shall be deemed to be an election of the alternative set forth in Section
11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination
Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs
on a Stipulated Loss Value Determination Date, determined as of such
Stipulated Loss Value Determination Date) together with interest on such
amount at the Debt Rate from such Stipulated Loss Value Determination Date to
the Loss Payment Date, plus (B) any and all Basic Rent due and payable on or
prior to the relevant Stipulated Loss Value Determination Date and unpaid,
plus (C) any and all Supplemental Rent due and payable on or prior to such
Loss Payment Date and all Supplemental Rent accrued through such date, plus
(D) all other amounts owing by the Lessee or the Owner Trustee to the Indenture
Trustee or the Holders under the Indenture and the other Operative Agreements,
plus (E) any reasonable out-of-pocket expenses incurred in connection with
such Event of Loss and the related prepayment of the Certificates by the
Lessor, the Owner Participant and the Indenture Trustee, minus (F) if the
relevant Stipulated Loss Value Determination Date is a Rent Payment Date, the
portion, if any, of the Basic Rent installment due and paid by the Lessee on
such Stipulated Loss Value Determination Date pursuant to Section 3.02 hereof
to the extent such Basic Rent installment (or portion thereof) is designated
on Schedule II hereto as being payable in advance, together with an imputed
interest amount in respect of such advance payment of Basic Rent (or portion
thereof) at the Debt Rate from the date of payment of such Basic Rent
installment (or portion thereof) by the Lessee to the Loss Payment Date;
provided that in no event shall there be subtracted pursuant to clause (F) an
amount such that the Holders shall not be paid in full.
(b) Termination of Lease; Title Transfer. The obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
Loss Payment Date shall, upon payment of the amounts specified in Section
11.02(a) hereof, terminate and the Term shall end on such Loss Payment Date.
Further, upon such payment, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens (it being
understood that, in connection with such transfer, the Owner Participant shall
be responsible for removal of Lessor's Liens attributable to it, FSB shall be
responsible for removal of Lessor's Liens attributable to it and the Owner
Trustee shall be responsible for removal of Lessor's Liens attributable to the
Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case
may be, of the Participation Agreement)), all of the Lessor's right, title and
interest in and to the Airframe and Engines with respect to which such Event
of Loss occurred, as well as all of the Lessor's right, title and interest in
and to any Engines constituting part of the Aircraft but not installed on the
Airframe when such Event of Loss occurred, and will deliver to the Lessee such
instrument as the Lessor shall have received from the Indenture Trustee,
releasing the Aircraft from the Lien of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Default or Event of Default shall have occurred and be
continuing, and subject to Section 11.01 hereof, if the Lessee has elected to
replace the Airframe and Engines suffering an Event of Loss pursuant to this
Section 11.03, the Lessee shall cause to be duly conveyed to the Lessor within
one hundred twenty (120) days after the occurrence of such Event of Loss, as
replacement for the Airframe and Engines with respect to which such Event of
Loss has occurred, good and marketable title to a McDonnell Douglas MD-11F
airframe (the "Replacement Airframe") and good and marketable title to a
number of Replacement Engines equal to the number of Engines with respect to
which an Event of Loss has occurred, provided that following compliance with
all other terms of this Section 11.03 all three Engines shall be of identical
make and model and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Section 6.01 hereof, other than Sections 6.01(b),(d) and (f)
hereof, duly certified as an airworthy aircraft by the Aeronautics Authority,
and having a value, remaining useful life and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii)cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft may
then be registered in accordance with Section 6.03(b) of the Participation
Agreement;
(iii)cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv)furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe and such
Replacement Engine have a value, remaining useful life 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 at least in the
condition and repair required by the terms of this Lease immediately prior
to the occurrence of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi)provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that the Owner
Participant and the Lessor will suffer no adverse tax consequence not
otherwise indemnified for as a result of such substitution or (B) an
indemnity reasonably acceptable to the Owner Participant and the Lessor
against such consequences;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii)cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Utah and the filing of a notice with the Secretary of
State of Tennessee, as the Lessor or the Indenture Trustee may reasonably
request in order that such Replacement Airframe and Replacement Engines
shall be duly and properly titled in the Lessor, leased under this Lease
and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines free and clear of all Liens
(except for Liens permitted under Section 6.01 hereof, other than Sections
6.01(b),(d) and (f) thereof) and (B) such Replacement Airframe and
Replacement Engines have been validly subjected to the Lien of the Indenture
(with the effect and result that the Indenture constitutes a first priority
duly perfected security interest and Lien on such Replacement Airframe and
Replacement Engines); and
(xi)cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens (it being understood that, in
connection with such transfer, the Owner Participant shall be responsible for
removal of Lessor's Liens attributable to it, FSB shall be responsible for
removal of Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner Trustee,
all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the
Participation Agreement)), all of the Lessor's right, title and interest, if
any, in and to the Airframe and Engines with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee will prepare, and
the Lessor will execute or forward to the Indenture Trustee for execution, as
the case may be, a bill of sale evidencing such transfer and will deliver to
the Lessee such instrument as the Lessor shall have received from the
Indenture Trustee releasing the Aircraft from the Lien of the Indenture. Any
Engine constituting part of the Aircraft, but not installed on the Airframe
when such Event of Loss occurred, shall continue to be property of the Lessor
and leased under this Lease as part of the same equipment as the Replacement
Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values but may result in payments pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value otherwise payable in respect
thereof, the Lessee will deposit with the Lessor or the Indenture Trustee, as
the case may be, the amount of any deficiency as security on such 120th day.
If the Lessee has elected to proceed under this Section 11.03 but has not
fully performed its obligations under this Section 11.03 within 180 days of the
occurrence of such Event of Loss, the Lessee shall be deemed to have elected to
proceed under Section 11.02 hereof and shall immediately perform its
obligations thereunder, and the Lessor (or the Indenture Trustee, as the case
may be), shall apply the amounts held by it pursuant to the preceding sentence
as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Section 6.01 hereof, other than Sections 6.01(b),(d) and (f)
hereof, and having a value, remaining useful life 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,
remaining useful life and utility and in the condition and repair required by
the terms of this Lease immediately prior to the occurrence of such Event of
Loss, provided that after any replacement, all three Engines shall be of
identical make and model and any Replacement Engines of a different
manufacturer than the original Engines shall be then commonly in use in the
commercial aviation industry on McDonnell Douglas MD-11 airframes. The
standards set forth in this Section with respect to Replacement Engines shall
apply upon any replacement or substitution of an Engine with a Replacement
Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty bill of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii)cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii)furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv)furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi)cause an Indenture Supplement with respect to such Replacement
Engine to be duly executed by the Lessor and the Indenture Trustee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may be
registered as permitted by Section 6.03(b) of the Participation Agreement
in order that the Indenture shall constitute a first priority duly
perfected Lien and security interest on and in respect of such Replacement
Engine;
(vii)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Utah and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii)furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix)take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens (it being understood that, in
connection with such transfer, the Owner Participant shall be responsible for
removal of Lessor's Liens attributable to it, FSB shall be responsible for
removal of Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner Trustee,
all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the
Participation Agreement)), all of the Lessor's right, title and interest, if
any, in and to the Engine with respect to which such Event of Loss occurred.
In connection with such transfer, the Lessee will prepare, and the Lessor will
execute or forward to the Indenture Trustee for execution, as the case may be,
a bill of sale evidencing such transfer and will deliver to the Lessee such
instrument as the Lessor shall have received from the Indenture Trustee,
releasing the Aircraft from the Lien of the Indenture. Each Replacement
Engine shall, after such conveyance, be deemed part of the property leased
under this Lease. An Event of Loss covered by this Section 11.04 shall not
result in any change in Basic Rent, Stipulated Loss Values or Termination
Values, but may result in payments to be made pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other Person, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as
appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, subject to Section 11.08 hereof, such
payments shall be applied to reimburse the Lessee for its payment of such
Stipulated Loss Value and, if and to the extent specifically included in such
payment, to pay to the Lessee interest on such amount of Stipulated Loss Value
at the rate included in such payment if any. The excess, if any, remaining
after such application shall be divided between the Lessor and the Lessee as
their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee
or any permitted sublessee or transferee from the Requisitioning Government
for such use of the Airframe and Engines or engines during the Term (other
than any such requisition which constitutes an Event of Loss, as to which the
provisions of Section 11.05 hereof shall govern) shall, subject to Section
11.08 hereof, be paid over to, or retained by the Lessee or such permitted
sublessee or transferee. All payments received by the Lessor, the Lessee or
any such permitted sublessee or transferee from the Requisitioning Government
for the use of the Airframe and Engines or engines after the Term shall be
paid over to, or retained by, the Lessor (or the Lessee if it shall have
purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to or retainable by the Lessee shall not be paid to the
Lessee, or, if it has been previously paid directly to the Lessee, shall not
be retained by the Lessee, if at the time of such payment a Payment Default, a
Bankruptcy Default or an Event of Default shall have occurred and be
continuing, but shall be paid to and held by the Lessor (or the Indenture
Trustee so long as the Lien of the Indenture is in effect) as provided in
Article 23 hereof as security for the obligations of the Lessee under this
Agreement, and at such time as there shall not be continuing any such Payment
Default, Bankruptcy Default or Event of Default, such amount to the extent not
theretofore applied as provided herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise (including termination as a result of a rejection hereof pursuant
to any provision of the Bankruptcy Code applicable to the Lessee), the Lessee,
at its own cost and expense, will return the Aircraft by delivering it to the
Lessor on the last day of the Term or upon such earlier termination of the
Term, as the case may be, at a location on the Lessee's route system, as in
effect on the date of return, in the forty-eight (48) contiguous states of the
United States, as designated by the Lessor and reasonably acceptable to the
Lessee or, if such location designated by the Lessor is not reasonably
acceptable to the Lessee, at Memphis, Tennessee, and the Airframe shall be
fully equipped with three Engines of the same or an improved make and model as
were delivered on the Delivery Date (or Replacement Engines), free and clear
of all Liens (other than Lessor's Liens (it being understood that, in
connection with such transfer, the Owner Participant shall be responsible for
removal of Lessor's Liens attributable to it, FSB shall be responsible for
removal of Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner Trustee,
all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the
Participation Agreement)), including any rights of third parties under
pooling, interchange, overhaul, repair or similar agreements or arrangements,
it being understood that all such Engines and Replacement Engines so returned
shall be of identical make and model and that any Replacement Engine shall be
in at least as good operating condition and have at least the same value,
remaining useful life and utility as the Engines being replaced, assuming such
Engines were in the condition required hereunder. The Lessor will give the
Lessee at least thirty (30) days' (or five (5) Business Days' in the case of a
return pursuant to Article 17 hereof) prior written notice of the place of
such return; provided, however, that if the Lessor shall have made the request
for storage pursuant to Section 12.06 hereof, the Lessee shall return the
Aircraft to the Lessor at the site of the storage. If the Lessor furnishes to
the Lessee a written request regarding the return of the Aircraft so as to
enable the Lessor or the Owner Participant to realize "foreign trade income"
as defined in Section 923(b) of the Code or other favorable tax treatment for
Illinois state income tax purposes from the sale or release of the Aircraft,
the Lessee will comply with such proposal to the extent the Lessee can do so
without incurring any cost or expense not indemnified against by the Lessor in
a manner reasonably acceptable to the Lessee and to the extent such compliance
would not otherwise interfere with the Lessee's conduct of its business.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens (it being understood that, in
connection with such transfer, the Owner Participant shall be responsible for
removal of Lessor's Liens attributable to it, FSB shall be responsible for
removal of Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner Trustee,
all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the
Participation Agreement)) and (iii) a certificate as described in Section
11.04(b)(iii) hereof. The Lessee shall take such other action as the Lessor
may reasonably request in order that such Replacement Engine shall be duly and
properly titled in the Lessor free and clear of all Liens (other than Lessor's
Liens (it being understood that, in connection with such transfer, the Owner
Participant shall be responsible for removal of Lessor's Liens attributable to
it, FSB shall be responsible for removal of Lessor's Liens attributable to it
and the Owner Trustee shall be responsible for removal of Lessor's Liens
attributable to the Owner Trustee, all in accordance with Section 7.03(b) or
7.04(b) as the case may be, of the Participation Agreement)), and the Lessor
will then (i) transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens (other than Lessor's Liens (it being
understood that, in connection with such transfer, the Owner Participant shall
be responsible for removal of Lessor's Liens attributable to it and FSB shall
be responsible for removal of Lessor's Liens attributable to it and the Owner
Trustee shall be responsible for removal of Lessor's Liens attributable to the
Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case
may be, of the Participation Agreement)), all the Lessor's right, title and
interest in and to any Engine in lieu of which a Replacement Engine has been
delivered pursuant to Section 12.01 hereof, "as is, where is" and (ii) deliver
to the Lessee such instrument as the Lessor shall have received from the
Indenture Trustee, releasing such Engine from the Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof) logs, manuals, certificates and technical data,
and inspection, modification, maintenance and overhaul records pertaining to
the Airframe, Engines or engines, which are required to be maintained or are
actually maintained with respect thereto under applicable rules and
regulations of the Aeronautics Authority or pursuant to the Lessee's or any
permitted sublessee's Aeronautics Authority-approved maintenance program and
all original (or photocopied or microfilmed copies thereof) records maintained
with respect to the Aircraft under the maintenance program approved by the
aeronautical authority of any other country of registry of the Aircraft. All
records shall be returned in the format necessary to allow the Lessee or any
sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall be duly registered in the name of the Lessor or its
designee pursuant to the Transportation Code, unless the Lessor shall have
given the Lessee at least 60 days' prior written notice that the
then-existing registration shall be retained;
(ii)it shall be clean by airline and cargo handling operating
standards;
(iii)the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of three Engines or engines (as authorized under Section
12.02 hereof), all of the same make and model, installed thereon, together
with the equipment, accessories or parts installed thereon on the Delivery
Date or replacements therefor (as herein authorized) and alterations,
modifications and additions thereto made in accordance with the provisions
of this Lease;
(iv)it shall be in the condition required by Section 7.01(b) hereof,
and otherwise be in as good operating condition and in as good physical
condition as when delivered, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi)it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of the Aeronautics
Authority applicable to the Aircraft and required to be terminated within 6
months after the end of the Term of the Lease and each Engine (including
any Replacement Engine) shall be serviceable in accordance with the
Lessee's FAA-approved maintenance program;
(vii)it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens (it being understood that, in connection with
such transfer, the Owner Participant shall be responsible for removal of
Lessor's Liens attributable to it, FSB shall be responsible for removal of
Lessor's Liens attributable to it and the Owner Trustee shall be
responsible for removal of Lessor's Liens attributable to the Owner
Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may
be, of the Participation Agreement)) including, without limitation, rights
of third parties under pooling, interchange, overhaul, repair and other
similar agreements or arrangements referred to in Section 7.02(a) hereof;
(viii)it shall be in a standard cargo configuration; and
(ix)it shall not be subject to a use prohibition of the character
described in clause (iv) of the definition of "Event of Loss".
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program. If, at the time of return of the Aircraft,
the Airframe is subject to a continuous maintenance program, there will be no
time-before-overhaul requirement. If, at the time of return of the Aircraft,
the Engines are not being maintained under an on-condition maintenance
program, then the average number of hours on such Engines remaining until the
next scheduled engine heavy maintenance visit shall be at least 25% of the
allowable hours between engine heavy maintenance visits permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. The Lessee shall have
maintained the Aircraft in a non-discriminatory manner with other McDonnell
Douglas MD-11F series aircraft in the Lessee's fleet (whether owned, operated
or leased), and the Aircraft shall be in compliance in every material respect
with the Lessee's maintenance program as if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a) If the return of the
Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(C) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until
the earlier to occur of the return of the Aircraft hereunder or the expiration
of the six-month period (or such shorter period referred to in said clause
(iii)(2)(C)) after the scheduled end of the Term, provided that (i) Stipulated
Loss Value and Termination Value during such extension shall be an amount
determined in accordance with Section 4.01(b) hereof, (ii) the Lessee shall
pay on demand, as Basic Rent for each day of such delay and for each day this
Lease shall continue, an amount equal to the daily equivalent of the average
Basic Rent paid during the Basic Term and any Renewal Term, in each case with
such Basic Rent to include for this purpose such higher compensation being
paid by the Government pursuant to the CRAF Program and (iii) neither the
Lessee nor any other Person shall use or operate the Aircraft in any manner,
except pursuant to the activation of such CRAF Program.
(b) If, in the case of a delay in return pursuant to paragraph (a)
above, at the expiration of the six-month period following the scheduled end
of the Term the Aircraft has not been returned to the Lessor, an Event of Loss
shall be deemed to have occurred on the date of expiration of such six-month
period (or such shorter period referred to in paragraph (a) above) and on such
date (or at such earlier date as an Event of Loss pursuant to clause (iv) of
the definition of Event of Loss shall have occurred) the Lessee shall pay to
the Lessor all amounts then due hereunder together with the Stipulated Loss
Value for the Aircraft determined as of such date; provided, however, that the
Lessor shall have the right to waive payment of such Stipulated Loss Value and
accept the Aircraft on such date, "as is, where is" (including the Aircraft's
being subject to any use prohibition of the character described in clause (iv)
of the definition of Event of Loss).
(c) In any other situation in which the Aircraft is not returned to
the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay and this Lease shall continue, an amount equal to the Rent per
diem at a rate equal to the greater of average Basic Rent or the Fair Market
Rental; provided, however, that nothing in this paragraph shall be deemed (i)
to relieve the Lessee in any respect from any Default or Event of Default
arising from the failure to return the Aircraft at the time or in the
condition required by the Operative Agreements or (ii) to permit the Lessee or
any sublessee to operate or use the Aircraft otherwise than in connection with
effecting such return.
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least fifteen (15) days
prior to such expiration or termination, the Lessee will arrange, or will
cause to be arranged, at no charge to the Lessor, storage at a ramp storage
facility for the Aircraft located in the forty-eight (48) contiguous states of
the United States and selected by the Lessee and reasonably acceptable to the
Lessor if not at one of the Lessee's principal maintenance bases for a period
of up to thirty (30) days commencing on the date the Aircraft is returned
substantially in the condition required under this Section 12 and if the Lessor
so requests the Lessee in writing ten (10) days before expiration of such
thirty (30) day period, the Lessee shall continue to provide or cause to be
provided storage at the Lessor's cost for a further period of sixty (60) days.
The maintenance and risk of loss of, and responsibility for obtaining
insurance on, the Aircraft shall be the responsibility of the Lessor during
any period of storage; provided, however, the Lessee will, upon written
request of the Lessor and at the Lessor's expense, not to exceed the Lessee's
incremental cost of such service, obtain insurance for such property
(including, if possible, coverage through its fleet policy).
Section 12.07. Special Markings. Upon any expiration or termination
of the Term, the Lessee shall, at the Lessee's cost, completely strip from the
interior and the exterior of the Aircraft all insignias and other distinctive
markings of the Lessee or any sublessee and repaint the stripped down areas in
matching exterior colors in accordance with industry standards.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value determined in accordance with the provisions of
Section 4.03 hereof. Upon any return of the Aircraft pursuant to this Article
12, if the Lessor does not elect to exercise its option under this Section
12.08, the Lessee will, at its own cost and expense, remove such Parts
described in subparagraph (i), (ii) or (iii) of Section 9.02(b) hereof as the
Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal
liability and property damage liability insurance and cargo legal liability in
such amounts, against such risks (including, without limitation, contractual
liability and allied perils liability but excluding war risk insurance (except
as required under the second sentence of this Section 13.01(a)), with such
retentions (subject to the limitations set forth in Section 13.06 hereof) and
on such terms and conditions (including coverage for cost of claims) as the
Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee, and (ii) such insurance against such
other risks as is usually carried by similar corporations engaged in the same
or similar business and similarly situated as the Lessee and owning or
operating aircraft and engines similar to the Aircraft and Engines; provided
that in no event shall the limits of liability for all such insurance be less
than the amount, per occurrence, as set forth on the insurance certificate
delivered on the Delivery Date unless and only so long as the Aircraft is not
operated and all risk-ground insurance for the Aircraft on the ground is
maintained in the same manner and covering the same risks as is from time to
time applicable to other aircraft owned or operated by the Lessee on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance if the Aircraft is operated in a war zone and if it is the custom
for major international Air Carriers flying comparable routes to carry such
insurance, but only to the extent that such insurance is available on
commercially reasonable terms. All insurance required by this Section
13.01(a) shall be maintained with insurers of recognized responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner Participant
and each of their respective officers and directors in their respective
capacities as such as additional insureds (hereinafter in this paragraph
(c) sometimes referred to as "Additional Insured");
(ii)provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii)provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv)provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi)be primary, without right of contribution from any other insurance
which is carried by any Additional Insured with respect to its interest in
the Aircraft;
(vii)provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
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 with respect to
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, and upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to 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 and (ii) war risk insurance
only if the Aircraft is operated in a war zone or if it is the custom for
major international Air Carriers flying comparable routes to carry such
insurance), provided that such insurance shall at all times while the Aircraft
is subject to this Lease and the Lien of the Indenture be on an agreed-value
basis for an amount not less than an amount equal to the Stipulated Loss Value
for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as sole loss payee (hereinafter in
this paragraph (b) sometimes referred to as "Loss Payee");
(ii)provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall in
the aggregate upon receipt of evidence satisfactory to it that the damage
giving rise to such payment shall have been repaired or that such payment
shall then be required to pay for repairs then being made, pay the amount
of such payment to the Lessee or its order, and (ii) the entire amount of
any loss involving proceeds in the aggregate of $6,000,000 or less or the
amount of any proceeds of any loss in excess of the Stipulated Loss Value
for the Aircraft shall be paid to the Lessee or its order;
(iii)provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affects the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv)provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi)be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii)provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix)in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts; or
(ii)if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Section
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of an Event of Default.
Any amount referred to in this Article 13 which is payable to or retainable by
the Lessee shall not be paid to or retained by the Lessee if at the time of
such payment or retention a Payment Default or Bankruptcy Default or an Event
of Default shall have occurred and be continuing, but shall be held by or paid
over to the Indenture Trustee (unless the Indenture has been discharged in
which case such amount shall be paid to the Lessor) to be held in accordance
with Article 23 hereof, as security for the obligations of the Lessee under
this Lease and, if an Event of Default shall have occurred and be continuing,
applied against the Lessee's obligations hereunder as and when due. At such
time as there shall not be continuing any such Payment Default or Bankruptcy
Default or Event of Default, such amount shall be paid to the Lessee to the
extent not previously applied in accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, 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
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then applicable to other aircraft
or engines of the Lessee of value comparable to the Aircraft, but in no case
shall such self-insurance with respect to all aircraft in the Lessee's fleet
in aggregate exceed for any 12-month policy year an amount equal to the lesser
of (i) 50% of the highest insured value of any single aircraft in the Lessee's
fleet and (ii) 1.5% of the average aggregate insured value from time to time
of the Lessee's entire aircraft fleet provided that a standard deductible per
occurrence per aircraft (and/or retentions) not in excess of the amount
customarily allowed as a deductible in the industry shall be permitted in
addition to the above-mentioned self-insurance. The foregoing shall not
permit the Lessee to discriminate as between insurance coverage on the
Aircraft and insurance which the Lessee maintains with respect to similar
aircraft owned or operated by the Lessee operating on similar routes in
similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least ten (10) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice all Aeronautics Authority required
books and records of the Lessee and any sublessee relating to the maintenance
of the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft may be undertaken during any letter check or heavy
maintenance visit with respect to the Aircraft and shall be a visual,
walk-around inspection of the interior and exterior of the Aircraft and shall
not include opening any panel, bays or the like without the express consent of
the Lessee (except to the extent any such inspection takes place when any such
panel, bays or the like are open). Notwithstanding the previous sentence, the
Lessor, the Indenture Trustee, the Owner Participant or their respective
authorized representatives shall, so long as no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, each be
entitled to inspect the Aircraft only one time during any consecutive twelve
month period (except in the last year of the Term when such inspection may be
made twice by such Person). The Lessee shall make any permitted sublease or
transfer permitted under Section 7.02 hereof expressly subject to inspection
rights consistent with this Article 14. The Lessee agrees to respond in a
timely fashion to any of the Owner Trustee's, the Indenture Trustee's or the
Owner Participant's inquiries regarding (x) the location of the Aircraft or
any Engine or (y) the scheduling of any letter check or heavy maintenance
visit with respect to the Aircraft.
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
subsidiary of the Lessee which shall be a certificated U.S. Air Carrier. Any
such assignment, conveyance or sublease shall in no way relieve the Lessee
from any obligation under any Operative Agreement, which shall be and remain
primary obligations of the Lessee. The Lessor agrees that it will not assign
or convey its right, title and interest in and to this Lease or the Aircraft
except as contemplated by or provided in this Lease, the Trust Agreement, the
Indenture or the Participation Agreement. The terms and provisions of this
Lease shall be binding upon and inure to the benefit of the Lessor and the
Lessee and their respective successors and permitted assigns, and shall inure,
to the extent expressly provided herein and therein, to the direct benefit of,
and in accordance with the provisions of the Indenture and the Participation
Agreement shall be enforceable by, the Indenture Trustee, the Lessor and their
respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be,
within five (5) Business Days after the date when due; or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within thirty (30) days
after the Lessee has received written notice from the Person entitled to
receive such payment stating that such payment is due; or
(c) the Lessee shall fail to procure, carry and maintain insurance on
or in respect of the Aircraft at any time in accordance with the provisions
of Article 13 or such insurance lapses or is cancelled, provided that if
the Aircraft is grounded, as long as the Aircraft is insured as required
while on the ground and not operated, no such lapse or cancellation shall
constitute an Event of Default until the earlier of thirty (30) days (or
seven (7) days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation or the date that such lapse or
cancellation is effective as to any Additional Insured; or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any Operative
Agreement (excluding the Tax Indemnity Agreement) or any other written
agreement of the Lessee entered into in connection with the transactions
contemplated by the Operative Agreements and such failure shall continue
unremedied for a period of thirty (30) days from the date on which the
Lessee shall have actual knowledge thereof (whether by reason of notice
from the Lessor or the Owner Participant of such failure or otherwise),
provided, that in the event such failure is curable and so long as (but for
no longer than 90 days after such 30-day period) the Lessee shall be
diligently attempting to cure such failure, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of sixty (60) days after the
date of its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within sixty (60)
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of the
Lessee or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished or unterminated for
a period of sixty (60) days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and the other
Operative Agreements and shall remain material and unremedied for a period
of thirty (30) days after the Lessee shall have actual knowledge thereof
(whether by reason of receipt of written notice thereof or otherwise).
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Article 12 hereof,
or the Lessor, at its option, may enter upon the premises where such
Airframe or Engines are located or believed to be located and take
immediate possession of and remove such Airframe and Engines (together with
any engine which is not an Engine but is installed on the Airframe, subject
to all of the rights of the owner, lessor, Lien holder or secured party of
such engine) without the necessity for first instituting proceedings, or by
summary proceedings or otherwise, all without liability of the Lessor to
the Lessee for or by reason of such entry or taking of possession, whether
for the restoration of damage to property caused by such action or
otherwise;
(ii)With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii)Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 5 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date, and any other
Supplemental Rent accrued through such date (and, if Basic Rent or Renewal
Rent is payable in arrears, the pro rata portion of the installment of
Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in
respect of the period commencing on the Stipulated Loss Value Determination
Date referred to below and ending on the date of such payment), plus an
amount equal to the excess, if any, of the Stipulated Loss Value for the
Aircraft, computed as of the Stipulated Loss Value Determination Date on or
next preceding the payment date specified in such notice over, at the
Lessor's option, the Fair Market Value or the Fair Market Rental (in each
case, on an "as-is, where-is" basis) of the Aircraft for the remainder of
the Term applicable thereto, after discounting such Fair Market Rental
semi-annually to the present value as of such Rent Payment Date at the Past
Due Rate computed as of the Stipulated Loss Value Determination Date on or
next preceding the payment date specified in such notice, together in each
case, with interest, to the extent permitted by applicable law, at the Past
Due Rate on the amount of such Stipulated Loss Value, from the date as of
which such Stipulated Loss Value is computed to the date of actual payment
of such amount, and after payment in full by the Lessee of the amount
specified above and all other amounts due from the Lessee under this Lease
and the other Operative Agreements, the Lessor shall promptly transfer
(without recourse or warranty other than as to the absence of the Lessor's
Liens (it being understood that, in connection with such transfer, the
Owner Participant shall be responsible for removal of Lessor's Liens
attributable to it, FSB shall be responsible for removal of Lessor's Liens
attributable to it and the Owner Trustee shall be responsible for removal
of Lessor's Liens attributable to the Owner Trustee, all in accordance with
Section 7.03(b) or 7.04(b) as the case may be, of the Participation
Agreement)) all of its right, title and interest in the Aircraft or such
portion, to the Lessee;
(iv)In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent
due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the Stipulated
Loss Value Determination Date referred to below and ending on the date of
such sale), and any Supplemental Rent due on or before the date (and any
other Supplemental Rent accrued through such date) on which such sale
occurs, plus an amount equal to the excess, if any, of (A) the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Determination Date next preceding the sale date, over (B) the net proceeds
of such sale (after deduction of all of the Lessor's costs and expenses of
such sale, including, without limitation, sales or transfer taxes, costs of
storage, overhaul, maintenance, preparation and transportation of the
Aircraft and brokers' and attorneys' fees), together with interest, to the
extent permitted by applicable law, at the Past Due Rate, on the amount of
such excess from the date of such sale to the date of actual payment by the
Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi)Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii)Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Supplemental Rent or fails to perform or
comply with any of its agreements contained in this Lease whether or not such
failure shall constitute an Event of Default hereunder, the Lessor may (but
shall not be obligated to) make such payments or perform or comply with such
agreement, and the amount of such payment and the amount of the reasonable
costs and expenses of the Lessor incurred in connection with such payment or
the performance of or compliance with such agreement, together with interest
(to the extent permitted by applicable law) at the Past Due Rate from the date
of the making of such payment or the incurring of such costs and expenses by
the Lessor to the date of payment of such Supplemental Rent or other amount by
the Lessee, shall be deemed Supplemental Rent payable by the Lessee upon
demand. No such payment or performance by the Lessor shall be deemed to waive
any Default or Event of Default or relieve the Lessee of its obligations
hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of a
Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof)
shall interfere with the Lessee's right to quietly enjoy the Aircraft without
hindrance or disturbance by it or any such other Person; provided, however,
the Lessor shall not be liable for any act or omission of the Indenture
Trustee or any other Person claiming through the Indenture Trustee.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the
Transportation Code and will maintain the recordation of the Indenture until
the Lien of the Indenture shall have been discharged pursuant to the terms of
the Indenture. In addition, the Lessee will, at the Lessee's own cost and
expense, at the request of the Lessor, the Owner Participant or the Indenture
Trustee, as the case may be, promptly and duly execute and deliver to the
Lessor, the Owner Participant and the Indenture Trustee such further documents
and assurances to carry out the intent and purpose of this Lease and the
Indenture and to establish and protect the rights and remedies created or
intended to be created in favor of the Lessor under this Lease, and of the
Owner Participant under the Trust Agreement, and of the Indenture Trustee
under the Indenture, including, without limitation, the execution and filing
of Uniform Commercial Code financing and continuation statements, the
execution and delivery of supplements and amendments to this Lease and the
Indenture, in recordable form, subjecting to this Lease and the Indenture any
Replacement Airframe and/or Replacement Engines delivered by the Lessee
pursuant to Section 11.03 hereof and any Replacement Engine delivered by the
Lessee pursuant to Section 11.04 hereof and the recording and filing of
counterparts of this Lease and the Indenture in accordance with the laws of
such jurisdictions as the Lessor or the Indenture Trustee may from time to
time deem advisable. The foregoing does not, except as expressly provided
therein, impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character in connection with the use,
operation, maintenance and repair of the Airframe and each Engine by the
Lessee, including, without limitation, the costs and expenses particularly set
forth in this Lease, shall be absolute and unconditional, shall be separate
and independent covenants and agreements, and shall continue unaffected unless
and until the covenants have been terminated pursuant to an express provision
of this Lease. The Lessee's obligation to pay Rent and all amounts payable by
the Lessee under this Lease or the Participation Agreement shall be absolute
and unconditional and (except as otherwise expressly provided with respect to
notice of Supplemental Rent) shall be paid without notice or demand, and such
obligation shall not be affected by any circumstance whatsoever, including,
without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii)any defect in the title, airworthiness, registration, eligibility
for registration under the Transportation Code (and the regulations
thereunder) or under any of the laws or regulations of any other country of
registry of the Aircraft, condition, design, operation, merchantability or
fitness for use of, suitability for a particular purpose of, or any damage
to or loss or destruction of, the Aircraft or any portion thereof, or any
interruption or cessation in the use or possession of the Aircraft by the
Lessee or any sublessee for any reason including, without limitation, by
reason of governmental action or any doctrine of force majeure or
impossibility of performance;
(iii)any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv)any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to terminate, cancel, quit,
rescind or surrender this Lease, the Airframe, or any Engine or part thereof,
other than in accordance with the terms hereof.
(c) Except as expressly provided herein, each payment of Rent made
by the Lessee shall be final as to the Lessee, and the Lessee will not seek to
return nor to recover, abate, suspend, defer or reduce all or any part of any
such payment of Rent for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. Intentionally Left Blank.
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby accepts and consents to pursuant to the terms of the
Indenture, the Indenture Trustee's rights to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, the right
to transfer or assign title to the Aircraft subject to this Lease, to make all
waivers and agreements except as otherwise provided in the Indenture, to give
all notices, consents and releases and to take all action upon the happening
of a Default or Event of Default under this Lease (except as otherwise
specifically provided in the Indenture), or to do any and all other things
whatsoever which the Lessor is or may become entitled to do under this Lease
(except as otherwise provided in the Indenture); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee shall, to the extent so required under the
terms of this Lease or any other Operative Agreement, be held by the Lessor as
security for, and may be applied by the Lessor against, the obligations of the
Lessee under this Lease and the Participation Agreement during such time as
there shall have occurred and be continuing a Payment Default, Bankruptcy
Default or Event of Default, and, at such times as there shall not be
continuing a Payment Default, Bankruptcy Default or Event of Default, such
amounts, net of any amounts which have been applied by the Lessor against the
Lessee's obligations hereunder and thereunder, shall be paid to the Lessee.
Any amounts which are held by the Lessor pending payment to the Lessee shall,
until paid to the Lessee or applied against the Lessee's obligations hereunder
and thereunder, be invested by the Lessor, as directed from time to time, in
writing (and in the absence of a written direction by the Lessee, the Lessor
shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of America;
or
(iii) certificates of deposit issued by, or bankers' acceptances
of, or time deposits or a deposit account with, any bank,
trust company or national banking association incorporated
or doing business under the laws of the United States of
America or one of its States, having a combined capital and
surplus of at least $500,000,000 and having a rating of "A"
or better from Moody's or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P or Moody's,
respectively (or if neither such organization shall rate
such commercial paper at any time, a rating by any
nationally recognized statistical rating organization in
the United States of America equal to the highest rating
assigned by such rating organization).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any expenses, fees or commissions incurred by the
Lessor in connection with such investment), unless a Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing
in which case such funds shall be applied in the same manner as the principal
so invested. The Lessee shall be responsible for and will promptly pay to the
Indenture Trustee or the Lessor, as the case may be, on demand, the amount of
any loss realized as the result of any such investment (together with any
expenses, fees or commissions incurred by the Indenture Trustee or the Lessor
in connection with such investment), such amount to be disposed of in
accordance with the terms of the Indenture or the Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed
by FSB not individually but solely as Owner Trustee under the Trust Agreement
in the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall FSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant, that nothing herein
contained shall be construed as creating any liability on FSB, individually or
personally, to perform any covenant, either express or implied, herein, all
such liability, if any, being expressly waived by the Lessee and by each and
every Person now or hereafter claiming by, through or under the Lessee except
with respect to the gross negligence or willful misconduct of FSB, and that so
far as FSB, individually or personally is concerned, the Lessee and any Person
claiming by, through or under the Lessee shall look solely to the Lessor's
Estate for the performance by the Lessor of any of its obligations under this
Lease; provided, that nothing in this Section 24.01 shall be construed to
limit in scope or substance those representations and warranties of FSB in its
individual capacity set forth in the Participation Agreement and the Trust
Agreement. The term "Lessor" as used in this Lease shall include any trustee
succeeding FSB as Owner Trustee under the Trust Agreement. Any obligation of
the Lessor hereunder may be performed by the Owner Participant, and any such
performance shall not be construed as revocation of the trust created by the
Trust Agreement. Nothing contained in this Lease shall restrict the operation
of the provisions of the Trust Agreement with respect to its revocation of the
resignation or removal of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail, and (c) if given by FedEx service or other delivery
service of established reputation or other means, when received or personally
delivered, addressed in accordance with the terms of Article 14 of the
Participation Agreement.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including without limitation U.S.
federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall
be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code from time to time with respect to the
right to repossess the Airframe, the Engines and any Parts as provided herein,
and in any circumstances where more than one construction of the terms and
conditions of the Lease is possible, a construction which would preserve such
benefits shall control over any construction which would not preserve such
benefits or would render them doubtful.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A-103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: _______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Additional Leverage Amount. An amount equal to 5.506252521% of the
outstanding principal amount of the Original Loan Certificates to be
refinanced on the Refunding Date.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person 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. In the case of amounts
payable to the Lessor, the Owner Participant, or any corporate Affiliate of
the Owner Participant, it shall be presumed that such Person is at all times
subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe)
together with three Engines (whether any of which is an initial Engine or a
Replacement Engine) whether or not any of such initial or Replacement Engines
may from time to time be installed on such Airframe or may be installed on any
other airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any replacement airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N586FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N586FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N586FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant on the Delivery Date pursuant to Section 4.01(n) of
the Original Participation Agreement.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent for the Interim Term and the
Basic Term payable for the Aircraft throughout the Basic Term pursuant to
Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on March 22, 2017, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty
Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N586FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
EBO Date. As defined in Section 4.02(a)(F) of the Lease.
EBO Price. Has the meaning specified in Section 4.02(a)(F) of the
Lease.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
due to theft or disappearance for a period in excess of 30 days (or such
longer period not to exceed 60 days from the end of such 30 day period if and
so long as the location of such property is known and the Lessee is pursuing
the recovery thereof) or to the end of the Term, if less, unless such event
constitutes an Event of Loss under clause (i)(B) or clause (ii) below, or (B)
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by the government of Canada, France, Germany, Japan,
the Netherlands, Sweden, Switzerland or the United Kingdom, or instrumentality
or agency of any such foreign government, for a period in excess of 180 days,
(B) by a foreign government (other than any such government referred to in the
immediately preceding clause (A)), or instrumentality or agency of any such
foreign government, or any purported government or instrumentality or agency
thereof, or (C) by the Government for a period extending beyond the Term
provided that no Event of Loss shall be deemed to have occurred, and the Term
shall be extended automatically for a period of up to six months beyond the
end of the Term in the event that the Aircraft or the Airframe or any Engine
is requisitioned by the Government pursuant to an activation as part of the
CRAF Program described in Section 7.02(a)(iv) of the Lease; or (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited for a period of six (6) consecutive months, unless the
Lessee, prior to the expiration of such six (6) month period, shall be
diligently carrying forward all steps which are necessary and desirable to
permit the normal use of the Aircraft or Airframe provided, however, that an
Event of Loss shall be deemed to have occurred if (x) the Lessee fails to
continue diligently carrying forward all such steps or (y) the use of the
Aircraft or the Airframe in the normal course of air transportation of cargo
shall have been prohibited for a period of an additional 12 months following
such 6 month period or (z) unless waived by the Lessor, the Term shall have
expired. The date of such Event of Loss shall be (t) the 30th day or the 90th
day, as the case may be, following loss of such property or its use due to
theft or disappearance; (u) the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal
use; (v) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (w) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (x) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
and the date of such condemnation, confiscation, seizure or requisition in the
case of any other foreign government or instrumentality or agency thereof; (y)
the last day of the Term in the case of requisition for use of such property
by the Government or (z) the last day of the 6 month or additional 12 month
period, referred to in clause (iv) above. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments of
expenses paid or payable by the Lessee in respect of the Owner Participant,
the Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to Article 8, 9, or 10 and Section 15.01 of the
Participation Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to
Section 7.01(e), Article 9 or Section 11.03(a) of the Lease or Section 15.01
of the Participation Agreement, (ii) proceeds of public liability insurance
(or government indemnities in lieu thereof) in respect of the Aircraft payable
as a result of insurance claims paid for the benefit of, or losses suffered
by, the Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained with
respect to the Aircraft by the Owner Participant (whether directly or through
the Owner Trustee) maintained in accordance with the provisions of but not
required under Article 13 of the Lease, (iv) all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to
the Owner Participant or the Owner Trustee in its individual capacity, after
the release thereof from the Lien of the Indenture, (vi) subject to Section
3.05 of the Lease, payments constituting increases in Basic Rent attributable
to payments arising pursuant to Section 5 of the Tax Indemnity Agreement,
(vii) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (vi) above and (viii)
any payments in respect of interest to the extent attributable to the payments
referred to in clauses (i) through (vi) above.
Exempt Recipient. A person described in Section 6049(b)(4) of the
Code.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
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 the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Joseph International Sales Corporation, a United States Virgin
Islands corporation.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, except for purposes of Section 17.01 of the
Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft pursuant to such
Section 17.01, in which case an appraiser shall not be appointed and such Fair
Market Rental shall be deemed to be zero.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Value shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft free and clear
of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in
which case an appraiser shall not be appointed and such Fair Market Value
shall be deemed to be zero.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, and any successor (including any trustee which may succeed to
the Lessor's interest under the Lease), Affiliate, assign, officer, director,
employee, agent and servant of any of the foregoing, the Lessor's Estate and
the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N586FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N586FE), dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N586FE), dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N586FE), dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, the
GTA, the Engine Warranty Assignment, the Engine Consent, any Ancillary
Agreement, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of either the Owner Trustee in its individual capacity or the
Owner Participant) and requisition, indemnity or other payments of any kind
for or with respect to the Aircraft (except amounts owing to the Owner
Participant or to the Owner Trustee in its individual capacity, or to any of
their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) "Lessor's Estate" shall include all property intended to be subjected to
the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, the Owner Participant or any Affiliate of the
Owner Participant, in each case not related to the transactions contemplated
by the Operative Agreements, (ii) acts or omissions of the Lessor in its
individual capacity or as Owner Trustee, and, in the case of the Lessor in its
individual capacity, arising from its gross negligence or willful misconduct
either not related to the transactions contemplated by or expressly prohibited
under the Operative Agreements and any act or omission of the Owner
Participant or any Affiliate of the Owner Participant which is not related to
the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, (iii) Taxes or Expenses
imposed against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant or any Affiliate of the Owner Participant, the Lessor's
Estate or the trust created by the Trust Agreement which are not required to
be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement
or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or
(iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. McDonnell Douglas Corporation, a Maryland corporation,
and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Modification Agreement. The Aircraft Modification Agreement dated as
of December 1, 1995 between the Lessee and the Manufacturer providing for the
refurbishing and reconfiguration of the Aircraft including any warranties
relating thereto, as originally executed or as modified, supplemented, amended
or supplemented in accordance with the terms thereof, but only to the extent
that the foregoing relates to the Aircraft, to the extent assigned to the
Owner Trustee pursuant to the Warranty Bill of Sale.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to be
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, if any, the Owner Trustee Guaranty, if any, any Ancillary Agreement
entered into by or with the written consent of the Indenture Trustee, which by
its terms is an Operative Agreement, the Certificates outstanding at the time
of reference, the Indenture, the Indenture and Security Agreement Supplement,
the Engine Consent and the Tax Indemnity Agreement, each as amended from time
to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N586FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N586FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012951.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N586FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N586FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 24, 1996 and
assigned Conveyance Number HH012952.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N586FE), dated as of April 1, 1996, as
amended and restated as of September 1, 1996, among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N586FE), between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996, between the Owner Participant and the Owner
Trustee as it was originally executed on April 19, 1996 and amended and
restated as of September 1, 1996, and filed with the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Interim Term and
the Basic Term, utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N586FE), dated as of April 1, 1996, as amended and
restated as of September 1, 1996 and as further amended and restated as of
October 15, 1996, among the Lessee, the Original Loan Participants, the Owner
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as owner trustee, the Owner Participant, the Indenture
Trustee not in its individual capacity except as otherwise expressly provided
therein, but solely as indenture trustee and the Pass Through Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as pass through trustee, as amended, modified or supplemented, or the
terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of June 1, 1996 between the Lessee and the Pass Through Trustee, as such
Pass Through Agreement may be modified, supplemented or amended from time
to time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series B1 or 1996 Pass Through Certificates, Series B2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the
Underwriting Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 30 and July 30 commencing on January 30,
1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization,
association, corporation, institution, entity or government (federal,
state, local, foreign or any agency, instrumentality, division or body
thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, October 23, 2006 and with respect to the Certificates having
a Maturity in 2015, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term
with respect to which the Lessee has exercised its option to renew the
Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 30 and July 30 commencing on
January 30, 1997, and continuing thereafter during the Term.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of
Responsible Officer set forth in Section 3.10 of the Trust Agreement is
applicable) or the Indenture Trustee, any officer in its Corporate Trust
Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, and with respect to any other
party, any corporate officer or (except in the case of the Owner
Participant) other employee of a party who, in the normal performance of
his or her operational responsibilities, with respect to the subject matter
of any covenant, agreement or obligation of such party pursuant to any
Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent and, accordingly, no further accrual or credit
shall be required whenever Stipulated Loss Value is to be calculated with
reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Factors."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to FSB, the Lessor, the Owner Participant,
the Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, EBO Price and amounts calculated by reference to
Termination Value, and all amounts required to be paid by Lessee under the
agreements, covenants and indemnities contained in the Lease or in the
Participation Agreement or the Tax Indemnity Agreement or any other Operative
Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term, the Basic Term and any Renewal Term unless
the Lease is terminated earlier pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after the seventh anniversary of the Commencement Date in the case of
Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the
Lease, July 30, 2013, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, July 30, 2011.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor"
opposite such Termination Date (as such Schedule IV may be adjusted from
time to time as provided in Section 3.04 of the Lease). Notwithstanding
any other provisions of the Lease, the Participation Agreement or the
Indenture, each Termination Value shall be, under any circumstances and in
any event, an amount, together with so much of the arrears portion of Basic
Rent due and owing through the date of payment of any amount calculated by
reference to Termination Value as does not constitute an Excepted Payment,
at least sufficient to pay in full as of such date of payment the aggregate
unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on
Schedule IV of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals
and credits of unearned Basic Rent and, accordingly, no further accrual or
credit shall be required whenever Termination Value is to be calculated
with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N586FE), dated as of April 1, 1996, as amended and restated as of
September 1, 1996 and as further amended and restated as of October 15, 1996,
between the Owner Participant and the Owner Trustee in its individual
capacity, as from time to time modified, amended or supplemented pursuant to
its applicable provisions and in accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
Warranty Bill of Sale. The full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the Lessee,
as seller in favor of the Owner Trustee, as buyer, and dated the Delivery Date.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount
that will be at least sufficient to pay in full, as of such
Payment Date, the aggregate unpaid principal amount of due and
unpaid installments on the Certificates outstanding on such
Payment Date, together with the accrued and unpaid interest
thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to
pay in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE V
ADDITIONAL PURCHASE OPTION PROVISIONS
(D) The Purchase Option Referred to in Section 4.02(a)(D) of the
Lease. If any Significant Expenditure (as defined below) with respect to
the Aircraft is in the Lessee's judgment, as certified by the Lessee's
Assistant Treasurer or any more senior financial officer to the Lessor, the
Owner Participant and the Indenture Trustee, necessary, desirable or
required at any time on or after the seventh anniversary of the
Commencement Date, the Lessee may elect to terminate the Lease and purchase
the Aircraft on any Rent Payment Date occurring after such seventh
anniversary for, at the Lessee's option, either (1) the payment to the
Lessor in immediately available funds of an amount equal to the greater of
(x) the Fair Market Value of the Aircraft or (y) 102.5% of the Termination
Value for the Aircraft, determined in each case as of such Rent Payment
Date or (2) the assumption by the Lessee pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture of all of the
obligations of the Lessor under the Indenture and the Certificates and
Section 7.04 of the Participation Agreement and the other Operative
Agreements and the payment to the Lessor in immediately available funds of
an amount equal to the excess of (A) the greater of (I) 102.5% of the
Termination Value for the Aircraft, or (II) the Fair Market Value of the
Aircraft, both computed as of such Rent Payment Date, over (B) the unpaid
principal amount of the Certificates outstanding plus accrued interest as
of such Rent Payment Date; it being understood that the Fair Market Value
for this purpose shall be determined without regard to the improvements
giving rise to such Significant Expenditures, or the value thereof. For
purposes of this paragraph (D) the term "Significant Expenditure" means
expenditures in respect of non-severable improvements which in the Lessee's
reasonable judgment would exceed $8,250,000, which the Owner Participant
will not permit to be financed on similar terms and conditions then
available for similar transactions through the issuance of additional
non-recourse notes of the Lessor or through additional equity investments
of the Owner Participant or both (it being understood that Section
4.02(a)(D) of the Lease shall not impose any obligation on the Owner
Participant to provide or permit such financing); or
(E) The Purchase Option Referred to in Section 4.02(a)(E) of the
Lease. In the event that a Burdensome Indemnity Payment (as defined below)
that is not deliberately caused by the Lessee shall occur at any time on or
after the seventh anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on the first Rent
Payment Date (the "Burdensome Indemnity Payment Date") following the date
that the Owner Participant provides the Lessee with a written notice of
any Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a
Burdensome Indemnity Payment for, at the Lessee's option, either (1) the
payment to the Lessor in immediately available funds of an amount equal to
the greater of (x) the Fair Market Value of the Aircraft, or (y) 102.5% of
the Termination Value for the Aircraft, determined in each case as of such
Burdensome Indemnity Payment Date, or (2) the assumption by the Lessee,
pursuant to Section 7.11 of the Participation Agreement and Section 2.12 of
the Indenture, of all of the obligations of the Lessor under the Indenture
and the Certificates and Section 7.04 of the Participation Agreement and
the other Operative Agreements and the payment to the Lessor in immediately
available funds of an amount equal to the excess of (A) the greater of (I)
102.5% of the Termination Value for the Aircraft, or (II) the Fair Market
Value of the Aircraft, both computed as of the Burdensome Indemnity Payment
Date, over (B) the unpaid principal amount of the Certificates outstanding
plus accrued interest as of such date. For purposes of this paragraph (E),
the term "Burdensome Indemnity Payment" means a Loss as defined in the Tax
Indemnity Agreement, which causes the aggregate net present value as of the
determination date, discounted semi-annually at the Debt Rate, of all such
Losses (but excluding any Losses for which the Owner Participant shall have
waived its right to payment under the Tax Indemnity Agreement) paid or
payable by the Lessee which can be avoided through a purchase by the Lessee
of the Aircraft, to exceed 2.5% of the Purchase Price.
SCHEDULE VI
DESCRIPTION OF ORIGINAL LEASE
Lease Agreement (Federal Express Corporation Trust No. N586FE) dated
as of September 1, 1996 between Federal Express Corporation, as lessee and
First Security Bank, National Association, as owner trustee under Trust
Agreement (Federal Express Corporation Trust No. N586FE) dated as of April 1,
1996, as amended and restated as of September 1, 1996 between Ameritech Credit
Corporation, as owner participant and First Security Bank, National
Association, recorded by the Federal Aviation Administration on September 24,
1996 and assigned Conveyance No. HH012952, as supplemented by the following
described instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Lease Supplement No. 1
(Federal Express Corporation
Trust No. N586FE) 09/23/96 09/24/96 HH012952
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N586FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N586FE), dated _________, ____, between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement (Federal Express
Corporation Trust No. N586FE) dated as of April 1, 1996, as amended and
restated as of September 1, 1996 and as further amended and restated as of
October 15, 1996 (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware
corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N586FE) dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Lease", the defined terms in the Lease being used in this Lease Supplement
with the same meaning as in the Lease), which provides for the execution and
delivery of a Lease Supplement, substantially in the form of this Lease
Supplement No. __, for the purpose of leasing under the Lease the aircraft and
engines described below ("Aircraft") as and when delivered by the Lessor to
the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described McDonnell Douglas
MD-11F Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the
date of this Lease Supplement consists of the following:
(a) McDonnell Douglas MD-11F Airframe; U.S. Registration Number
______; Manufacturer's Serial No. _____; and
(b) Three (3) General Electric CF6-80C2-D1F 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).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Schedule II to the Participation
Agreement.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on __________________, unless
earlier terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against the Manufacturer, the Engine Manufacturer or any vendor of equipment
included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this
Lease Supplement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created through the
transfer or possession of any counterpart other than the original chattel-
paper counterpart, which shall be the counterpart containing the receipt
executed by the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: _______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease Supplement is hereby
acknowledged on this __ day of _________ 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
Dated as of September 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 761, REGISTRATION NO. N662FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, HAS
BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF
STATE STREET BANK AND TRUST COMPANY, AS INDENTURE TRUSTEE UNDER THE TRUST
INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N662FE) DATED AS OF SEPTEMBER 1, 1996, AS AMENDED AND RESTATED AS OF OCTOBER
15, 1996 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN
SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL"
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY STATE STREET BANK AND
TRUST COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank................................. 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery
Date................................................... 3
Section 3.05. Minimum Basic Rent....................................... 5
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 11
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 12
Section 7.02. Possession and Permitted Transfer and Sublease........... 15
Section 7.03. Insignia................................................. 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 19
Section 8.02. Pooling of Parts......................................... 20
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 21
Section 9.02. Other Alterations and Modifications...................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23
Section 10.02. Retention of Aircraft by the Lessor..................... 25
Section 10.03. Voluntary Termination as to Engines..................... 27
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 27
Section 11.02. Payment of Stipulated Loss Value........................ 27
Section 11.03. Replacement of Airframe and Engines..................... 28
Section 11.04. Event of Loss with Respect to an Engine................. 31
Section 11.05. Application of Payments from the Government or Others... 33
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government..................................... 34
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................. 35
Section 11.08. Application of Payments During Existence of Certain
Defaults.............................................. 35
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 35
Section 12.02. Return of Engines....................................... 36
Section 12.03. Return of Manuals....................................... 36
Section 12.04. Condition of Aircraft................................... 37
Section 12.05. Intentionally Left Blank................................ 38
Section 12.06. Storage................................................. 38
Section 12.07. Special Markings........................................ 38
Section 12.08. Lessor's Option to Purchase Parts....................... 39
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................... 39
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 41
Section 13.03. Application of Insurance Proceeds....................... 43
Section 13.04. Reports................................................. 44
Section 13.05. Lessor's Insurance...................................... 45
Section 13.06. Self-Insurance.......................................... 45
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 46
Section 14.02. No Obligation to Inspect................................ 46
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 46
Section 15.02. Citizenship............................................. 47
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 47
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 49
Section 17.02. Cumulative Remedies..................................... 52
Section 17.03. Waiver.................................................. 52
Section 17.04. Lessor's Right to Perform for Lessee.................... 53
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 53
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 53
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 54
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 55
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 56
Section 22.02. Intentionally Left Blank................................ 56
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 56
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 57
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 58
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 59
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 60
Section 26.02. References.............................................. 60
Section 26.03. APPLICABLE LAW.......................................... 60
Section 26.04. Severability............................................ 60
Section 26.05. No Oral Modification.................................... 60
Section 26.06. Agreement as Chattel Paper.............................. 60
Section 26.07. Counterparts............................................ 60
Section 26.08. Public Release of Information........................... 61
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 61
Section 27.02. Section 1110 Compliance................................. 61
Section 27.03. Finance Lease........................................... 61
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Schedule VI Description of Original Lease
Exhibit A Form of Lease Supplement
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N662FE) dated
as of September 1, 1996, as amended and restated as of October 15, 1996 (this
"Lease") between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and
FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Article 1 below;
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of September 1, 1996 as supplemented by the Lease
Supplement;
WHEREAS, the Original Lease was recorded by the FAA and assigned a
Conveyance Number as more particularly described on Schedule VI attached
hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated. This Lease
shall last for the Term, at all times during which full legal title to the
Aircraft shall remain vested in the Lessor to the exclusion of the Lessee,
notwithstanding the possession and use thereof by the Lessee or any other
Person.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank.
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Section 3.04 of this Lease. Each payment of Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, (i) an amount equal to
the aggregate amount of any Make-Whole Premium payable under the Indenture
(other than any Make-Whole Premium payable in connection with an Indenture
Event of Default that is not and does not arise out of a Lease Event of
Default) and (ii) an amount equal to the excess of interest at the Past Due
Rate on the principal of the Certificates in connection with an acceleration
of the Certificates pursuant to Section 7.02 of the Indenture following an
Indenture Event of Default attributable to an Event of Default over interest
payable by the Lessee at the Past Due Rate on Basic Rent. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date. The percentages for Basic Rent
referred to in Schedule II hereto and the percentages for Stipulated Loss
Value and Termination Value referred to in Schedule III and Schedule IV
hereto, respectively, shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01
of the Participation Agreement being greater or less than the Estimated
Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement, (iii) any reoptimization pursuant to Section 15.02(a)
of the Participation Agreement, (iv) payments pursuant to Section 5 of the Tax
Indemnity Agreement by an adjustment of Basic Rent or (v) the Commencement
Date being other than January 30, 1997. Each such adjustment pursuant to
clause (i), (ii), (iv) or (v) of the first sentence of this Section 3.04 shall
maintain the Owner's Economic Return (and, while maintaining such Return,
minimize the aggregate Net Present Value of Rents to the Lessee). In the
event of an adjustment pursuant to clause (iii) of the first sentence of this
Section 3.04, the Owner Participant may recalculate Basic Rent as set forth in
Schedule II hereto in order to maintain to the extent feasible the Owner's
Economic Return and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto in a manner
consistent with such recalculation of Basic Rent; provided that any such
recalculations as a result of an adjustment pursuant to such clause (iii) of
the first sentence of this Section 3.04 may not (A) increase the Net Present
Value of Rents to the Lessee, (B) increase as of any date the sum of (1) the
Net Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value as of such
date, in each case discounted at the Debt Rate, beyond such net present values
prior to such adjustment, or (C) otherwise result in any adverse impact
(including tax consequences) to the Lessee for which the Owner Participant has
not agreed to indemnify the Lessee on terms reasonably acceptable to the
Lessee.
The Owner Participant shall promptly notify the Lessee and the Lessor
and the Lessee shall promptly notify the Owner Participant and the Lessor of
the need for any such adjustment pursuant to this Section 3.04. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request
and, subject to the next succeeding sentence, expense of the Lessee, the
accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Basic Rent, Stipulated Loss
Values and Termination Values shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second,
if such adjustments are still believed to be in error and are not reconciled
with the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee
and reasonably acceptable to the Owner Participant and, in order to enable
them to verify such adjustments, the Owner Participant shall make available to
such accountants (for their own confidential use and not to be disclosed to
the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the name
of the lease analysis program used by the Owner Participant to calculate such
adjustments. The Lessee will pay the reasonable costs and expenses of the
verification process under this Section 3.04 unless as a result of such
verification process by the independent public accountants Basic Rent is
adjusted and such adjustment causes the Net Present Value of Rents, to decline
by 10 or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor and
the Lessee shall execute and deliver an amendment to this Lease to reflect
each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 79
South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Lien of the Indenture shall not have been discharged the Lessor hereby
directs, and the Lessee agrees, that all Rent (other than Excepted Payments,
which shall be paid by the Lessee directly to the Person entitled thereto) (all
without set-off or counterclaim as and to the extent provided in Article 20
hereof) shall be paid directly to the Indenture Trustee at its principal
office at Two International Place, 4th Floor, Boston, Massachusetts,
Attention: Corporate Trust Department, or as the Indenture Trustee may
otherwise direct within the United States by wire transfer of immediately
available funds in U.S. Dollars no later than 10:30 a.m., New York time, on
the due date of such payment. In any case where a scheduled Rent Payment Date
shall not be a Business Day such Rent Payment Date shall be adjourned to the
next succeeding Business Day without interest thereon for the period of such
extension (provided that payment is made on such next succeeding Business Day).
Section 3.07.Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01.Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (the "Preliminary
Notice") not more than 360 days nor less than 180 days prior to the end of the
Basic Term or any Renewal Term, as the case may be, whether it will exercise
its options either to renew this Lease pursuant to this Section 4.01 or to
purchase the Aircraft pursuant to Section 4.02(a)(B), (C) or (F) hereof, as
applicable. Provided that (i) no Event of Default shall have occurred and be
continuing at the time of renewal, (ii) this Lease has not otherwise expired
or terminated, and (iii) the Lessee shall have timely delivered the respective
Preliminary Notice, the Lessee may, by irrevocable written notice delivered
to the Lessor not less than 90 days prior to the end of the Basic Term, extend
the Term for one Fixed Renewal Term of three years commencing on the
expiration of the Basic Term. The Lessee shall pay the Fixed Renewal Rent
during the Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, on no more than
two occasions, by irrevocable written notice delivered to the Lessor not less
than 90 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending two years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than four years
following the Basic Term or the Fixed Renewal Term. The Lessee shall pay the
Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02.Purchase Options. (a) Election to Purchase. Provided
that (i) this Lease has not otherwise expired or terminated, (ii) the Lessee
shall have previously given the Preliminary Notice under Section 4.01(a)
hereof (in the case of paragraph (B) or (F) below or, if a Renewal Term is
available, paragraph (C) below) or the applicable notice for each other
paragraph below, as the case may be, and (iii) no Event of Default shall have
occurred and be continuing on the applicable Termination Date, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to the
applicable Rent Payment Date, elect to terminate the Lease and purchase the
Aircraft on (and only on) January 30, 2017, for, at the Lessee's option,
either (1) an amount in immediately available funds equal to the greater of
the Fair Market Value or the Termination Value on such date or (2)(i) the
assumption by the Lessee, pursuant to Section 7.11 of the Participation
Agreement, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and (ii) the
payment to the Lessor of an amount in immediately available funds equal to
the excess of (A) the greater of the Fair Market Value or the Termination
Value on such date over (B) the unpaid principal of the Certificates plus
accrued interest as of such date. Such notice (which shall be revocable by
the Lessee upon at least 15 days' written notice prior to the applicable
Rent Payment Date) shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of
the Indenture or state that the Lessee shall exercise its option to assume
the Certificates pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount in immediately available funds equal to the Fair Market Value
thereof on such date; provided, however, that the Lessee shall have paid
all Rent due and payable under this Lease on or prior to the last day of
the Basic Term; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to terminate the Lease and purchase the Aircraft on the last
day of such Renewal Term at a price in immediately available funds equal to
the Fair Market Value of the Aircraft on such day; provided, however, that
the Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for the
amount in immediately available funds specified in the Ancillary Agreement
II (the "FPO Price") which is not less than the estimate set forth in the
Appraisal of the Fair Market Value of the Aircraft at the time of exercise
of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of the
Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or
4.02(a)(E) hereof and shall fail to make payment (and, if applicable, assume
the Certificates) on the applicable Termination Date, the Lease shall continue
and the Lessee shall pay to the Owner Trustee any losses, costs and expenses
of the Owner Participant incurred in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a bill of sale evidencing such
transfer and such other documents as the Lessee may reasonably require. In
connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03.Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01.Disclaimer of Representations and Warranties. THE LESSEE
ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE,
DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE,
(ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS SUITABLE FOR
ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND
EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02.No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or the Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and the Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and the Engine Manufacturer
are obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03.Certain Agreements of the Lessee. The Lessee agrees with
the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01.Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01.Registration, Maintenance and Operation. The Lessee, at
its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in
the name of the Lessor as owner, pursuant to the Transportation Code and,
subject to the proviso to Section 6.03(b) of the Participation Agreement,
to remain at all times duly registered pursuant to the Transportation Code
and at all times act in accordance with the rules and regulations of the
Aeronautics Authority or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered in
accordance with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language (which records, logs and other materials
shall, as between the Lessor and the Lessee and all parties claiming
through the Lessee, be the property of the Lessor but shall become the
property of the Lessee upon purchase by the Lessee of the Aircraft pursuant
to the terms of this Lease or upon the occurrence of an Event of Loss and
the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests the Lessee agrees are indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(and naming the Lessor, or so long as this Lease is assigned to the
Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02.Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing at the commencement of such sublease, (ii) the Lien of the
Indenture is not impaired thereby, (iii) all applicable governmental approvals
in connection therewith have been obtained and (iv) the Lessee shall comply
with the provisions of Article 13 hereof, the Lessee may without the prior
written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into and with 30 days' prior written notice to
the Lessor and the Owner Participant, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) after December 31, 2003 sublease the
Aircraft or any Engine to an Air Carrier which is principally based in and
domiciled in one of the countries listed on Schedule III of the
Participation Agreement, or (C) after December 31, 2003 sublease the
Aircraft or any Engine to any other Air Carrier not described in this
Section which shall be reasonably acceptable to the Lessor as evidenced by
its prior written consent; provided, that, with respect to clauses (B) and
(C) above, at the time of any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled and provided further that such
country shall not then be experiencing war. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any Renewal Term
then in effect hereunder. Prior to any sublease to an Air Carrier
permitted under Section 7.02(a)(i)(C) above: (I) the maintenance standards
of the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative Agreements
and the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might reasonably have been imposed on such
owner or Persons under the laws of the United States or any state thereof
(it being understood that, in the event that such latter opinion cannot be
given in a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution of
such a sublease, at the Lessee's cost and expense), (G) that there exist no
possessory rights in favor of such sublessee under the laws of such country
which would, upon bankruptcy or insolvency of the Lessee (and assuming that
at such time such sublessee is not bankrupt or insolvent) or of the
sublessee, prevent the return of the Aircraft in accordance with the terms
of this Lease and (H) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (III) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (IV) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required, or reasonably requested by the Lessor, to
continue the Lessor's right, title and interest to the Aircraft and rights
under the Lease (and sublease) and to perfect and maintain the priority of
the Lien of the Indenture;
(ii) subject the Engines or permit any Engine to be subjected to
normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Lessee in the
ordinary course of its business with a vendor domiciled in the United
States or in a country with which the United States maintains normal
diplomatic relations (and which is not experiencing war) or (x) any U.S.
Air Carrier or (y) any foreign Air Carrier which is (I) organized in a
country listed on Schedule III to the Participation Agreement, (II)
organized in a country with which the United States then maintains normal
diplomatic relations, (III) is a party to the Convention on the
International Recognition of Rights in Aircraft or (IV) otherwise provides
equivalent protection to owners, lessors and mortgagees of aircraft;
provided that no transfer of the registration of or any Engine shall be
effected and that throughout the period that any Engine is subjected to
such interchange or pooling agreement or arrangement the terms of this
Lease shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program administrated pursuant to
Executive Order No. 12056, as amended (the "CRAF Program"), or any similar
or substitute programs of the Government, so long as the Lessee (or any
permitted sublessee or transferee pursuant to this Section) shall promptly
notify the Lessor upon such transfer of possession and provide the Lessor
and the Indenture Trustee with the name and address of the Contracting
Officer or representative of the Military Aircraft Command of the United
States Air Force to whom notices must be given in respect of the Aircraft;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease and the
other Operative Agreements to the same extent as if such sublease or transfer
had not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof), operation,
use and insurance of the Aircraft, the Airframe and each Engine in accordance
with the provisions of this Lease and shall provide assurances reasonably
satisfactory to the Lessor that the sublessee may not further sublease any of
such equipment. The Lessee shall promptly provide the Lessor, the Owner
Participant and the Indenture Trustee a copy of any sublease and, prior to
execution and delivery of any sublease deliver to the Lessor all other
documents (including all insurance certificates evidencing compliance with
this Lease) required hereunder relating to such sublease or transfer of
possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03.Insignia. (a) Nameplate. On or prior to the Delivery
Date or as soon thereafter as possible, the Lessee agrees to affix to and
maintain in the cockpit of the Airframe, in a clearly visible location, and on
each Engine, a clearly visible metal nameplate bearing the inscription "FIRST
SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND LESSOR," and,
so long as such Airframe or Engines shall be subject to the Lien of the
Indenture, the additional inscription "STATE STREET BANK AND TRUST COMPANY, AS
INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary,
from time to time, with a nameplate reflecting the name of any successor
Lessor or successor Indenture Trustee, in each case as permitted by the
Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or on any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01.Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens except for Liens permitted by Section 6.01 hereof
(other than clauses (d) and (f) thereof) and shall thereupon be and become
a Part; and
(iii) such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02.Pooling of Parts. Any Part removed from the Airframe or
any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01.Required Alterations and Modifications. The Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests the Lessee agrees are indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account
authorized postponements resulting from a contest or otherwise and shall be
made at such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02.Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or airworthiness below its
value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed; provided that
in no event shall the aggregate value of all such Obsolete Parts which shall
have been so removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' irrevocable
(except as provided herein) prior written notice (which notice shall state the
Proposed Termination Date) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on one occasion
to revoke its notice of termination no later than the Business Day prior to
the date 15 days prior to the Proposed Termination Date whereupon this Lease
shall continue in full force and effect.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full to
the Lessor of the bid price and all amounts due and owing pursuant to Section
10.01(c) hereof by wire transfer of immediately available funds and upon
discharge of the Lien of the Indenture in accordance with Article 7 thereof,
sell the Airframe and Engines or engines to such bidder without recourse or
warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii)the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(iii)all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium) under
this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02.Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii)all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make- Whole Premium, on or prior to the Proposed Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03.Voluntary Termination as to Engines. The Lessee shall
have the right at its option and at any time, on at least thirty (30) days'
prior written notice to the Lessor, to terminate this Lease with respect to
any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01.Lessee's Election Rights. The Lessee shall notify the
Lessor, the Indenture Trustee and the Owner Participant as soon as practicable
but in no event more than 10 Business Days following the occurrence of an
event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within
60 days of the occurrence of any Event of Loss, the Lessee shall have the
right to elect the alternative set forth in Section 11.02 hereof or the
alternative set forth in Section 11.03 hereof. The Lessee's failure to make
such election within said 60-day period shall be deemed to be an election of
the alternative set forth in Section 11.02 hereof.
Section 11.02.Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination
Date next succeeding the Loss Payment Date (or, if the Loss Payment Date
occurs on a Stipulated Loss Value Determination Date, determined as of such
Stipulated Loss Value Determination Date), plus (B) any and all Basic Rent due
and payable on the relevant Stipulated Loss Value Determination Date to the
extent payable in arrears but not to the extent payable in advance, plus (C)
any and all Supplemental Rent due and payable on or prior to such Loss Payment
Date, plus (D) all other amounts (including Basic Rent due and payable with
respect to Rent Payment Dates occurring prior to such Stipulated Loss Value
Determination Date and unpaid) due and payable by the Lessee hereunder or
owing by the Lessee or the Owner Trustee to the Indenture Trustee or the
Holders under the Indenture and the other Operative Agreements, plus (E) any
reasonable out-of-pocket expenses incurred in connection with such Event of
Loss and the related prepayment of the Certificates by the Lessor, the Owner
Participant and the Indenture Trustee; provided that in no event shall the
Holders not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03.Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof and
provided that the Lessee shall have reimbursed the reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Lessor, the Owner Participant, the Indenture Trustee and
the Holders (to the extent of the reasonable fees and expenses of one legal
counsel in each relevant jurisdiction representing all of the Holders) in
connection with the matters contemplated by this Section 11.03, if the Lessee
has elected to replace the Airframe and Engines suffering
an Event of Loss pursuant to this Section 11.03, the Lessee shall cause to be
duly conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300-600 series airframe manufactured no earlier than
January 1, 1996 (the "Replacement Airframe") and good and marketable title to
a number of Replacement Engines equal to the number of Engines with respect to
which an Event of Loss has occurred, provided that following compliance with
all other terms of this Section 11.03 each Engine shall be of identical make
and model and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an
airworthy aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii)cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft may
then be registered in accordance with Section 6.03(b) of the Participation
Agreement;
(iii)cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv)furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and value, at least equal to, and are in as good operating
condition as, the Airframe and Engines replaced, assuming such Airframe and
Engines were in the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi)provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for to its reasonable
satisfaction as of the Delivery Date as a result of such substitution or
(B) an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Utah and the filing of a notice with the Secretary of
State of Tennessee, as the Lessor or the Indenture Trustee may reasonably
request in order that such Replacement Airframe and Replacement Engines
shall be duly and properly titled in the Lessor, leased under this Lease
and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi)cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a bill of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04.Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Sections 6.01(a), (b) (provided that if there are any Liens of the
type described in Section 6.01(b) hereof, such Liens are subordinate to the
Lien of the Indenture), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss, provided
that after any replacement, each Engine shall be of identical make and model.
The standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty bill of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii)cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii)furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv)furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi)cause an Indenture and Security Agreement Supplement with respect
to such Replacement Engine to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Transportation Code, or the
applicable laws, rules and regulations of any other jurisdiction in which
the Aircraft may be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(vii)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Utah and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix)take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a bill of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05.Application of Payments from the Government or Others.
(a) Generally. Any payments (other than insurance proceeds the application
of which is provided for in Section 13.03 hereof) received at any time by the
Lessor or by the Lessee from any governmental authority or any other party,
foreign or domestic, with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Airframe or any Engine will be applied, as appropriate, in
accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06.Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in repairing or maintaining the Aircraft by the Lessee shall
have been caused by such requisition. All payments received by the Lessor,
the Lessee or any permitted sublessee or transferee from the Requisitioning
Government for such use of the Airframe and Engines or engines during the Term
(other than any such requisition which constitutes an Event of Loss, as to
which the provisions of Section 11.05 hereof shall govern) shall, subject to
Section 11.08 hereof, be paid over to, or retained by the Lessee or such
permitted sublessee or transferee. All payments received by the Lessor, the
Lessee or any such permitted sublessee or transferee from the Requisitioning
Government for the use of the Airframe and Engines or engines after the Term
shall be paid over to, or retained by, the Lessor (or the Lessee if it shall
have purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07.Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08.Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01.Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant), or if such termination
is pursuant to Article 17 hereof, selected by the Lessor in its reasonable
discretion, within or, if the Aircraft is then registered outside the United
States, outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee shall
pay any incremental expenses incurred in connection with a redelivery outside
the United States) and the Airframe shall be fully equipped with two Engines
of the same or an improved make and model as were delivered on the Delivery
Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessee will give the Lessor at least 30 days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage.
Section 12.02.Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03.Return of Manuals. Upon the return of the Aircraft, the
Lessee shall deliver to the Lessor all original (or photocopied or microfilmed
copies thereof, if then permitted to be maintained in such form under
applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04.Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii)it shall be clean by airline and cargo handling operating
standards;
(iii)the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv)it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi)it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and the Airframe
and each Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii)it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program (or other permitted maintenance program).
If, at the time of return of the Aircraft, the Engines or engines are not
being maintained under an on-condition maintenance program, then the average
number of hours of operation on such Engines or engines remaining until the
next scheduled engine heavy maintenance visit under the Lessee's FAA-approved
maintenance program (or other permitted maintenance program) shall be at least
25% of the allowable hours between engine heavy maintenance visits. With
respect to maintenance under the Lessee's FAA-approved maintenance program,
the Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300-600 series aircraft in the Lessee's fleet, and the Aircraft
shall be free and clear of all Liens and rights of others other than Lessor's
Liens and shall be in compliance in every material respect with the Lessee's
FAA-approved maintenance program as if the Term were not ending.
Section 12.05.Intentionally Left Blank.
Section 12.06.Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07.Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08.Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal and
bodily injury liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and allied perils liability but excluding
war risk insurance (except as required under the second sentence of this
Section 13.01(a)), with such retentions (subject to the limitations set forth
in Section 13.06 hereof) and on such terms and conditions (including coverage
for cost of claims) as the Lessee customarily maintains with respect to
aircraft and engines of the same type and model which comprise the fleet of
the Lessee, and (ii) such insurance against such other risks as is usually
carried by similar corporations engaged in the same or similar business and
similarly situated as the Lessee and owning or operating aircraft and engines
similar to the Aircraft and Engines; provided that in no event shall the
limits of liability for all such insurance be less than the amount, per
occurrence, as set forth on the insurance certificate delivered on the
Delivery Date unless and only so long as the Aircraft is not operated and all
risk-ground insurance for the Aircraft on the ground is maintained in the same
manner and covering the same risks as is from time to time applicable to other
aircraft owned or operated by the Lessee of the same type and model on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance only if the Aircraft is operated in a war zone or a recognized area
of armed hostilities. All insurance required by this Section 13.01(a) shall
be maintained with insurers of recognized reputation and responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner Participant
and each of their respective officers and directors in their respective
capacities as such as additional insureds (hereinafter in this paragraph
(c) sometimes referred to as "Additional Insured");
(ii)provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii)provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv)provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi)be primary, without right of contribution from any other
insurance which is carried by the Lessee or any sublessee or any Additional
Insured with respect to its interest in the Aircraft;
(vii)provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
reputation and responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk coverage with respect to any
Engines and Parts while 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
with respect to the country of registry) with such retentions (subject to the
limitations set forth in Section 13.06 hereof) and in such form, and upon such
terms and conditions (including coverage for cost of claims), and in amounts
as the Lessee customarily maintains with respect to the aircraft in the
Lessee's fleet of the same type and model and operated on the same routes as
the Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to 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 and (ii) war risk insurance
only if the Aircraft is operated in a war zone or a recognized area of armed
hostilities), provided that such insurance shall at all times while the
Aircraft is subject to this Lease and the Lien of the Indenture be on an
agreed-value basis for an amount not less than an amount equal to the
Stipulated Loss Value for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as an additional insured and as the
sole loss payee (hereinafter in this paragraph (b) sometimes referred to as
"Loss Payee");
(ii)provide with respect to coverage provided under this Section
13.02, (except as otherwise provided under Section 13.03 hereof when an
Event of Loss or a Payment Default, Bankruptcy Default or Event of Default
has occurred and is continuing), that (i) in the event of a loss involving
proceeds in the aggregate in excess of $6,000,000, the proceeds in respect
of such loss up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to the Lessor (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee), it being understood and
agreed that in the case of any payment to the Lessor (or the Indenture
Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the
Indenture Trustee) shall in the aggregate upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in the
aggregate of $6,000,000 or less or the amount of any proceeds of any loss
in excess of the Stipulated Loss Value for the Aircraft shall be paid to
the Lessee or its order to pay for repairs or replacement property;
(iii)provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affect the scope
of the coverage required herein, or if such insurance is allowed to lapse
for nonpayment of premium, such cancellation, change or lapse shall not be
effective as to the Loss Payee for thirty days (except in the case of
war-risk coverage in which event the applicable period shall be seven (7)
days or such other period as may be customary) after receipt by the Loss
Payee of written notice from such insurer of such cancellation, change or
lapse;
(iv)provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi)be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii)provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix)in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts; or
(ii)if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Section
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of Certain Defaults. Any
amount referred to in this Article 13 which is payable to or retainable by the
Lessee shall not be paid to or retained by the Lessee if at the time of such
payment or retention a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing, but shall be held by or paid over to
the Indenture Trustee (unless the Indenture has been discharged in which case
such amount shall be paid to the Lessor) to be held in accordance with Article
23 hereof, as security for the obligations of the Lessee under this Lease and,
if an Event of Default shall have occurred and be continuing, applied against
the Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount shall be paid to the Lessee to the extent not
previously applied in accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, 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
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then generally applicable to
other aircraft or engines of the Lessee of the same type and model as the
Aircraft, but in no case shall such self-insurance with respect to all
aircraft (whether owned or leased) in the Lessee's fleet in aggregate exceed
for any 12-month policy year an amount equal to the lesser of (i) 50% of the
highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft (and/or retentions) not in excess of the amount imposed by the
aircraft hull or liability insurer shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01.Right of Inspection. At reasonable times, and upon at
least ten (10) Business Days' prior written notice to the Lessee, the Lessor,
the Indenture Trustee or the Owner Participant, or their respective authorized
representatives, may inspect the Aircraft and upon at least ten (10) Business
Days' prior written notice, all Aeronautics Authority required books and
records of the Lessee or any sublessee relating to the maintenance of the
Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the first sentence of this Section 14.01, unless a
material Default relating to maintenance or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14.
Section 14.02.No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01.Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
domestic subsidiary of the Lessee which shall be a certificated U.S. Air
Carrier. Any such assignment, conveyance or sublease shall in no way relieve
the Lessee from any obligation hereunder or under any other Operative
Agreement or any written agreement of the Lessee entered into in connection
with the transactions contemplated by the Operative Agreements, which shall be
and remain primary obligations of the Lessee. The Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02.Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01.Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that, in the case of insurance with respect to which cancellation
or lapse for nonpayment is not effective as to the Lessor, the Indenture
Trustee, the Holders or the Owner Participant for 30 days (seven days, in
the case of any aircraft war risk coverage) no such lapse or cancellation
shall constitute an Event of Default until the earlier of (A) 30 days (or
seven days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation and (B) the date that such
lapse or cancellation is effective as to any Additional Insured and
provided further that such failure shall not constitute an Event of Default
as long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is not
required to maintain such insurance under Section 13.01 hereof while the
indemnification or insurance referred to in the proviso to Section 13.01(b)
hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of 60 days after the date of
its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within 60 days, or
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Lessee or
of any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished or unterminated for 60 days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of 120 days after the Lessee shall have received written notice of
such misstatement.
ARTICLE 17
REMEDIES
Section 17.01.Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii)With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii)Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv)In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent
due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi)Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii)Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02.Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03.Waiver. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04.Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01.Quiet Enjoyment. So long as no Event of Default shall
have occurred and be continuing, the Lessor covenants that neither it nor any
other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and
it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01.Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the
Transportation Code and will maintain the recordation of the Indenture until
the Lien of the Indenture shall have been discharged pursuant to the terms of
the Indenture. In addition, the Lessee will, at the Lessee's own cost and
expense, promptly and duly execute and deliver to the Lessor, the Owner
Participant and the Indenture Trustee such further documents and assurances to
carry out the intent and purpose of this Lease and the Indenture and to
establish and protect the rights and remedies created or intended to be
created in favor of the Lessor under this Lease, and of the Owner Participant
under the Trust Agreement, and of the Indenture Trustee under the Indenture,
including, without limitation, the execution and filing of Uniform Commercial
Code financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable
form, subjecting to this Lease and the Indenture any Replacement Airframe
and/or Replacement Engines delivered by the Lessee pursuant to Section 11.03
hereof and any Replacement Engine delivered by the Lessee pursuant to Section
11.04 hereof and the recording and filing of counterparts of this Lease and
the Indenture in accordance with the laws of such jurisdictions as the Lessor
or the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01.Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii)any defect in the title, airworthiness, registration, eligibility
for registration under the Transportation Code (and the regulations
thereunder) or under any of the laws or regulations of any other country of
registry of the Aircraft, condition, design, operation, merchantability or
fitness for use of, suitability for a particular purpose of, or any damage
to or loss or destruction of, the Aircraft or any portion thereof, or any
interruption or cessation in the use or possession of the Aircraft by the
Lessee or any sublessee for any reason including, without limitation, by
reason of governmental action or any doctrine of force majeure or
impossibility of performance;
(iii)any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv)any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
abate, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01.Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01.Security for Lessor's Obligations to Holders. In order
to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02.Intentionally Left Blank.
Section 22.03.Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, to
transfer or assign title to the Aircraft subject to this Lease, to make
(jointly with the Lessor where provided in the Indenture) all waivers and
agreements except as otherwise provided in the Indenture (including Section
8.01 thereof), to give all notices, consents and releases and to take all
action upon the happening of a Default or Event of Default under this Lease
(except as otherwise specifically provided in the Indenture, including Section
8.01 thereof), or to do any and all other things whatsoever which the Lessor
is or may become entitled to do under this Lease (except as otherwise provided
in the Indenture, including Section 8.01 thereof); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01.Investment of Security Funds. (a) Any amounts otherwise
payable to the Lessee in accordance with the terms hereof shall instead be
held by the Lessor as security for, and may be applied by the Lessor against,
the obligations of the Lessee under this Lease during such time as there shall
have occurred and be continuing a Payment Default, Bankruptcy Default or Event
of Default, and, at such times as there shall not be continuing a Payment
Default, Bankruptcy Default or Event of Default, such amounts, net of any
amounts which have been applied by the Lessor against the Lessee's obligations
hereunder, shall be paid to the Lessee as provided in this Lease. Any amounts
which are held by the Lessor pending payment to the Lessee shall, until paid
to the Lessee or applied against the Lessee's obligations hereunder, be
invested by the Lessor, as directed from time to time, in writing (and in the
absence of a written direction by the Lessee, the Lessor shall invest such
monies in direct obligations of the United States of America), by the Lessee
and at the expense and risk of the Lessee, in the following securities (which
in the case of securities referred to in subparagraphs (i) through (iv) of
this Section 23.01(a) hereof shall mature within ninety (90) days of the date
of purchase):
(i) direct obligations of the United States of America; or
(ii)obligations fully guaranteed by the United States of America; or
(iii)certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Moody's
or S&P; or
(iv)commercial paper rated A-1/P-1 by S&P or Moody's, respectively
(or if neither such organization shall rate such commercial paper at any
time, a rating by any nationally recognized statistical rating organization
in the United States of America equal to the highest rating assigned by
such rating organization) (which may include commercial paper issued by the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01.Lessor's Entry Into Lease. Except as expressly provided
herein, the Lessor and the Lessee agree that this Lease is executed by FSB not
individually but solely as Owner Trustee under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as such Owner
Trustee, that each and all of the representations, undertakings and agreements
by the Lessor herein are for the purpose and with the intention of binding
only the Lessor's Estate, and that in no case whatsoever shall FSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on FSB, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of FSB, and that so far as FSB, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of FSB in its individual capacity set forth in
the Participation Agreement and the Trust Agreement. The term "Lessor" as
used in this Lease shall include any trustee succeeding FSB as Owner Trustee
under the Trust Agreement. Any obligation of the Lessor hereunder may be
performed by the Owner Participant, and any such performance shall not be
construed as revocation of the trust created by the Trust Agreement. Nothing
contained in this Lease shall restrict the operation of the provisions of the
Trust Agreement with respect to its revocation of the resignation or removal
of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01.Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2005 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (901) 395-3388, facsimile (901) 395-4758; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Agent, Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at Two International
Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Department, telephone (617) 664-5414, facsimile (617) 664-5371; or to such
other address as the Indenture Trustee shall from time to time designate in
writing to the Lessor, the Lessee, the Agent and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01.Section Heading and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02.References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03.APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04.Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05.No Oral Modification. The terms and provisions of this
Lease may not be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any such change, waiver,
discharge or termination is also subject to the provisions of Section 8.01 and
Article XIII of the Indenture.
Section 26.06.Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07.Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08.Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01.Intent of the Parties. It is the intent of the parties
to this Lease that for all purposes (including, without limitation, U.S.
Federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02.Section 1110 Compliance. Notwithstanding any provision
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements are expressly intended to be, shall be and
should be construed so as to be, entitled to the full benefits of Section 1110
of the Bankruptcy Code and any successor provision thereof.
Section 27.03.Finance Lease. This Lease is a "finance lease" within
the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N662FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N662FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N662FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on December 23, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N662FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of
September 1, 1996 executed by the Manufacturer, as the same may be amended,
modified or supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. September 23, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996 between
the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
September 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N662FE), dated as of September 1, 1996, as
amended and restated as of October 15, 1996, between the Lessor and the
Indenture Trustee, as supplemented by the Indenture and Security Agreement
Supplement, and as said Indenture may from time to time be further
supplemented or amended, including any amendment or supplement thereto entered
into from time to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N662FE) dated September 23, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate,
(ii) any act or omission of the Indenture Trustee which is not related to
the transactions contemplated by the Operative Agreements or is in
violation of any of the terms of the Operative Agreements or (iii) Taxes
imposed against the Indenture Trustee in its individual capacity in respect
of which the Lessee has not indemnified (and is not obligated to indemnify)
the Indenture Trustee in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N662FE) dated as of September 1, 1996, as amended and restated as of October
15, 1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N662FE) dated September 23, 1996, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N662FE), dated as of
September 1, 1996, between the Owner Trustee and the Indenture Trustee, which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270116.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N662FE), dated September 23, 1996 attached
thereto was recorded as one instrument by the FAA on September 25, 1996, and
assigned Conveyance Number 2A270117.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N662FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of September 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N662FE) between the Lessee and the
Owner Participant as it was originally executed as of September 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N662FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of September 1, 1996 and filed with
the FAA on September 23, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N662FE), dated as of September 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. December 23, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2017, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N662FE), dated as of September 1, 1996, as amended and restated as
of October 15, 1996, between the Owner Participant and the Owner Trustee in
its individual capacity, as from time to time modified, amended or
supplemented pursuant to its applicable provisions and in accordance with the
Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount
that will be at least sufficient to pay in full, as of such
Payment Date, the aggregate unpaid principal amount of due and
unpaid installments on the Certificates outstanding on such
Payment Date, together with the accrued and unpaid interest
thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to
pay in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
in the Lessee's sole discretion) necessary, desirable or required to be
made at any time on or after the seventh anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on (and only on) the first Rent Payment Date occurring at least six months
after the Owner Participant have notified the Lessee that they will not
permit such Significant Expenditure to be financed as contemplated in
clause (ii) of the definition of "Significant Expenditure" below, for, at
the Lessee's option, either (1) the payment to the Lessor in immediately
available funds of an amount equal to the greater of the Fair Market Value
of the Aircraft and the Termination Value for the Aircraft, determined in
each case as of such Rent Payment Date, or (2) the assumption by the
Lessee, pursuant to Section 7.11 of the Participation Agreement and Section
2.12 of the Indenture, of all of the Lessor's obligations under the
Indenture, the Certificates and Section 7.04 of the Participation
Agreement, and the payment to the Lessor in immediately available funds of
an amount equal to the excess of (A) the greater of (I) the Termination
Value for the Aircraft, and (II) the Fair Market Value of the Aircraft,
both computed as of such Rent Payment Date, over (B) the unpaid principal
amount of the Certificates outstanding plus accrued interest as of such
date; it being understood that the Fair Market Value for this purpose shall
be determined without regard to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment (or, in the event the Owner Participant
disagrees with such judgment, in accordance with the appraisal procedures
set forth in Section 4.03 of the Lease) would exceed $10,000,000 and (ii)
the Owner Participant will not permit to be financed on similar terms and
conditions then available for similar transactions for like-situated
lessees through the issuance of additional non-recourse notes of the Lessor
or through additional equity investments of the Owner Participant or both
(it being understood that Section 4.02(a)(D) of the Lease shall not impose
any obligation on the Owner Participant to provide such financing). The
Lessee, prior to notifying the Owner Participant and the Indenture Trustee
in accordance with Paragraph (F) of this Schedule V of its election to
purchase the Aircraft pursuant to Section 4.02(a)(D) of the Lease, shall
notify the Owner Participant of the non-severable improvements which would
satisfy the conditions described in clauses (i) and (iii) of the preceding
sentence, and provide the Owner Participant with a reasonable opportunity
to permit the financing thereof as contemplated in clause (ii) of such
sentence. The Owner Participant shall notify the Lessee of their decision
with respect to such financing within 60 days after the Lessee has given
the notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the seventh anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on (and only on) the
first Rent Payment Date (the "Burdensome Indemnity Payment Date") following
the date that the Owner Participant provides the Lessee with a written
notice of any Loss (as defined in Section 5 of the Tax Indemnity Agreement)
that is a Burdensome Indemnity Payment for, at the Lessee's option, either
(1) the payment to the Lessor in immediately available funds of an amount
equal to the greater of the Fair Market Value of the Aircraft and the
Termination Value for the Aircraft, determined in each case as of such
Burdensome Indemnity Payment Date, or (2) the assumption by the Lessee,
pursuant to Section 7.11 of the Participation Agreement and Section 2.12
of the Indenture, of all of the obligations of the Lessor under the
Indenture, the Certificates and Section 7.04 of the Participation Agreement
and the payment to the Lessor in immediately available funds of an amount
equal to the excess of (A) the greater of (I) the Termination Value for the
Aircraft and (II) the Fair Market Value of the Aircraft, both computed as
of the Burdensome Indemnity Payment Date, over (B) the unpaid principal of
the Certificates outstanding plus accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which under
the circumstances cannot be commercially reasonably avoided by the Lessee
which causes the aggregate net present value as of the determination date,
discounted semi-annually at the Debt Rate, of all such Losses (but
excluding any Losses for which the Owner Participant shall have waived its
right to payment under the Tax Indemnity Agreement) paid or payable by the
Lessee which, in the opinion of independent tax counsel, can be avoided
through a purchase by the Lessee of the Aircraft, to exceed 3% of the
Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 180 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture. The
Lessee's notice pursuant to Section 4.02(a)(D) or 4.02(a)(E) hereof shall
become irrevocable on the Business Day preceding the 15th day prior to the
applicable purchase date designated in such notice but if any such notice
is revoked, the Lessee shall no longer be entitled to purchase the Aircraft
as a result of the facts and circumstances originally giving rise to such
right and will pay all reasonable expenses of the Owner Participant, the
Owner Trustee and the Indenture Trustee in connection therewith.
SCHEDULE VI
DESCRIPTION OF ORIGINAL LEASE
Lease Agreement (Federal Express Corporation Trust No. N662FE) dated
as of September 1, 1996 between Federal Express Corporation, as lessee and
First Security Bank, National Association, as owner trustee under Trust
Agreement (Federal Express Corporation Trust No. N662FE) dated as of September
1, 1996 between PMCC Leasing Corporation, as owner participant and First
Security Bank, National Association, recorded by the Federal Aviation
Administration on September 25, 1996, 1996 and assigned Conveyance No.
2A270117, as supplemented by the following described instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Lease Supplement No. 1
(Federal Express Corporation
Trust No. N662FE) 09/23/96 09/25/96 2A270117
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N662FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N662FE), dated ________ __, ____, between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement (Federal Express
Corporation Trust No. N662FE) dated as of September 1, 1996, as amended and
restated as of October 15, 1996 (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N662FE) dated as of
September 1, 1996, as amended and restated as of October 15, 1996 (the
"Lease", the defined terms in the Lease being used in this Lease Supplement
with the same meaning as in the Lease), which provides for the execution and
delivery of a Lease Supplement, substantially in the form of this Lease
Supplement No. __, for the purpose of leasing under the Lease the aircraft and
engines described below ("Aircraft") as and when delivered by the Lessor to
the Lessee in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus A300F4-605R Airframe; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) 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).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement II.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this Lease
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the original chattel-paper
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is hereby
acknowledged on this __ day of _________.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
Dated as of August 1, 1996
Amended and Restated as of October 15, 1996
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 771, REGISTRATION NO. N667FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, HAS
BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF
STATE STREET BANK AND TRUST COMPANY, AS INDENTURE TRUSTEE UNDER THE TRUST
INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N667FE) DATED AS OF AUGUST 1, 1996, AS AMENDED AND RESTATED AS OF OCTOBER 15,
1996 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH
TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED
IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS
THE RECEIPT THEREFOR EXECUTED BY STATE STREET BANK AND TRUST COMPANY, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank................................. 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date.............. 3
Section 3.05. Minimum Basic Rent....................................... 5
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 5
Section 4.02. Purchase Options......................................... 6
Section 4.03. Appraisal Procedures..................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 11
Section 5.03. Certain Agreements of the Lessee......................... 11
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 12
Section 7.02. Possession and Permitted Transfer and Sublease........... 15
Section 7.03. Insignia................................................. 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 19
Section 8.02. Pooling of Parts......................................... 20
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 21
Section 9.02. Other Alterations and Modifications...................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23
Section 10.02. Retention of Aircraft by the Lessor..................... 25
Section 10.03. Voluntary Termination as to Engines..................... 27
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 27
Section 11.02. Payment of Stipulated Loss Value........................ 27
Section 11.03. Replacement of Airframe and Engines..................... 28
Section 11.04. Event of Loss with Respect to an Engine................. 31
Section 11.05. Application of Payments from the Government or Others... 33
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government..................................... 34
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................. 35
Section 11.08. Application of Payments During Existence of Certain
Defaults.............................................. 35
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 35
Section 12.02. Return of Engines....................................... 36
Section 12.03. Return of Manuals....................................... 36
Section 12.04. Condition of Aircraft................................... 37
Section 12.05. Intentionally Left Blank................................ 38
Section 12.06. Storage................................................. 38
Section 12.07. Special Markings........................................ 38
Section 12.08. Lessor's Option to Purchase Parts....................... 39
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................... 39
Section 13.02. Insurance Against Loss or Damage to Aircraft
and Engines........................................... 41
Section 13.03. Application of Insurance Proceeds....................... 43
Section 13.04. Reports................................................. 44
Section 13.05. Lessor's Insurance...................................... 45
Section 13.06. Self-Insurance.......................................... 45
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 46
Section 14.02. No Obligation to Inspect................................ 46
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 46
Section 15.02. Citizenship............................................. 47
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 47
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 49
Section 17.02. Cumulative Remedies..................................... 52
Section 17.03. Waiver.................................................. 52
Section 17.04. Lessor's Right to Perform for Lessee.................... 53
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 53
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 53
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 54
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 55
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 56
Section 22.02. Intentionally Left Blank................................ 56
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 56
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 57
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 58
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 59
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Heading and Captions............................ 60
Section 26.02. References.............................................. 60
Section 26.03. APPLICABLE LAW.......................................... 60
Section 26.04. Severability............................................ 60
Section 26.05. No Oral Modification.................................... 60
Section 26.06. Agreement as Chattel Paper.............................. 60
Section 26.07. Counterparts............................................ 60
Section 26.08. Public Release of Information........................... 61
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 61
Section 27.02. Section 1110 Compliance................................. 61
Section 27.03. Finance Lease........................................... 61
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Schedule VI Description of Original Lease
Exhibit A Form of Lease Supplement
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N667FE) dated
as of August 1, 1996, as amended and restated as of October 15, 1996 (this
"Lease") between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and
FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Article 1 below;
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of August 1, 1996 as supplemented by the Lease
Supplement;
WHEREAS, the Original Lease was recorded by the FAA and assigned a
Conveyance Number as more particularly described on Schedule VI attached
hereto;
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule I hereto, for all purposes of this
Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated. This Lease
shall last for the Term, at all times during which full legal title to the
Aircraft shall remain vested in the Lessor to the exclusion of the Lessee,
notwithstanding the possession and use thereof by the Lessee or any other
Person.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank.
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Section 3.04 of this Lease. Each payment of Basic
Rent shall be made in arrears or in advance, all as stated in Schedule II
hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, (i) an amount equal to
the aggregate amount of any Make-Whole Premium payable under the Indenture
(other than any Make-Whole Premium payable in connection with an Indenture
Event of Default that is not and does not arise out of a Lease Event of
Default) and (ii) an amount equal to the excess of interest at the Past Due
Rate on the principal of the Certificates in connection with an acceleration
of the Certificates pursuant to Section 7.02 of the Indenture following an
Indenture Event of Default attributable to an Event of Default over interest
payable by the Lessee at the Past Due Rate on Basic Rent. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value After the Delivery Date. The percentages for Basic Rent
referred to in Schedule II hereto and the percentages for Stipulated Loss
Value and Termination Value referred to in Schedule III and Schedule IV
hereto, respectively, shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01
of the Participation Agreement being greater or less than the Estimated
Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement, (iii) any reoptimization pursuant to Section 15.02(a)
of the Participation Agreement, (iv) payments pursuant to Section 5 of the Tax
Indemnity Agreement by an adjustment of Basic Rent or (v) the Commencement
Date being other than January 30, 1997. Each such adjustment pursuant to
clause (i), (ii), (iv) or (v) of the first sentence of this Section 3.04 shall
maintain the Owner's Economic Return (and, while maintaining such Return,
minimize the aggregate Net Present Value of Rents to the Lessee). In the
event of an adjustment pursuant to clause (iii) of the first sentence of this
Section 3.04, the Owner Participant may recalculate Basic Rent as set forth in
Schedule II hereto in order to maintain to the extent feasible the Owner's
Economic Return and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto in a manner
consistent with such recalculation of Basic Rent; provided that any such
recalculations as a result of an adjustment pursuant to such clause (iii) of
the first sentence of this Section 3.04 may not (A) increase the Net Present
Value of Rents to the Lessee, (B) increase as of any date the sum of (1) the
Net Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value as of such
date, in each case discounted at the Debt Rate, beyond such net present values
prior to such adjustment, or (C) otherwise result in any adverse impact
(including tax consequences) to the Lessee for which the Owner Participant has
not agreed to indemnify the Lessee on terms reasonably acceptable to the
Lessee.
The Owner Participant shall promptly notify the Lessee and the Lessor
and the Lessee shall promptly notify the Owner Participant and the Lessor of
the need for any such adjustment pursuant to this Section 3.04. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request
and, subject to the next succeeding sentence, expense of the Lessee, the
accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Basic Rent, Stipulated Loss
Values and Termination Values shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second,
if such adjustments are still believed to be in error and are not reconciled
with the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee
and reasonably acceptable to the Owner Participant and, in order to enable
them to verify such adjustments, the Owner Participant shall make available to
such accountants (for their own confidential use and not to be disclosed to
the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the name
of the lease analysis program used by the Owner Participant to calculate such
adjustments. The Lessee will pay the reasonable costs and expenses of the
verification process under this Section 3.04 unless as a result of such
verification process by the independent public accountants Basic Rent is
adjusted and such adjustment causes the Net Present Value of Rents, to decline
by 10 or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor and
the Lessee shall execute and deliver an amendment to this Lease to reflect
each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 79
South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Lien of the Indenture shall not have been discharged the Lessor hereby
directs, and the Lessee agrees, that all Rent (other than Excepted Payments,
which shall be paid by the Lessee directly to the Person entitled thereto) (all
without set-off or counterclaim as and to the extent provided in Article 20
hereof) shall be paid directly to the Indenture Trustee at its principal
office at Two International Place, 4th Floor, Boston, Massachusetts,
Attention: Corporate Trust Department, or as the Indenture Trustee may
otherwise direct within the United States by wire transfer of immediately
available funds in U.S. Dollars no later than 10:30 a.m., New York time, on
the due date of such payment. In any case where a scheduled Rent Payment Date
shall not be a Business Day such Rent Payment Date shall be adjourned to the
next succeeding Business Day without interest thereon for the period of such
extension (provided that payment is made on such next succeeding Business Day).
Section 3.07.Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01.Renewal Options. (a) Election to Renew. The Lessee
shall provide the Lessor with irrevocable written notice (the "Preliminary
Notice") not more than 360 days nor less than 180 days prior to the end of the
Basic Term or any Renewal Term, as the case may be, whether it will exercise
its options either to renew this Lease pursuant to this Section 4.01 or to
purchase the Aircraft pursuant to Section 4.02(a)(B), (C) or (F) hereof, as
applicable. Provided that (i) no Event of Default shall have occurred and be
continuing at the time of renewal, (ii) this Lease has not otherwise expired
or terminated, and (iii) the Lessee shall have timely delivered the respective
Preliminary Notice, the Lessee may, by irrevocable written notice delivered
to the Lessor not less than 90 days prior to the end of the Basic Term, extend
the Term for one Fixed Renewal Term of three years commencing on the
expiration of the Basic Term. The Lessee shall pay the Fixed Renewal Rent
during the Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have timely
delivered the respective Preliminary Notice, the Lessee may, on no more than
two occasions, by irrevocable written notice delivered to the Lessor not less
than 90 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending two years thereafter for a rent equal to the
then-current Fair Market Rental of the Aircraft. The Term may be extended
pursuant to this paragraph for an aggregate of no more than four years
following the Basic Term or the Fixed Renewal Term. The Lessee shall pay the
Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the greater of the Stipulated Loss Value on the last day of the Basic
Term and the Fair Market Value of the Aircraft as of the commencement of such
Renewal Term.
Section 4.02.Purchase Options. (a) Election to Purchase. Provided
that (i) this Lease has not otherwise expired or terminated, (ii) the Lessee
shall have previously given the Preliminary Notice under Section 4.01(a)
hereof (in the case of paragraph (B) or (F) below or, if a Renewal Term is
available, paragraph (C) below) or the applicable notice for each other
paragraph below, as the case may be, and (iii) no Event of Default shall have
occurred and be continuing on the applicable Termination Date, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to the
applicable Rent Payment Date, elect to terminate the Lease and purchase the
Aircraft on (and only on) January 30, 2015, for, at the Lessee's option,
either (1) an amount in immediately available funds equal to the greater of
the Fair Market Value or the Termination Value on such date or (2)(i) the
assumption by the Lessee, pursuant to Section 7.11 of the Participation
Agreement, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and (ii) the
payment to the Lessor of an amount in immediately available funds equal to
the excess of (A) the greater of the Fair Market Value or the Termination
Value on such date over (B) the unpaid principal of the Certificates plus
accrued interest as of such date. Such notice (which shall be revocable by
the Lessee upon at least 15 days' written notice prior to the applicable
Rent Payment Date) shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of
the Indenture or state that the Lessee shall exercise its option to assume
the Certificates pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for an
amount in immediately available funds equal to the Fair Market Value
thereof on such date; provided, however, that the Lessee shall have paid
all Rent due and payable under this Lease on or prior to the last day of
the Basic Term; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of any Renewal
Term, elect to terminate the Lease and purchase the Aircraft on the last
day of such Renewal Term at a price in immediately available funds equal to
the Fair Market Value of the Aircraft on such day; provided, however, that
the Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount in immediately available
funds not less than the greater of the amount specified in Schedule V
hereto and the Fair Market Value of the Aircraft; or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not less than 90 days prior to the end of the Basic Term,
elect to purchase the Aircraft on the last day of the Basic Term for the
amount in immediately available funds specified in the Ancillary Agreement
II (the "FPO Price") which is not less than the estimate set forth in the
Appraisal of the Fair Market Value of the Aircraft at the time of exercise
of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D) or
4.02(a)(E) hereof. Such notice shall either direct the Lessor to prepay the
Certificates in full on such Termination Date pursuant to Section 6.02 of the
Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D) or
4.02(a)(E) hereof and shall fail to make payment (and, if applicable, assume
the Certificates) on the applicable Termination Date, the Lease shall continue
and the Lessee shall pay to the Owner Trustee any losses, costs and expenses
of the Owner Participant incurred in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a bill of sale evidencing such
transfer and such other documents as the Lessee may reasonably require. In
connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03.Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01.Disclaimer of Representations and Warranties. THE LESSEE
ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE,
DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE,
(ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS SUITABLE FOR
ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND
EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02.No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or the Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and the Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and the Engine Manufacturer
are obligated to provide and do provide pursuant to the Purchase Agreement or
the GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03.Certain Agreements of the Lessee. The Lessee agrees with
the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01.Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve (i) any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) any material risk of civil
liabilities or (iii) any risk of the assertion of criminal charges against
the Lessor, the Owner Participant, the Indenture Trustee or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01.Registration, Maintenance and Operation. The Lessee, at
its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in
the name of the Lessor as owner, pursuant to the Transportation Code and,
subject to the proviso to Section 6.03(b) of the Participation Agreement,
to remain at all times duly registered pursuant to the Transportation Code
and at all times act in accordance with the rules and regulations of the
Aeronautics Authority or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered in
accordance with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language (which records, logs and other materials
shall, as between the Lessor and the Lessee and all parties claiming
through the Lessee, be the property of the Lessor but shall become the
property of the Lessee upon purchase by the Lessee of the Aircraft pursuant
to the terms of this Lease or upon the occurrence of an Event of Loss and
the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests the Lessee agrees are indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(and naming the Lessor, or so long as this Lease is assigned to the
Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02.Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing at the commencement of such sublease, (ii) the Lien of the
Indenture is not impaired thereby, (iii) all applicable governmental approvals
in connection therewith have been obtained and (iv) the Lessee shall comply
with the provisions of Article 13 hereof, the Lessee may without the prior
written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into and with 30 days' prior written notice to
the Lessor and the Owner Participant, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) after December 31, 2003 sublease the
Aircraft or any Engine to an Air Carrier which is principally based in and
domiciled in one of the countries listed on Schedule III of the
Participation Agreement, or (C) after December 31, 2003 sublease the
Aircraft or any Engine to any other Air Carrier not described in this
Section which shall be reasonably acceptable to the Lessor as evidenced by
its prior written consent; provided, that, with respect to clauses (B) and
(C) above, at the time of any such sublease the United States of America
maintains normal diplomatic relations with the country in which such Air
Carrier is principally based and domiciled and provided further that such
country shall not then be experiencing war. In the case of any sublease (x)
such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any Engine
to any other Person without the prior written consent of the Lessor (except
as permitted by subparagraphs (ii) through (viii) below and except that, in
the case of subparagraph (iv), possession of the Aircraft may only be
transferred at the direction of the Lessee) and (z) such sublease shall
expire not later than the expiration of the Basic Term or any Renewal Term
then in effect hereunder. Prior to any sublease to an Air Carrier
permitted under Section 7.02(a)(i)(C) above: (I) the maintenance standards
of the aeronautical authority of the country of domicile or principal
operation of the sublessee taken as a whole shall not be materially less
stringent than those of the FAA or at least comparable to those, taken as a
whole, required by the central civil aviation authority of any of the
United Kingdom, France, Canada, Japan or Germany; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor) with respect to
(A) the legality, validity and enforceability of the Operative Agreements
and the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might reasonably have been imposed on such
owner or Persons under the laws of the United States or any state thereof
(it being understood that, in the event that such latter opinion cannot be
given in a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution of
such a sublease, at the Lessee's cost and expense), (G) that there exist no
possessory rights in favor of such sublessee under the laws of such country
which would, upon bankruptcy or insolvency of the Lessee (and assuming that
at such time such sublessee is not bankrupt or insolvent) or of the
sublessee, prevent the return of the Aircraft in accordance with the terms
of this Lease and (H) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (III) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (IV) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required, or reasonably requested by the Lessor, to
continue the Lessor's right, title and interest to the Aircraft and rights
under the Lease (and sublease) and to perfect and maintain the priority of
the Lien of the Indenture;
(ii) subject the Engines or permit any Engine to be subjected to
normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Lessee in the
ordinary course of its business with a vendor domiciled in the United
States or in a country with which the United States maintains normal
diplomatic relations (and which is not experiencing war) or (x) any U.S.
Air Carrier or (y) any foreign Air Carrier which is (I) organized in a
country listed on Schedule III to the Participation Agreement, (II)
organized in a country with which the United States then maintains normal
diplomatic relations, (III) is a party to the Convention on the
International Recognition of Rights in Aircraft or (IV) otherwise provides
equivalent protection to owners, lessors and mortgagees of aircraft;
provided that no transfer of the registration of or any Engine shall be
effected and that throughout the period that any Engine is subjected to
such interchange or pooling agreement or arrangement the terms of this
Lease shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of any Engine, and if the Lessor's title to any Engine shall
nonetheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such
Engine and the Lessee shall comply with Section 11.04 of this Lease in
respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program administrated pursuant to
Executive Order No. 12056, as amended (the "CRAF Program"), or any similar
or substitute programs of the Government, so long as the Lessee (or any
permitted sublessee or transferee pursuant to this Section) shall promptly
notify the Lessor upon such transfer of possession and provide the Lessor
and the Indenture Trustee with the name and address of the Contracting
Officer or representative of the Military Aircraft Command of the United
States Air Force to whom notices must be given in respect of the Aircraft;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessor shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease and the
other Operative Agreements to the same extent as if such sublease or transfer
had not occurred. Any such sublease shall include appropriate provisions for
the maintenance, inspection (as required by Section 14.01 hereof), operation,
use and insurance of the Aircraft, the Airframe and each Engine in accordance
with the provisions of this Lease and shall provide assurances reasonably
satisfactory to the Lessor that the sublessee may not further sublease any of
such equipment. The Lessee shall promptly provide the Lessor, the Owner
Participant and the Indenture Trustee a copy of any sublease and, prior to
execution and delivery of any sublease deliver to the Lessor all other
documents (including all insurance certificates evidencing compliance with
this Lease) required hereunder relating to such sublease or transfer of
possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term. Subject to the terms and
conditions of this Lease, the Lessee will retain the right to cure any default
by any sublessee permitted pursuant to this Section 7.02 and to terminate such
sublease upon such default. The Lessee shall pay all costs of the Owner
Participant, the Indenture Trustee and the Lessor incurred in connection with
any subleasing or proposed subleasing.
Section 7.03.Insignia. (a) Nameplate. On or prior to the Delivery
Date or as soon thereafter as possible, the Lessee agrees to affix to and
maintain in the cockpit of the Airframe, in a clearly visible location, and on
each Engine, a clearly visible metal nameplate bearing the inscription "FIRST
SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND LESSOR," and,
so long as such Airframe or Engines shall be subject to the Lien of the
Indenture, the additional inscription "STATE STREET BANK AND TRUST COMPANY, AS
INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary,
from time to time, with a nameplate reflecting the name of any successor
Lessor or successor Indenture Trustee, in each case as permitted by the
Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or on any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01.Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof)
and shall be in at least as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens except for Liens permitted by Section 6.01 hereof
(other than clauses (d) and (f) thereof) and shall thereupon be and become
a Part; and
(iii) such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02.Pooling of Parts. Any Part removed from the Airframe or
any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof (other than clauses (d) and (f) thereof)); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof (other than clauses (d) and (f) thereof)) and by
causing title to such further replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01.Required Alterations and Modifications. The Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests the Lessee agrees are indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account
authorized postponements resulting from a contest or otherwise and shall be
made at such time and in such a manner so as not to discriminate against the
Aircraft whether by reason of its leased status or otherwise.
Section 9.02.Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or airworthiness below its
value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and state of airworthiness required to be maintained
by the terms of this Lease, or cause the Airframe or any Engine to become
"limited use property" within the meaning of Revenue Procedure 76-30, 1976-2
C.B. 647, except that the value (but not the remaining useful life, utility,
condition or airworthiness) of the Aircraft may be reduced by the value, if
any, of any such Obsolete Parts which shall have been removed; provided that
in no event shall the aggregate value of all such Obsolete Parts which shall
have been so removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' irrevocable
(except as provided herein) prior written notice (which notice shall state the
Proposed Termination Date) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right on one occasion
to revoke its notice of termination no later than the Business Day prior to
the date 15 days prior to the Proposed Termination Date whereupon this Lease
shall continue in full force and effect.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full to
the Lessor of the bid price and all amounts due and owing pursuant to Section
10.01(c) hereof by wire transfer of immediately available funds and upon
discharge of the Lien of the Indenture in accordance with Article 7 thereof,
sell the Airframe and Engines or engines to such bidder without recourse or
warranty (except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii)the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(iii)all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium) under
this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02.Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii)all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make- Whole Premium, on or prior to the Proposed Termination Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Proposed Termination Date and all other sums due
and owing to the Indenture Trustee and the Holders on or prior to the Proposed
Termination Date under this Lease, the Indenture or any other Operative
Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03.Voluntary Termination as to Engines. The Lessee shall
have the right at its option and at any time, on at least thirty (30) days'
prior written notice to the Lessor, to terminate this Lease with respect to
any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01.Lessee's Election Rights. The Lessee shall notify the
Lessor, the Indenture Trustee and the Owner Participant as soon as practicable
but in no event more than 10 Business Days following the occurrence of an
event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within
60 days of the occurrence of any Event of Loss, the Lessee shall have the
right to elect the alternative set forth in Section 11.02 hereof or the
alternative set forth in Section 11.03 hereof. The Lessee's failure to make
such election within said 60-day period shall be deemed to be an election of
the alternative set forth in Section 11.02 hereof.
Section 11.02.Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the fifteenth day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination
Date next succeeding the Loss Payment Date (or, if the Loss Payment Date
occurs on a Stipulated Loss Value Determination Date, determined as of such
Stipulated Loss Value Determination Date), plus (B) any and all Basic Rent due
and payable on the relevant Stipulated Loss Value Determination Date to the
extent payable in arrears but not to the extent payable in advance, plus (C)
any and all Supplemental Rent due and payable on or prior to such Loss Payment
Date, plus (D) all other amounts (including Basic Rent due and payable with
respect to Rent Payment Dates occurring prior to such Stipulated Loss Value
Determination Date and unpaid) due and payable by the Lessee hereunder or
owing by the Lessee or the Owner Trustee to the Indenture Trustee or the
Holders under the Indenture and the other Operative Agreements, plus (E) any
reasonable out-of-pocket expenses incurred in connection with such Event of
Loss and the related prepayment of the Certificates by the Lessor, the Owner
Participant and the Indenture Trustee; provided that in no event shall the
Holders not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03.Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof and
provided that the Lessee shall have reimbursed the reasonable out-of-pocket
costs and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Lessor, the Owner Participant, the Indenture Trustee and
the Holders (to the extent of the reasonable fees and expenses of one legal
counsel in each relevant jurisdiction representing all of the Holders) in
connection with the matters contemplated by this Section 11.03, if the Lessee
has elected to replace the Airframe and Engines suffering
an Event of Loss pursuant to this Section 11.03, the Lessee shall cause to be
duly conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300-600 series airframe manufactured no earlier than
January 1, 1996 (the "Replacement Airframe") and good and marketable title to
a number of Replacement Engines equal to the number of Engines with respect to
which an Event of Loss has occurred, provided that following compliance with
all other terms of this Section 11.03 each Engine shall be of identical make
and model and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an
airworthy aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii)cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft may
then be registered in accordance with Section 6.03(b) of the Participation
Agreement;
(iii)cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws, rules
and regulations of any other jurisdiction in which the Aircraft may then be
registered as permitted by Section 6.03(b) of the Participation Agreement;
(iv)furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and value, at least equal to, and are in as good operating
condition as, the Airframe and Engines replaced, assuming such Airframe and
Engines were in the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi)provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for to its reasonable
satisfaction as of the Delivery Date as a result of such substitution or
(B) an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly perfected
Lien and security interest on and in respect of such Replacement Airframe
and Replacement Engines;
(ix)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Utah and the filing of a notice with the Secretary of
State of Tennessee, as the Lessor or the Indenture Trustee may reasonably
request in order that such Replacement Airframe and Replacement Engines
shall be duly and properly titled in the Lessor, leased under this Lease
and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi)cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a bill of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04.Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Sections 6.01(a), (b) (provided that if there are any Liens of the
type described in Section 6.01(b) hereof, such Liens are subordinate to the
Lien of the Indenture), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of
this Lease immediately prior to the occurrence of such Event of Loss, provided
that after any replacement, each Engine shall be of identical make and model.
The standards set forth in this Section with respect to Replacement Engines
shall apply upon any replacement or substitution of an Engine with a
Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Indenture Trustee with an original of, and the Lessor
with a copy of, a full warranty bill of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor of any and all manufacturer's warranties applicable thereto and a
consent reasonably satisfactory to the Lessor and the Indenture Trustee
from such manufacturer to such assignment;
(ii)cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the
Transportation Code, or the applicable laws, rules and regulations of any
other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii)furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor certifying that such Replacement Engine has a value and utility
at least equal to, and is in as good operating condition as, the Engine
replaced, assuming such Engine was in at least the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(iv)furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) comply with the provisions of Section 9.08 of the Indenture;
(vi)cause an Indenture and Security Agreement Supplement with respect
to such Replacement Engine to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Transportation Code, or the
applicable laws, rules and regulations of any other jurisdiction in which
the Aircraft may be registered as permitted by Section 6.03(b) of the
Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(vii)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Utah and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(viii) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(ix)take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a bill of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05.Application of Payments from the Government or Others.
(a) Generally. Any payments (other than insurance proceeds the application
of which is provided for in Section 13.03 hereof) received at any time by the
Lessor or by the Lessee from any governmental authority or any other party,
foreign or domestic, with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Airframe or any Engine will be applied, as appropriate, in
accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06.Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in repairing or maintaining the Aircraft by the Lessee shall
have been caused by such requisition. All payments received by the Lessor,
the Lessee or any permitted sublessee or transferee from the Requisitioning
Government for such use of the Airframe and Engines or engines during the Term
(other than any such requisition which constitutes an Event of Loss, as to
which the provisions of Section 11.05 hereof shall govern) shall, subject to
Section 11.08 hereof, be paid over to, or retained by the Lessee or such
permitted sublessee or transferee. All payments received by the Lessor, the
Lessee or any such permitted sublessee or transferee from the Requisitioning
Government for the use of the Airframe and Engines or engines after the Term
shall be paid over to, or retained by, the Lessor (or the Lessee if it shall
have purchased the Lessor's interest therein in accordance with the provisions
hereof).
Section 11.07.Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08.Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01.Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant), or if such termination
is pursuant to Article 17 hereof, selected by the Lessor in its reasonable
discretion, within or, if the Aircraft is then registered outside the United
States, outside of the continental United States (on the Lessee's route
structure as in effect on the return date and provided that the Lessee shall
pay any incremental expenses incurred in connection with a redelivery outside
the United States) and the Airframe shall be fully equipped with two Engines
of the same or an improved make and model as were delivered on the Delivery
Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessee will give the Lessor at least 30 days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage.
Section 12.02.Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03.Return of Manuals. Upon the return of the Aircraft, the
Lessee shall deliver to the Lessor all original (or photocopied or microfilmed
copies thereof, if then permitted to be maintained in such form under
applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04.Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii)it shall be clean by airline and cargo handling operating
standards;
(iii)the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv)it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi)it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and the Airframe
and each Engine (including any Replacement Engine) shall be serviceable in
accordance with the Lessee's FAA-approved maintenance program;
(vii)it shall be free and clear of all Liens and rights of others
(other than Lessor's Liens) including, without limitation, rights of third
parties under pooling, interchange, overhaul, repair and other similar
agreements or arrangements referred to in Section 7.02(a) hereof; and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program (or other permitted maintenance program).
If, at the time of return of the Aircraft, the Engines or engines are not
being maintained under an on-condition maintenance program, then the average
number of hours of operation on such Engines or engines remaining until the
next scheduled engine heavy maintenance visit under the Lessee's FAA-approved
maintenance program (or other permitted maintenance program) shall be at least
25% of the allowable hours between engine heavy maintenance visits. With
respect to maintenance under the Lessee's FAA-approved maintenance program,
the Lessee shall have treated the Aircraft in a nondiscriminatory manner with
other Airbus A300-600 series aircraft in the Lessee's fleet, and the Aircraft
shall be free and clear of all Liens and rights of others other than Lessor's
Liens and shall be in compliance in every material respect with the Lessee's
FAA-approved maintenance program as if the Term were not ending.
Section 12.05.Intentionally Left Blank.
Section 12.06.Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07.Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08.Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, (i) comprehensive
airline liability insurance including, without limitation, passenger legal and
bodily injury liability and property damage liability insurance and cargo
legal liability in such amounts, against such risks (including, without
limitation, contractual liability and allied perils liability but excluding
war risk insurance (except as required under the second sentence of this
Section 13.01(a)), with such retentions (subject to the limitations set forth
in Section 13.06 hereof) and on such terms and conditions (including coverage
for cost of claims) as the Lessee customarily maintains with respect to
aircraft and engines of the same type and model which comprise the fleet of
the Lessee, and (ii) such insurance against such other risks as is usually
carried by similar corporations engaged in the same or similar business and
similarly situated as the Lessee and owning or operating aircraft and engines
similar to the Aircraft and Engines; provided that in no event shall the
limits of liability for all such insurance be less than the amount, per
occurrence, as set forth on the insurance certificate delivered on the
Delivery Date unless and only so long as the Aircraft is not operated and all
risk-ground insurance for the Aircraft on the ground is maintained in the same
manner and covering the same risks as is from time to time applicable to other
aircraft owned or operated by the Lessee of the same type and model on the
ground and not in operation. The Lessee will be required to maintain war risk
insurance only if the Aircraft is operated in a war zone or a recognized area
of armed hostilities. All insurance required by this Section 13.01(a) shall
be maintained with insurers of recognized reputation and responsibility.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its individual
capacity and as trustee/mortgagee of the Aircraft and the Owner Participant
and each of their respective officers and directors in their respective
capacities as such as additional insureds (hereinafter in this paragraph
(c) sometimes referred to as "Additional Insured");
(ii)provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii)provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv)provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi)be primary, without right of contribution from any other
insurance which is carried by the Lessee or any sublessee or any Additional
Insured with respect to its interest in the Aircraft;
(vii)provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
reputation and responsibility, all-risk ground and flight aircraft hull
insurance covering the Aircraft and all-risk coverage with respect to any
Engines and Parts while 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
with respect to the country of registry) with such retentions (subject to the
limitations set forth in Section 13.06 hereof) and in such form, and upon such
terms and conditions (including coverage for cost of claims), and in amounts
as the Lessee customarily maintains with respect to the aircraft in the
Lessee's fleet of the same type and model and operated on the same routes as
the Aircraft (except that the Lessee shall be required to maintain (i) allied
perils, hijacking (air piracy) and governmental confiscation and expropriation
insurance (except with respect to 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 and (ii) war risk insurance
only if the Aircraft is operated in a war zone or a recognized area of armed
hostilities), provided that such insurance shall at all times while the
Aircraft is subject to this Lease and the Lien of the Indenture be on an
agreed-value basis for an amount not less than an amount equal to the
Stipulated Loss Value for the Aircraft from time to time.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as an additional insured and as the
sole loss payee (hereinafter in this paragraph (b) sometimes referred to as
"Loss Payee");
(ii)provide with respect to coverage provided under this Section
13.02, (except as otherwise provided under Section 13.03 hereof when an
Event of Loss or a Payment Default, Bankruptcy Default or Event of Default
has occurred and is continuing), that (i) in the event of a loss involving
proceeds in the aggregate in excess of $6,000,000, the proceeds in respect
of such loss up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to the Lessor (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee), it being understood and
agreed that in the case of any payment to the Lessor (or the Indenture
Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the
Indenture Trustee) shall in the aggregate upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in the
aggregate of $6,000,000 or less or the amount of any proceeds of any loss
in excess of the Stipulated Loss Value for the Aircraft shall be paid to
the Lessee or its order to pay for repairs or replacement property;
(iii)provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affect the scope
of the coverage required herein, or if such insurance is allowed to lapse
for nonpayment of premium, such cancellation, change or lapse shall not be
effective as to the Loss Payee for thirty days (except in the case of
war-risk coverage in which event the applicable period shall be seven (7)
days or such other period as may be customary) after receipt by the Loss
Payee of written notice from such insurer of such cancellation, change or
lapse;
(iv)provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi)be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii)provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix)in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts; or
(ii)if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Section
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee.
(c) Application of Payments During Existence of Certain Defaults. Any
amount referred to in this Article 13 which is payable to or retainable by the
Lessee shall not be paid to or retained by the Lessee if at the time of such
payment or retention a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing, but shall be held by or paid over to
the Indenture Trustee (unless the Indenture has been discharged in which case
such amount shall be paid to the Lessor) to be held in accordance with Article
23 hereof, as security for the obligations of the Lessee under this Lease and,
if an Event of Default shall have occurred and be continuing, applied against
the Lessee's obligations hereunder as and when due. At such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount shall be paid to the Lessee to the extent not
previously applied in accordance with the preceding sentence.
(d) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee will cause its aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, 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
Lease. The Lessee will cause such aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly
of any default in the payment of any premium and of any other act or omission
on the part of the Lessee of which it has knowledge and which might
invalidate, cause cancellation of or render unenforceable all or any part of
any insurance carried by the Lessee with respect to the Aircraft. The Lessee
will cause such insurance broker to agree to advise the Lessor, the Indenture
Trustee and the Owner Participant in writing if and when it becomes evident to
such broker that any insurance policy carried and maintained on the Aircraft
pursuant to this Article 13 will not be renewed at the scheduled expiration
date for such policy. If the Lessee shall fail to maintain insurance as
required, the Lessor may, at its option, provide such insurance, and in such
event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental
Rent, for the cost of such insurance; provided, however, that no exercise of
said option shall affect the provisions of this Lease, including the
provisions that failure by the Lessee to maintain the prescribed insurance
shall constitute an Event of Default or otherwise constitute a waiver of any
other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
manner and in such reasonable amounts as are then generally applicable to
other aircraft or engines of the Lessee of the same type and model as the
Aircraft, but in no case shall such self-insurance with respect to all
aircraft (whether owned or leased) in the Lessee's fleet in aggregate exceed
for any 12-month policy year an amount equal to the lesser of (i) 50% of the
highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft (and/or retentions) not in excess of the amount imposed by the
aircraft hull or liability insurer shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01.Right of Inspection. At reasonable times, and upon at
least ten (10) Business Days' prior written notice to the Lessee, the Lessor,
the Indenture Trustee or the Owner Participant, or their respective authorized
representatives, may inspect the Aircraft and upon at least ten (10) Business
Days' prior written notice, all Aeronautics Authority required books and
records of the Lessee or any sublessee relating to the maintenance of the
Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the first sentence of this Section 14.01, unless a
material Default relating to maintenance or an Event of Default shall have
occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14.
Section 14.02.No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01.Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or (ii) to a wholly-owned
domestic subsidiary of the Lessee which shall be a certificated U.S. Air
Carrier. Any such assignment, conveyance or sublease shall in no way relieve
the Lessee from any obligation hereunder or under any other Operative
Agreement or any written agreement of the Lessee entered into in connection
with the transactions contemplated by the Operative Agreements, which shall be
and remain primary obligations of the Lessee. The Lessor agrees that it will
not assign or convey its right, title and interest in and to this Lease or the
Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02.Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01.Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that, in the case of insurance with respect to which cancellation
or lapse for nonpayment is not effective as to the Lessor, the Indenture
Trustee, the Holders or the Owner Participant for 30 days (seven days, in
the case of any aircraft war risk coverage) no such lapse or cancellation
shall constitute an Event of Default until the earlier of (A) 30 days (or
seven days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by any Additional Insured of
written notice of such lapse or cancellation and (B) the date that such
lapse or cancellation is effective as to any Additional Insured and
provided further that such failure shall not constitute an Event of Default
as long as the Aircraft is insured as required while on the ground and not
operated, or (ii) the Aircraft shall be operated at any time when
comprehensive airline liability insurance required under Section 13.01
hereof shall not be in effect (it being understood that the Lessee is not
required to maintain such insurance under Section 13.01 hereof while the
indemnification or insurance referred to in the proviso to Section 13.01(b)
hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the Owner
Participant or the Lessor has ceased to be a Citizen of the United States,
shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of 60 days after the date of
its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within 60 days, or
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Lessee or
of any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished or unterminated for 60 days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of 120 days after the Lessee shall have received written notice of
such misstatement.
ARTICLE 17
REMEDIES
Section 17.01.Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii)With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii)Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv)In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent
due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi)Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii)Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and state of airworthiness required by
such Article or in connection with any inspection, use, operation,
maintenance, insurance, storage, or leasing carried out as part of such
exercise.
Section 17.02.Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03.Waiver. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04.Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01.Quiet Enjoyment. So long as no Event of Default shall
have occurred and be continuing, the Lessor covenants that neither it nor any
other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and
it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01.Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the
Transportation Code and will maintain the recordation of the Indenture until
the Lien of the Indenture shall have been discharged pursuant to the terms of
the Indenture. In addition, the Lessee will, at the Lessee's own cost and
expense, promptly and duly execute and deliver to the Lessor, the Owner
Participant and the Indenture Trustee such further documents and assurances to
carry out the intent and purpose of this Lease and the Indenture and to
establish and protect the rights and remedies created or intended to be
created in favor of the Lessor under this Lease, and of the Owner Participant
under the Trust Agreement, and of the Indenture Trustee under the Indenture,
including, without limitation, the execution and filing of Uniform Commercial
Code financing and continuation statements, the execution and delivery of
supplements and amendments to this Lease and the Indenture, in recordable
form, subjecting to this Lease and the Indenture any Replacement Airframe
and/or Replacement Engines delivered by the Lessee pursuant to Section 11.03
hereof and any Replacement Engine delivered by the Lessee pursuant to Section
11.04 hereof and the recording and filing of counterparts of this Lease and
the Indenture in accordance with the laws of such jurisdictions as the Lessor
or the Indenture Trustee may from time to time deem advisable. The foregoing
does not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01.Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor, the Owner Participant, any
Holder, the Indenture Trustee or anyone else for any reason (including,
without limitation, any breach by the Lessor or the Owner Participant or
the Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii)any defect in the title, airworthiness, registration, eligibility
for registration under the Transportation Code (and the regulations
thereunder) or under any of the laws or regulations of any other country of
registry of the Aircraft, condition, design, operation, merchantability or
fitness for use of, suitability for a particular purpose of, or any damage
to or loss or destruction of, the Aircraft or any portion thereof, or any
interruption or cessation in the use or possession of the Aircraft by the
Lessee or any sublessee for any reason including, without limitation, by
reason of governmental action or any doctrine of force majeure or
impossibility of performance;
(iii)any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv)any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
abate, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01.Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01.Security for Lessor's Obligations to Holders. In order
to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02.Intentionally Left Blank.
Section 22.03.Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, to
transfer or assign title to the Aircraft subject to this Lease, to make
(jointly with the Lessor where provided in the Indenture) all waivers and
agreements except as otherwise provided in the Indenture (including Section
8.01 thereof), to give all notices, consents and releases and to take all
action upon the happening of a Default or Event of Default under this Lease
(except as otherwise specifically provided in the Indenture, including Section
8.01 thereof), or to do any and all other things whatsoever which the Lessor
is or may become entitled to do under this Lease (except as otherwise provided
in the Indenture, including Section 8.01 thereof); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01.Investment of Security Funds. (a) Any amounts otherwise
payable to the Lessee in accordance with the terms hereof shall instead be
held by the Lessor as security for, and may be applied by the Lessor against,
the obligations of the Lessee under this Lease during such time as there shall
have occurred and be continuing a Payment Default, Bankruptcy Default or Event
of Default, and, at such times as there shall not be continuing a Payment
Default, Bankruptcy Default or Event of Default, such amounts, net of any
amounts which have been applied by the Lessor against the Lessee's obligations
hereunder, shall be paid to the Lessee as provided in this Lease. Any amounts
which are held by the Lessor pending payment to the Lessee shall, until paid
to the Lessee or applied against the Lessee's obligations hereunder, be
invested by the Lessor, as directed from time to time, in writing (and in the
absence of a written direction by the Lessee, the Lessor shall invest such
monies in direct obligations of the United States of America), by the Lessee
and at the expense and risk of the Lessee, in the following securities (which
in the case of securities referred to in subparagraphs (i) through (iv) of
this Section 23.01(a) hereof shall mature within ninety (90) days of the date
of purchase):
(i) direct obligations of the United States of America; or
(ii)obligations fully guaranteed by the United States of America; or
(iii)certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Moody's
or S&P; or
(iv)commercial paper rated A-1/P-1 by S&P or Moody's, respectively
(or if neither such organization shall rate such commercial paper at any
time, a rating by any nationally recognized statistical rating organization
in the United States of America equal to the highest rating assigned by
such rating organization) (which may include commercial paper issued by the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01.Lessor's Entry Into Lease. Except as expressly provided
herein, the Lessor and the Lessee agree that this Lease is executed by FSB not
individually but solely as Owner Trustee under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as such Owner
Trustee, that each and all of the representations, undertakings and agreements
by the Lessor herein are for the purpose and with the intention of binding
only the Lessor's Estate, and that in no case whatsoever shall FSB be
personally liable for any loss in respect of such representations,
undertakings and agreements, that actions to be taken by the Lessor pursuant
to its obligations hereunder may, in certain instances, be taken by the Lessor
only upon specific authority of the Owner Participant and the Indenture
Trustee, that nothing herein contained shall be construed as creating any
liability on FSB, individually or personally, to perform any covenant, either
express or implied, herein, all such liability, if any, being expressly waived
by the Lessee and by each and every Person now or hereafter claiming by,
through or under the Lessee except with respect to the gross negligence or
willful misconduct of FSB, and that so far as FSB, individually or personally
is concerned, the Lessee and any Person claiming by, through or under the
Lessee shall look solely to the Lessor's Estate for the performance by the
Lessor of any of its obligations under this Lease; provided, that nothing in
this Section 24.01 shall be construed to limit in scope or substance those
representations and warranties of FSB in its individual capacity set forth in
the Participation Agreement and the Trust Agreement. The term "Lessor" as
used in this Lease shall include any trustee succeeding FSB as Owner Trustee
under the Trust Agreement. Any obligation of the Lessor hereunder may be
performed by the Owner Participant, and any such performance shall not be
construed as revocation of the trust created by the Trust Agreement. Nothing
contained in this Lease shall restrict the operation of the provisions of the
Trust Agreement with respect to its revocation of the resignation or removal
of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01.Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2005 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (901) 395-3388, facsimile (901) 395-4758; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, the Agent, Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at Two International
Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust
Department, telephone (617) 664-5414, facsimile (617) 664-5371; or to such
other address as the Indenture Trustee shall from time to time designate in
writing to the Lessor, the Lessee, the Agent and the Owner Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01.Section Heading and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02.References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03.APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04.Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05.No Oral Modification. The terms and provisions of this
Lease may not be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any such change, waiver,
discharge or termination is also subject to the provisions of Section 8.01 and
Article XIII of the Indenture.
Section 26.06.Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07.Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08.Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01.Intent of the Parties. It is the intent of the parties
to this Lease that for all purposes (including, without limitation, U.S.
Federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02.Section 1110 Compliance. Notwithstanding any provision
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements are expressly intended to be, shall be and
should be construed so as to be, entitled to the full benefits of Section 1110
of the Bankruptcy Code and any successor provision thereof.
Section 27.03.Finance Lease. This Lease is a "finance lease" within
the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of the
Original Agreements, (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:
Additional Insured. As defined in Article 13 of the Lease.
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
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be 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 to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participants pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any replacement airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N667FE), dated as of October 15, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N667FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N667FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
August 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on November 28, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Memphis, Tennessee and the city in
which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates, and after
the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N667FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. January 30, 1997.
Consent and Agreement. The Consent and Agreement dated as of August
1, 1996 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, or such other office at which the Owner Trustee's
corporate trust business shall be administered which the Owner Trustee shall
have specified by notice in writing to the Lessee, the Owner Participant and
the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(a)(iv) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. August 28, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by manufacturer's serial numbers in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSB. First Security Bank, National Association, a national banking
association.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
August 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSB, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N667FE), dated as of August 1, 1996, as amended
and restated as of October 15, 1996, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N667FE) dated August 28, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N667FE) dated as of August 1, 1996, as amended and restated as of October 15,
1996, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to time
be supplemented or amended, or its terms waived or modified, to the extent
permitted by, and in accordance with, the terms of the Indenture, including,
without limitation, supplementation by one or more Lease Supplements entered
into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N667FE) dated August 28, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors and permitted assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N667FE), dated as of August
1, 1996, between the Owner Trustee and the Indenture Trustee, which together
with the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N667FE), dated August 28, 1996 attached thereto was
recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269964.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N667FE), dated August 28, 1996 attached thereto
was recorded as one instrument by the FAA on August 29, 1996, and assigned
Conveyance Number 2A269965.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N667FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of August 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N667FE) between the Lessee and the
Owner Participant as it was originally executed as of August 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N667FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of August 1, 1996 and filed with the
FAA on August 28, 1996.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N667FE), dated as of August 1, 1996, as amended and
restated as of October 15, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
June 1, 1996 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through Certificates,
Series B1 or 1996 Pass Through Certificates, Series B2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means both
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1996-B1
or Federal Express Pass Through Trust, 1996-B2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Certificates having a
Maturity in 2012, October 23, 2006 and with respect to the Certificates having
a Maturity in 2018, June 23, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary Agreement
II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. November 28, 2019 and each January 30 and July 30
commencing on January 30, 1997.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-B1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1996-B2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2003 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 30, 2015, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N667FE), dated as of August 1, 1996, as amended and restated as of
October 15, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, BA Securities, Inc. and First Chicago
Capital Markets, Inc.
Underwriting Agreement. The Underwriting Agreement dated October 17,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, 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.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount
that will be at least sufficient to pay in full, as of such
Payment Date, the aggregate unpaid principal amount of due and
unpaid installments on the Certificates outstanding on such
Payment Date, together with the accrued and unpaid interest
thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to
pay in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate
unpaid principal amount of the Certificates outstanding on such
date of payment, together with the accrued and unpaid interest
thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
in the Lessee's sole discretion) necessary, desirable or required to be
made at any time on or after the seventh anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on (and only on) the first Rent Payment Date occurring at least six months
after the Owner Participant have notified the Lessee that they will not
permit such Significant Expenditure to be financed as contemplated in
clause (ii) of the definition of "Significant Expenditure" below, for, at
the Lessee's option, either (1) the payment to the Lessor in immediately
available funds of an amount equal to the greater of the Fair Market Value
of the Aircraft and the Termination Value for the Aircraft, determined in
each case as of such Rent Payment Date, or (2) the assumption by the
Lessee, pursuant to Section 7.11 of the Participation Agreement and Section
2.12 of the Indenture, of all of the Lessor's obligations under the
Indenture, the Certificates and Section 7.04 of the Participation
Agreement, and the payment to the Lessor in immediately available funds of
an amount equal to the excess of (A) the greater of (I) the Termination
Value for the Aircraft, and (II) the Fair Market Value of the Aircraft,
both computed as of such Rent Payment Date, over (B) the unpaid principal
amount of the Certificates outstanding plus accrued interest as of such
date; it being understood that the Fair Market Value for this purpose shall
be determined without regard to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment (or, in the event the Owner Participant
disagrees with such judgment, in accordance with the appraisal procedures
set forth in Section 4.03 of the Lease) would exceed $10,000,000 and (ii)
the Owner Participant will not permit to be financed on similar terms and
conditions then available for similar transactions for like-situated
lessees through the issuance of additional non-recourse notes of the Lessor
or through additional equity investments of the Owner Participant or both
(it being understood that Section 4.02(a)(D) of the Lease shall not impose
any obligation on the Owner Participant to provide such financing). The
Lessee, prior to notifying the Owner Participant and the Indenture Trustee
in accordance with Paragraph (F) of this Schedule V of its election to
purchase the Aircraft pursuant to Section 4.02(a)(D) of the Lease, shall
notify the Owner Participant of the non-severable improvements which would
satisfy the conditions described in clauses (i) and (iii) of the preceding
sentence, and provide the Owner Participant with a reasonable opportunity
to permit the financing thereof as contemplated in clause (ii) of such
sentence. The Owner Participant shall notify the Lessee of their decision
with respect to such financing within 60 days after the Lessee has given
the notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the seventh anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on (and only on) the
first Rent Payment Date (the "Burdensome Indemnity Payment Date") following
the date that the Owner Participant provides the Lessee with a written
notice of any Loss (as defined in Section 5 of the Tax Indemnity Agreement)
that is a Burdensome Indemnity Payment for, at the Lessee's option, either
(1) the payment to the Lessor in immediately available funds of an amount
equal to the greater of the Fair Market Value of the Aircraft and the
Termination Value for the Aircraft, determined in each case as of such
Burdensome Indemnity Payment Date, or (2) the assumption by the Lessee,
pursuant to Section 7.11 of the Participation Agreement and Section 2.12
of the Indenture, of all of the obligations of the Lessor under the
Indenture, the Certificates and Section 7.04 of the Participation Agreement
and the payment to the Lessor in immediately available funds of an amount
equal to the excess of (A) the greater of (I) the Termination Value for the
Aircraft and (II) the Fair Market Value of the Aircraft, both computed as
of the Burdensome Indemnity Payment Date, over (B) the unpaid principal of
the Certificates outstanding plus accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which under
the circumstances cannot be commercially reasonably avoided by the Lessee
which causes the aggregate net present value as of the determination date,
discounted semi-annually at the Debt Rate, of all such Losses (but
excluding any Losses for which the Owner Participant shall have waived its
right to payment under the Tax Indemnity Agreement) paid or payable by the
Lessee which, in the opinion of independent tax counsel, can be avoided
through a purchase by the Lessee of the Aircraft, to exceed 3% of the
Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 180 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture. The
Lessee's notice pursuant to Section 4.02(a)(D) or 4.02(a)(E) hereof shall
become irrevocable on the Business Day preceding the 15th day prior to the
applicable purchase date designated in such notice but if any such notice
is revoked, the Lessee shall no longer be entitled to purchase the Aircraft
as a result of the facts and circumstances originally giving rise to such
right and will pay all reasonable expenses of the Owner Participant, the
Owner Trustee and the Indenture Trustee in connection therewith.
SCHEDULE VI
DESCRIPTION OF ORIGINAL LEASE
Lease Agreement (Federal Express Corporation Trust No. N667FE) dated
as of August 1, 1996 between Federal Express Corporation, as lessee and First
Security Bank, National Association, as owner trustee under Trust Agreement
(Federal Express Corporation Trust No. N667FE) dated as of August 1, 1996
between PMCC Leasing Corporation, as owner participant and First Security
Bank, National Association, recorded by the Federal Aviation Administration on
August 29, 1996 and assigned Conveyance No. 2A269965, as supplemented by the
following described instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
- ---------- ---------- --------- -----------
Lease Supplement No. 1
(Federal Express Corporation
Trust No. N667FE) 08/28/96 08/29/96 2A269965
Exhibit A
to
Lease Agreement
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N667FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N667FE), dated ________ __, ____, between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement (Federal Express
Corporation Trust No. N667FE) dated as of August 1, 1996, as amended and
restated as of October 15, 1996 (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N667FE) dated as of
August 1, 1996, as amended and restated as of October 15, 1996 (the "Lease",
the defined terms in the Lease being used in this Lease Supplement with the
same meaning as in the Lease), which provides for the execution and delivery
of a Lease Supplement, substantially in the form of this Lease Supplement No.
__, for the purpose of leasing under the Lease the aircraft and engines
described below ("Aircraft") as and when delivered by the Lessor to the Lessee
in accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a part of
this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and other
good and sufficient consideration, the Lessor and the Lessee agree as follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date
of this Lease Supplement consists of the following:
(a) Airbus A300F4-605R Airframe; U.S. Registration Number ______;
Manufacturer's Serial No. ___; and
(b) 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).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement II.
Section 4. Term. The Term for the Delivered Aircraft shall commence
on the Delivery Date, and shall terminate on ______, ____, unless earlier
terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent
for the Delivered Aircraft throughout the Term thereof in accordance with the
terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee
hereby confirms to the Lessor that the Delivered Aircraft has been duly marked
in accordance with Section 7.03 of the Lease and that the Lessee has accepted
the Delivered Aircraft for all purposes hereof and of the Lease, and as being
free and clear of all Liens except Lessor's Liens. Such acceptance by the
Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the provisions
of the Lease are hereby incorporated by reference in this Lease Supplement to
the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND
IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this Lease
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the original chattel-paper
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
Section 10. Counterparts. This Lease Supplement may be executed in
any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall
be the original for purposes of perfecting a security interest therein as
chattel paper under the Uniform Commercial Code), but all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Lease Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written.
LESSOR: FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: __________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: ___________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Receipt of this original counterpart of the Lease Supplement is hereby
acknowledged on this __ day of _________.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
EXHIBIT 4.f
ANCILLARY AGREEMENT I
(FEDERAL EXPRESS CORPORATION TRUST NO. N586FE)
October 23, 1996
Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, IL 60008
First Security Bank,
National Association
79 South Main Street
Salt Lake City, UT 84111
State Street Bank and Trust Company
4 International Place
3rd Floor
Boston, MA 02115
Ladies and Gentlemen,
In connection with that certain Participation Agreement (Federal
Express Corporation Trust No. N586FE), dated as of April 1, 1996, as amended
and restated as of September 1, 1996 and as further amended and restated as of
October 15, 1996 (the "Participation Agreement"), among Federal Express
Corporation, as Lessee ("Lessee"), Ameritech Credit Corporation, as Owner
Participant ("Owner Participant"), Morgan Guaranty Trust Company of New York,
Bank of America National Trust & Savings Association, The Chase Manhattan
Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as
Original Loan Participants ("Original Loan Participants"), First Security
Bank, National Association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement
referred to therein ("Owner Trustee"), State Street Bank and Trust Company,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee under the Trust Indenture ("Indenture Trustee"), and State
Street Bank and Trust Company, not in its individual capacity, except as
otherwise stated, but solely as Pass Through Trustee under the Pass Through
Trust Agreement ("Pass Through Trustee"), and that certain Lease Agreement
(Federal Express Corporation Trust N586FE) dated as of September 1, 1996, as
amended and restated as of October 15, 1996 (the "Lease") by and between First
Security Bank, National Association, not in its individual capacity but solely
as Owner Trustee, as Lessor, and Federal Express Corporation, as Lessee, the
undersigned agree as follows, notwithstanding anything else in the
Participation Agreement, the Lease or any other Operative Agreement to the
contrary:
1. The words "Default or" shall be added to clause (i)(A) of the proviso
to the first paragraph of Section 7.02(a) of the Lease before the
words "Event of Default shall have occurred and be continuing on the
date the sublease is entered into".
2. For purposes of Section 7.02(a)(ii) of the Lease, the Lessee may not
without the prior written consent of the Lessor subject the Airframe
or permit the Airframe to be subjected to any interchange agreements.
3. Sections 13.01(a)(i) and 13.02(a) of the Lease shall require the
Lessee to maintain war risk insurance if the Aircraft is operated in
a war zone or a recognized area of armed hostilities, unless the
Lessee has obtained indemnification or insurance from the Government
satisfactory to the Lessor and the Indenture Trustee.
4. For purposes of Section 14.01 of the Lease, if an Event of Default
shall have occurred and be continuing, two (2) days' notice only
shall be required to be given to the Lessee by the Lessor, the
Indenture Trustee, the Loan Participants or the Owner Participant, as
the case may be, in order for such Person or its authorized
representative to inspect the Aircraft and the Aeronautics
Authority-required books and records of the Lessee or any sublessee
relating to the maintenance of the Aircraft.
This Ancillary Agreement is intended for all purposes of the Lease
and the other Operative Agreements to be an Ancillary Agreement for the
benefit of the Owner Participant, the Owner Trustee, the Loan Participants,
each Holder from time to time of any Certificate and the Indenture Trustee,
and an Operative Agreement.
This Ancillary Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York, including
matters of construction, validity and performance, without giving effect to
principles of conflicts of laws.
To the extent that this Ancillary Agreement constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Ancillary Agreement may
be created through the transfer or possession of any counterpart other than
the original counterpart, which shall be the counterpart containing the
receipt executed by the Indenture Trustee on its signature page.
This Ancillary Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be an original (except that
only the counterpart bearing the receipt executed by the Indenture Trustee
shall be the original for purposes of perfecting a security interest therein
as chattel paper under the Uniform Commercial Code), but all such counterparts
shall together constitute but one and the same instrument.
This Ancillary Agreement shall inure to the benefit of the addressees
hereof and their respective successors and assigns.
Terms used herein without definition shall have the respective
meanings set forth in the Lease.
This Ancillary Agreement is intended to amend the Lease, and
provisions of this Ancillary Agreement shall control in the event any
provision of the Lease should conflict with any provision hereof. The
provisions of Section 22.03 of the Lease are hereby incorporated herein.
The parties hereto agree that acceptance of this Ancillary Agreement
may be made by the Indenture Trustee, on behalf of the Loan Participants and
the Holders from time to time of the Certificates, by execution by the
Indenture Trustee of the form of acceptance provided below, with the same
effect as if the Loan Participants and such Holders had executed such form of
acceptance.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _______________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
Agreed and Accepted:
AMERITECH CREDIT CORPORATION
By: _______________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By: _______________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By: _______________________________
Name:
Title:
Receipt of this original counterpart of the Ancillary Agreement I is
hereby acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By: _______________________________
Name:
Title:
ANCILLARY AGREEMENT I
(FEDERAL EXPRESS CORPORATION TRUST NO. N662FE)
This Ancillary Agreement I ("Agreement") dated September 23, 1996, as
amended and restated this 23rd day of October, 1996 among Federal Express
Corporation, a Delaware corporation, PMCC Leasing Corporation, a Delaware
corporation, First Security Bank, National Association, a national banking
association, in its capacity as Owner Trustee under the Lease, and State
Street Bank and Trust Company, a Massachusetts trust company, as Indenture
Trustee.
Reference is made to that certain leveraged lease dated as of
September 1, 1996, as amended and restated as of October 15, 1996 of one (1)
Airbus A300F4-605R Aircraft initially bearing FAA Registration No. N662FE (or
any replacement thereof under such lease). Capitalized terms used herein
shall have the meaning assigned to such terms in the Participation Agreement
(Federal Express Corporation Trust No. N662FE), dated as of September 1, 1996,
as amended and restated as of October 15, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee ("Lessee"), PMCC
Leasing Corporation, as Owner Participant ("Owner Participant"), Morgan
Guaranty Trust Company of New York, Bank of America National Trust & Savings
Association, The Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants ("Original Loan
Participants"), First Security Bank, National Association, not in its
individual capacity, except as otherwise stated, but solely as Owner Trustee
under the Trust Agreement referred to therein ("Owner Trustee"), State Street
Bank and Trust Company, not in its individual capacity, except as otherwise
stated, but solely as Indenture Trustee under the Trust Indenture and Security
Agreement ("Indenture Trustee") and State Street Bank and Trust Company, not
in its individual capacity, except as otherwise stated, but solely as Pass
Through Trustee. With respect to said transaction the parties agree as
follows, anything in the Operative Agreements to the contrary notwithstanding:
1. The references to Event of Default in Section 4.01(a) of the
Lease shall include Payment Default and Bankruptcy Default.
2. Clause (iii) of the first sentence of Section 4.02(a) of the
Lease shall also include a Payment Default.
3. The words "or substantial civil unrest" shall be inserted after
the words "such country shall not then be experiencing war" in Section
7.02(a)(i) of the Lease and "which is not experiencing war" in Section
7.02(a)(ii) of the Lease.
4. Section 10.01(c) of the Lease shall be replaced with and read as
follows:
(c) Payments to the Lessor. The total selling price
realized at a sale pursuant to Section 10.01(b) hereof (the "Gross
Sales Price") shall be retained by the Lessor (or the Indenture
Trustee as long as the Indenture is in force) and, in addition, on or
before the Proposed Termination Date, the Lessee shall pay to the
Lessor (or the Indenture Trustee as long as the Indenture is in
force), by wire transfer of immediately available funds, the sum of:
(i) the excess, if any, of the Termination Value for the
Aircraft computed as of the Proposed Termination Date over the
Gross Sales Price; plus
(ii) the installment of Basic Rent due with respect to
the Aircraft on the Proposed Termination Date to the extent
payable in arrears but not to the extent payable in advance;
plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any
Make-Whole Premium) under this Lease and any other Operative
Agreement.
All expenses of the sale shall be borne by the Lessee.
5. The first proviso in Section 16.01(d) of the Lease shall be
replaced with and read as follows:
provided, that in the event such failure is curable and so long
as (but for no longer than 150 days after such 30-day period)
the Lessee shall have promptly undertaken such cure after the
Lessee receives notice thereof which undertaking shall be
diligently and continuously pursued using the Lessee's
reasonable best efforts, and so long as, in the case of the
Lessee's obligation to remove Liens, during such extended cure
period there is no (i) material danger of the sale, forfeiture
or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein, (ii) material risk of civil
liabilities or (iii) risk of the assertion of criminal charges
against the Lessor, the Owner Participant or the Indenture
Trustee, such failure shall not constitute an Event of Default;.
6. The definition of "Replacement Engine" in Schedule II to the
Participation Agreement shall read as follows:
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine, and suitable for installation
and use on the Airframe; provided, that an engine of another manufacturer of
equivalent or greater value, utility, remaining useful life and airworthiness,
and suitable for installation and use on the Airframe may constitute a
Replacement Engine if at the time of replacement General Electric is no longer
manufacturing engines certificated for use on the Airframe, the Lessee does not
at the time of replacement own or lease any General Electric engines
certificated for use on the Airframe or, except in connection with the return
of the Aircraft under Article 12 of the Lease, General Electric is no longer
manufacturing engines which reasonably fulfill the Lessee's operational
requirements; and provided further that such engine shall be of the same make,
model and manufacturer as the other engine installed on the Aircraft and shall
be an engine of a type then being utilized by the Lessee on a significant
number of other Airbus A300-600 airframes operated by the Lessee.
7. The Assignment and Assumption Agreement shall be substantially in
the form of Exhibit E-1 to the Participation Agreement, and the Owner
Participant Guaranty shall be substantially in the form of Exhibit E-2 to the
Participation Agreement.
This Agreement is intended to be and shall be deemed an "Operative
Agreement". This Agreement is further intended to amend and modify certain
provisions of the other Operative Agreements as set forth herein, and in the
event of any conflict between the provisions of this Agreement and any other
Operative Agreement, the provisions hereof shall govern.
To the extent that this Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in this Agreement may be created through
the transfer or possession of any counterpart other than the original
counterpart, which shall be the counterpart containing the receipt executed by
the Indenture Trustee on its signature page.
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
This Agreement may be executed in separate counterparts, each of which
when so executed and delivered shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all such counterparts shall
together constitute but one and the same instrument.
This Agreement shall inure to the benefit of the addressees hereof
and their respective successors and assigns.
The parties hereto agree that acceptance of this Agreement may be
made by the Indenture Trustee, on behalf of the Holders from time to time of
the Certificates, by execution by the Indenture Trustee of the form of
acceptance provided below, with the same effect as if such Holders had
executed such form of acceptance.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
PMCC LEASING CORPORATION
By: _________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
not in its individual capacity,
but solely as Owner Trustee
By: _________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
not in its individual capacity,
but solely as Indenture Trustee
By: _________________________________
Name:
Title:
Receipt of this original counterpart of the Ancillary Agreement
I is hereby acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY
not in its individual capacity,
but solely as Indenture Trustee
By: _________________________________
Name:
Title:
ANCILLARY AGREEMENT I
(FEDERAL EXPRESS CORPORATION TRUST NO. N667FE)
This Ancillary Agreement I ("Agreement") dated August 28, 1996,
as amended and restated this 23rd day of October, 1996 among Federal Express
Corporation, a Delaware corporation, PMCC Leasing Corporation, a Delaware
corporation, First Security Bank, National Association, a national banking
association, in its capacity as Owner Trustee under the Lease, and State Street
Bank and Trust Company, a Massachusetts trust company, as Indenture Trustee.
Reference is made to that certain leveraged lease dated as of
August 1, 1996, as amended and restated as of October 15, 1996 of one (1)
Airbus A300F4-605R Aircraft initially bearing FAA Registration No. N667FE (or
any replacement thereof under such lease). Capitalized terms used herein
shall have the meaning assigned to such terms in the Participation Agreement
(Federal Express Corporation Trust No. N667FE), dated as of August 1, 1996, as
amended and restated as of October 15, 1996 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee ("Lessee"), PMCC Leasing
Corporation, as Owner Participant ("Owner Participant"), Morgan Guaranty Trust
Company of New York, Bank of America National Trust & Savings Association, The
Chase Manhattan Bank, Commerzbank AG, Atlanta Agency and NationsBank, N.A.
(South), as Original Loan Participants ("Original Loan Participants"), First
Security Bank, National Association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement
referred to therein ("Owner Trustee"), State Street Bank and Trust Company,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee under the Trust Indenture and Security Agreement ("Indenture
Trustee") and State Street Bank and Trust Company, not in its individual
capacity, except as otherwise stated, but solely as Pass Through Trustee.
With respect to said transaction the parties agree as follows, anything in the
Operative Agreements to the contrary notwithstanding:
1. The references to Event of Default in Section 4.01(a) of
the Lease shall include Payment Default and Bankruptcy Default.
2. Clause (iii) of the first sentence of Section 4.02(a) of
the Lease shall also include a Payment Default.
3. The words "or substantial civil unrest" shall be inserted
after the words "such country shall not then be experiencing war" in Section
7.02(a)(i) of the Lease and "which is not experiencing war" in Section
7.02(a)(ii) of the Lease.
4. Section 10.01(c) of the Lease shall be replaced with and
read as follows:
(c) Payments to the Lessor. The total selling
price realized at a sale pursuant to Section 10.01(b) hereof
(the "Gross Sales Price") shall be retained by the Lessor (or
the Indenture Trustee as long as the Indenture is in force)
and, in addition, on or before the Proposed Termination Date,
the Lessee shall pay to the Lessor (or the Indenture Trustee as
long as the Indenture is in force), by wire transfer of
immediately available funds, the sum of:
(i) the excess, if any, of the Termination Value
for the Aircraft computed as of the Proposed Termination
Date over the Gross Sales Price; plus
(ii) the installment of Basic Rent due with
respect to the Aircraft on the Proposed Termination Date
to the extent payable in arrears but not to the extent
payable in advance; plus
(iii) all other amounts then due and payable by the
Lessee (including, without limitation, the aggregate
amount of any Make-Whole Premium) under this Lease and
any other Operative Agreement.
All expenses of the sale shall be borne by the Lessee.
5. The first proviso in Section 16.01(d) of the Lease shall be
replaced with and read as follows:
provided, that in the event such failure is curable and
so long as (but for no longer than 150 days after such
30-day period) the Lessee shall have promptly undertaken
such cure after the Lessee receives notice thereof which
undertaking shall be diligently and continuously pursued
using the Lessee's reasonable best efforts, and so long
as, in the case of the Lessee's obligation to remove
Liens, during such extended cure period there is no (i)
material danger of the sale, forfeiture or loss of the
Lessor's Estate, the Aircraft, the Airframe or any Engine
or any interest therein, (ii) material risk of civil
liabilities or (iii) risk of the assertion of criminal
charges against the Lessor, the Owner Participant or the
Indenture Trustee, such failure shall not constitute an
Event of Default;.
6. The definition of "Replacement Engine" in Schedule II to the
Participation Agreement shall read as follows:
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine, and suitable for installation
and use on the Airframe; provided, that an engine of another manufacturer of
equivalent or greater value, utility, remaining useful life and airworthiness,
and suitable for installation and use on the Airframe may constitute a
Replacement Engine if at the time of replacement General Electric is no longer
manufacturing engines certificated for use on the Airframe, the Lessee does
not at the time of replacement own or lease any General Electric engines
certificated for use on the Airframe or, except in connection with the return
of the Aircraft under Article 12 of the Lease, General Electric is no longer
manufacturing engines which reasonably fulfill the Lessee's operational
requirements; and provided further that such engine shall be of the same make,
model and manufacturer as the other engine installed on the Aircraft and shall
be an engine of a type then being utilized by the Lessee on a significant
number of other Airbus A300-600 airframes operated by the Lessee.
7. The Assignment and Assumption Agreement shall be
substantially in the form of Exhibit E-1 to the Participation Agreement, and
the Owner Participant Guaranty shall be substantially in the form of Exhibit
E-2 to the Participation Agreement.
This Agreement is intended to be and shall be deemed an
"Operative Agreement". This Agreement is further intended to amend and modify
certain provisions of the other Operative Agreements as set forth herein, and
in the event of any conflict between the provisions of this Agreement and any
other Operative Agreement, the provisions hereof shall govern.
To the extent that this Agreement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Agreement may be
created through the transfer or possession of any counterpart other than the
original counterpart, which shall be the counterpart containing the receipt
executed by the Indenture Trustee on its signature page.
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
This Agreement may be executed in separate counterparts, each of
which when so executed and delivered shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all such counterparts shall
together constitute but one and the same instrument.
This Agreement shall inure to the benefit of the addressees
hereof and their respective successors and assigns.
The parties hereto agree that acceptance of this Agreement may
be made by the Indenture Trustee, on behalf of the Holders from time to time
of the Certificates, by execution by the Indenture Trustee of the form of
acceptance provided below, with the same effect as if such Holders had
executed such form of acceptance.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
PMCC LEASING CORPORATION
By: _________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
not in its individual capacity,
but solely as Owner Trustee
By: _________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
not in its individual capacity,
but solely as Indenture Trustee
By: _________________________________
Name:
Title:
Receipt of this original counterpart of the Ancillary Agreement
I is hereby acknowledged on this __ day of October 1996.
Indenture Trustee: STATE STREET BANK AND TRUST COMPANY
not in its individual capacity,
but solely as Indenture Trustee
By: _________________________________
Name:
Title:
