As filed with the Securities and Exchange Commission on May 10, 1996
Registration No. 33-56569
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
POST-EFFECTIVE AMENDMENT NO. 1 to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________________
Federal Express Corporation
(Exact name of registrant as specified in its charter)
Delaware 71-0427007
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
KENNETH R. MASTERSON, ESQ.
Executive Vice President, General Counsel and Secretary
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, Tennessee 38132
(901) 395-3388
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_______________________
Copies to:
SARAH JONES BESHAR, ESQ.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
_______________________
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this registration statement as
determined in light of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans,
check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum
Title of Each Class of Amount Being Proposed Maximum Aggregate Amount of
Securities Being Registered Registered Offering Price Per Unit Offering Price(1) Registration Fee
<S> <C> <C> <C> <C>
________________________________________________________________________________________________________________
Equipment Trust Certificates;
Pass Through Certificates $50,000,000 100% $50,000,000 $17,241.38
================================================================================================================
(1) Estimated solely for purposes of determining the registration fee.
</TABLE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
=============================================================================
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus; one, as
supplemented, to be used in connection with offerings of equipment trust
certificates and the other, as supplemented, to be used in connection with
offerings of pass through certificates. Neither prospectus will be used to
consummate sales of securities unless accompanied by a prospectus supplement
applicable to the securities offered thereby.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 10, 1996
PROSPECTUS
- - ----------
[COMPANY LOGO]
EQUIPMENT TRUST CERTIFICATES
_____________________
Up to $197,380,000 aggregate principal amount of Equipment Trust
Certificates (the "Certificates") may be offered for sale from time to time
pursuant to this Prospectus and one or more Prospectus Supplements. The
Certificates may be offered in one or more Series in amounts, at prices and on
terms to be determined at the time of sale. The Certificates of each Series
will be issued as nonrecourse obligations by an Owner Trustee, acting not in
its individual capacity but solely as the Owner Trustee of a separate Owner
Trust, and authenticated by the Indenture Trustee, acting not in its
individual capacity but solely as the Indenture Trustee under an Indenture
among the Owner Trustee, the Indenture Trustee and Federal Express Corporation
(the "Corporation"), to finance or refinance a portion of the payment by such
Owner Trustee of the purchase price for a specified aircraft (an "Aircraft"),
which has been or will be leased to the Corporation in connection with a
leveraged lease transaction. The Prospectus Supplement relating to each
offering will describe certain terms of the Certificates offered thereby, the
Indentures and Leases and the leveraged lease transactions and Aircraft
relating to such Certificates.
For each Aircraft, the related Owner Trustee will issue Certificates
of the related Series, each of which may have a different principal amount,
maturity date and interest rate, which will be set forth on the cover of the
related Prospectus Supplement. Each offering pursuant to this Prospectus and
a related Prospectus Supplement may consist of one or more Series of
Certificates. The Certificates of each Series will be secured by a security
interest in the related Aircraft and by the Lease relating thereto, including
the right to receive rent payable by the Corporation under such Lease.
Although the Certificates will not be obligations of, nor guaranteed by, the
Corporation, the amounts payable by the Corporation under the Lease of each
Aircraft will be sufficient to pay in full when due all principal of and
interest on the Certificates related to such Aircraft.
Interest will be payable on the Certificates of each Series on the
dates and at the rates per annum set forth for such Certificates in the
applicable Prospectus Supplement. Principal will be payable on the
Certificates of each Series in scheduled amounts and on specified dates as set
forth in the applicable Prospectus Supplement. The Certificates shall be
issued in registered form only and may, if so specified in the applicable
Prospectus Supplement, be issued in accordance with a book-entry system.
The Certificates may be sold to or through underwriters or directly
to other purchasers or through agents. The Prospectus Supplement relating to
each offering will set forth the names of any underwriters, dealers or agents
involved in the sale of the Certificates in connection with which this
Prospectus is being delivered, the amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters or agents.
Prior to their issuance there will have been no market for the
Certificates of any Series and there can be no assurance that one will
develop. Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporation does not intend to apply for the listing of any Series of
Certificates on a national securities exchange.
This Prospectus may not be used to consummate sales of any
Certificates unless accompanied by the Prospectus Supplement applicable to the
Certificates being sold.
______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________
The date of this Prospectus is May , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.
AVAILABLE INFORMATION
Federal Express Corporation (the "Corporation") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy and information statements and other information filed by the
Corporation with the Commission can be inspected, and copies may be obtained
at prescribed rates, at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
Regional Offices of the Commission: Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office,
7 World Trade Center, New York, New York 10048. Such material can also be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on
Form S-3 (together with all amendments and exhibits, herein referred to as the
"Registration Statement") filed by the Corporation under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information included in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to the
Corporation and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission in accordance with
the provisions of the Exchange Act are incorporated herein by reference and
made a part hereof:
1. The Corporation's Annual Report on Form 10-K for the fiscal
year ended May 31, 1995 filed August 4, 1995.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1995, November 30, 1995 and February
29, 1996, respectively, filed October 13, 1995, January 12, 1996
and April 12, 1996, respectively.
3. The Corporation's Current Reports on Form 8-K dated August 14,
1995, August 16, 1995, September 14, 1995, October 17, 1995,
October 25, 1995, October 26, 1995, January 12, 1996 and March
14, 1996, respectively, filed August 15, 1995, August 18, 1995,
September 19, 1995, October 18, 1995, October 27, 1995, October
30, 1995, January 16, 1996 and March 26, 1996, respectively.
All documents filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
before the termination of the offering made by this Prospectus shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will furnish without charge to each person, including
any beneficial owner, to whom this Prospectus is delivered, upon written or
oral request of such person, a copy of any or all documents incorporated by
reference in this Prospectus, without exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Shirlee M. Clark, Manager --
Media Relations, Federal Express Corporation, by mail at Box 727, Memphis,
Tennessee 38194-1850 or by telephone at (901) 395-3490.
FEDERAL EXPRESS CORPORATION
The Corporation offers a wide range of express services for the
time-definite transportation of documents, packages and freight throughout the
world using an extensive fleet of aircraft and vehicles and leading-edge
information technologies. Corporate headquarters are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
Year Ended May 31 February 28 February 29
-------------------------------- ----------- -----------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
Ratio of
Earnings to
Fixed Charges(a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x
________________
(a) Earnings included in the calculation of the ratio of earnings to
fixed charges represent income before income taxes plus fixed
charges (other than capitalized interest). Fixed charges include
interest expense, capitalized interest, amortization of debt
issuance costs and a portion of rent expense representative of
interest.
(b) Earnings were inadequate to cover fixed charges by $173.4 million
for the year ended May 31, 1992.
USE OF PROCEEDS
The proceeds from the sale of the equipment trust certificates
(the "Certificates") of each series (a "Series") offered pursuant to this
Prospectus and a related Prospectus Supplement will be used to finance or
refinance the debt portion and, in certain cases, to refinance some of the
equity portion of a separate leveraged lease transaction entered into by
the Corporation, as lessee, with respect to an aircraft (an "Aircraft")
specified in such Prospectus Supplement. For each Aircraft, unless
otherwise specified in the applicable Prospectus Supplement, the debt
portion financed or refinanced will not exceed 80% of the purchase price
for such Aircraft.
The discounts and commissions relating to the offering of the
Certificates of each Series will be paid by the Owner Participant (as defined
below). The other expenses relating to the issuance and offering of such
Certificates (other than certain expenses to be paid directly by the
Corporation) will be paid by the Owner Participant as such other expenses
become due or, if previously paid by the Corporation, will be reimbursed to
the Corporation by the Owner Participant.
OUTLINE OF LEVERAGED LEASE TRANSACTIONS
Each Prospectus Supplement will specify the type and model of
Aircraft relating to the Certificates offered thereby, the engines with
which such Aircraft is equipped and when such Aircraft was delivered new by
the manufacturer to the Corporation or the Owner Trustee, as the case may
be. Each Aircraft has been or will be sold to Wilmington Trust Company, or
another bank or trust company, not in its individual capacity but solely
as owner trustee (the "Owner Trustee") of a trust (an "Owner Trust" created
pursuant to a "Trust Agreement") for the benefit of the owner participant
named in the related Trust Agreement (the "Owner Participant").
Simultaneously with such sale, the Owner Trustee has leased or will lease
the Aircraft to the Corporation pursuant to a lease (a "Lease") between the
Owner Trustee, as lessor, and the Corporation, as lessee. Each of the
leveraged lease transactions was or will be effected pursuant to a separate
participation agreement (a "Participation Agreement") among the Owner
Participant, the Owner Trustee, the Indenture Trustee (as defined below),
the Corporation and, in the case of a refinancing, each holder of a loan
certificate issued under the Indenture as originally executed.
For each Aircraft, the related Certificates will be issued as a
separate Series by the Owner Trustee, as nonrecourse obligations, and
authenticated by The Bank of New York, or another bank or trust company,
as indenture trustee (the "Indenture Trustee") pursuant to a separate trust
indenture and security agreement between the Owner Trustee, the Indenture
Trustee and the Corporation (an "Indenture"). Each Owner Participant will
have provided or will provide, from sources other than the related
Certificates, unless otherwise specified in the applicable Prospectus
Supplement, at least 20% of the purchase price for the related Aircraft.
DESCRIPTION OF THE CERTIFICATES
The discussion that follows is a summary and does not purport to be
complete. The summary includes descriptions of the material terms of the
Indenture and the Certificates, the forms of which have been filed as exhibits
to the Registration Statement of which this Prospectus is a part. For the
Certificates offered pursuant to this Prospectus and any Prospectus
Supplement, this summary will be qualified in its entirety by the detailed
information appearing in such Prospectus Supplement, as well as by the form of
the Certificates of each Series offered thereby and the related Indenture,
Lease and Participation Agreement which will be filed as exhibits to a
post-effective amendment to this Registration Statement, a Current Report on
Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, as
applicable, to be filed with the Commission in connection with the issuance of
such Certificates. This summary makes use of terms defined in and is
qualified in its entirety by reference to the form of Indenture referred to
above.
Each Prospectus Supplement will include a glossary of certain terms
used in connection with the Certificates offered thereby. Except as otherwise
indicated below or as described in the applicable Prospectus Supplement, the
following summary will apply to the Certificates, the Indenture, the Lease and
the Participation Agreement relating to each Aircraft. Additional provisions
with respect to the Indentures, the Certificates, the Leases and the
Participation Agreements relating to any particular offering of Certificates
will be described in the applicable Prospectus Supplement. To the extent that
any provision in any Prospectus Supplement is inconsistent with any provision
of this summary, the provision of such Prospectus Supplement will control.
General
The Certificates of each Series will be issued as nonrecourse
obligations by the Owner Trustee, acting for a separate Owner Trust for the
benefit of an Owner Participant, and will be authenticated under the related
Indenture by the Indenture Trustee for the benefit of the registered holders
of the Certificates of such Series (the "Holders"). All of the Certificates
issued under the same Indenture will relate to a specific Aircraft which will
be leased by the Owner Trustee to the Corporation pursuant to a separate Lease
between the Owner Trustee and the Corporation. The Aircraft subject to each
Lease and the Certificates issued under the related Indenture, will be
specified in the applicable Prospectus Supplement. The Corporation will be
obligated to make rental payments under each Lease that will be sufficient to
pay the principal of and accrued interest on the related Certificates when and
as due and payable. The Corporation's obligations to pay rent and to cause
other payments to be made under each Lease will be general obligations of the
Corporation. The Certificates will not, however, be obligations of, or
guaranteed by, the Corporation.
The applicable Prospectus Supplement will describe whether the
Certificates will be issued in the form of one or more temporary or permanent
global security or securities and, if so, the identity of the depository for
such global security or securities, or if issued in certificated form, the
form and terms of such certificates.
The Certificates will not be obligations of the Owner Trustee, in its
individual capacity, or the Owner Participant; and neither the Owner Trustee,
in its individual capacity, nor the Owner Participant will be liable for
payment of any principal of, or premium, if any, or interest on the
Certificates.
Principal and Interest Payments
Interest will be payable on the Certificates of each Series on the
dates and at the rates per annum set forth for such Certificates in the
applicable Prospectus Supplement. Interest will be calculated on the basis of
a 360-day year consisting of twelve 30-day months. Principal will be payable
on the Certificates of each Series in scheduled amounts and on specified dates
as set forth in the applicable Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, the record date for each
interest and principal payment date will be the fifteenth day prior to such
payment date.
Principal of, premium, if any, and interest on the Certificates of
each Series will be payable at the corporate trust office of the Indenture
Trustee in the City of New York or at such other office or agency,
including the office or agency of a paying agent that may be appointed by
the Indenture Trustee (a "Paying Agent"), maintained for the payment of the
Certificates of a Series. All amounts payable by the Indenture Trustee
under the terms of the Indenture may, however, at the option of the
Indenture Trustee or Paying Agent, be paid by check mailed to the person
entitled thereto at the address shown in the register maintained by the
Indenture Trustee or other registrar, if any. (Indenture, Sections 2.04,
3.02 and 3.04)
Unless otherwise specified in the applicable Prospectus Supplement,
the Certificates will be issued in fully registered, certificated form without
coupons and in minimum denominations of $1,000 or any integral multiple of
$1,000. Certificates may be surrendered for registration of transfer or
exchange for Certificates of the same Series, maturity and interest rate at a
facility or facilities established for such purpose by the Indenture Trustee
in the City of New York. No service charge will be levied on any Holder for
any transfer or exchange of Certificates, but payment may be required from
such Holder of any tax or other governmental charges that may be imposed in
connection therewith. (Indenture, Sections 2.04, 2.06 and 3.02)
Prepayment
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the related Certificates may or
must be prepaid prior to the stated maturity date thereof, in whole or in
part, the premium, if any, applicable upon certain prepayments and other terms
applying to the prepayment of such Certificates.
Security
The Certificates of each Series will be secured by:
(i) an assignment by the Owner Trustee to the Indenture Trustee of the
Owner Trustee's rights (except for certain limited rights
described below) under the related Lease, including the right to
receive rent and other payments thereunder;
(ii) a security interest in the related Aircraft, subject to the rights
of the Corporation under such Lease and to certain other liens and
encumbrances; and
(iii) an assignment to the Indenture Trustee of the Owner Trustee's
rights relating to such Aircraft and the related engines under the
agreements for the purchase thereof between the Corporation and
the respective manufacturers of such Aircraft and of such engines.
See "Registration of the Aircraft" below.
The assignment by the Owner Trustee to the Indenture Trustee of its
rights under each Lease will exclude rights of the Owner Trustee and the Owner
Participant relating to:
(i) indemnification by the Corporation for certain matters;
(ii) proceeds of public liability insurance payable to the Owner
Trustee in its individual capacity and to the Owner Participant
under insurance maintained by the Corporation under such Lease;
and
(iii) proceeds of any insurance policies separately maintained by the
Owner Trustee in its individual capacity or by the Owner
Participant.
The right of the Indenture Trustee, however, to exercise any of the
rights of the Owner Trustee under the related Lease, except the right to
receive payments of rent due thereunder, will be subject to certain
limitations as described in the applicable Prospectus Supplement.
(Indenture, Granting Clause and Section 8.01)
There will be no cross-collateralization provisions in the Indentures
and consequently the Certificates issued in respect of one of the Aircraft
will not be secured by any other Aircraft or the Leases related thereto. There
will be no cross-default provisions in the Indentures and consequently events
resulting in an Indenture Event of Default under any particular Indenture may
not result in an Indenture Event of Default occurring under any other
Indenture.
The proceeds from the sale of the Certificates of any Series will,
if such proceeds are received by the Indenture Trustee on a day that is
prior to the delivery date for the related Aircraft or, in the case of a
refinancing, the refunding date for the related original loan certificate,
be deposited with and held by the Indenture Trustee in the investments
described in the following sentence, at the direction and risk of the
Corporation, as security for such Certificates pending the delivery of the
Aircraft or the consummation of the refunding. Funds, if any, held from
time to time by the Indenture Trustee with respect to any Aircraft as a
result of (i) the occurrence of an Indenture Event of Default, which may
cause the Indenture Trustee to hold funds otherwise distributable to the
Owner Trustee, (ii) an Event of Loss with respect to such Aircraft or (iii)
otherwise, will be invested in obligations either of, or fully guaranteed
by, the United States of America; certificates of deposit, bankers'
acceptances or time deposits made with or by certain banks, trust companies
or national banking associations; or commercial paper issued by a U.S.
corporation whose commercial paper is rated at least A-1/P-1 by Standard &
Poor's Corporation and Moody's Investors Service, Inc., respectively, or if
neither such organization rates such commercial paper, the highest rating
by another nationally recognized rating organization. Any income realized
as a result of such investments, net of the Indenture Trustee's reasonable
fees and expenses incurred in making such investment, will 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, after taking into
account such earnings and such reasonable fees and expenses, will be
charged against the principal amount invested, in which case the
Corporation will be responsible for any losses. (Indenture, Section 5.08)
Registration of the Aircraft
The Corporation will be required, except under certain circumstances,
to register and keep each Aircraft registered under Title 49 of the United
States Code (the "Transportation Code"), in the name of the Owner Trustee,
and to record and maintain the recordation of the Indenture and the
Lease relating to each such Aircraft under the Transportation Code.
Such recordation will give the Indenture Trustee a security interest in
each such Aircraft perfected under the Transportation Code, which perfected
security interest will, with certain limited exceptions, be recognized in
those jurisdictions that have ratified the Convention on the International
Recognition of Rights in Aircraft (the "Convention").
The Corporation will be able, in certain circumstances, to
re-register any Aircraft in certain countries other than the United States.
Unless otherwise specified in the applicable Prospectus Supplement, prior to
any such change in the jurisdiction of registry, the Indenture Trustee and the
related Owner Participant must receive certain assurances, including that such
other country would provide substantially equivalent protection for the rights
of owner participants, lessors and lenders in similar transactions as is
provided under United States law, except that, for the purpose of such
determination, rights and remedies similar to those available under Section
1110 of the United States Bankruptcy Code (the "Bankruptcy Code") will not be
required in the absence of restrictions of rights and remedies of lessors and
secured parties that are similar to those imposed by Sections 362, 363 and
1129 of the Bankruptcy Code. While such assurances are intended to
provide that the Corporation's or the Owner Trustee's title to the
Aircraft and the Indenture Trustee's lien thereon will be recognized in such
jurisdiction and that the Indenture Trustee may exercise the rights granted
to it in the Indentures, there is no guarantee that, even if such jurisdiction
is a party to the Convention, as a practical matter, the Indenture Trustee
would be able to realize upon its security interest in the case of an
Indenture Event of Default.
Each Aircraft may also be operated by the Corporation or placed
under sublease or interchange arrangements with carriers domiciled outside
of the United States. The ability of the Indenture Trustee in the case of
an Indenture Event of Default, to realize upon its security interest in the
Aircraft could be adversely affected as a legal or practical matter if the
Aircraft were located outside the United States.
Payments and Limitation of Liability
All payments of principal of, premium, if any, and interest on the
Certificates of each Series will be made only from the assets subject to the
Lien of the applicable Indenture or the income and proceeds received by the
Indenture Trustee therefrom, including rent payable by the Corporation under
the related Lease. See "The Leases -- Terms and Rentals" below. The
Corporation's obligations to pay rent and to cause other payments to be made
under each Lease will be general obligations of the Corporation. The
Certificates will not be direct obligations of, and will not be guaranteed by,
the Corporation.
Neither the Owner Trustee nor the Indenture Trustee (in their
individual capacities) will be liable to any Holder or, in the case of the
Owner Trustee, in its individual capacity, to the Corporation or the Indenture
Trustee for any amounts payable or for any liability under the Certificates or
the Indentures, except as provided in the Indentures and the Participation
Agreements and except for the gross negligence or willful misconduct of the
Owner Trustee. (Indenture, Section 2.05)
Merger, Consolidation and Transfer of Assets
With respect to each Series of Certificates, the Corporation will be
prohibited from consolidating with or merging into any other corporation under
circumstances in which the Corporation is not the surviving corporation, or
from transferring all or substantially all of its assets as an entirety to any
other corporation, unless, among other things:
(i) the successor or transferee corporation is a U.S. Citizen, an "air
carrier" within the meaning of and operating under the
Transportation Code and a corporation organized and existing under
the laws of the United States or a political subdivision thereof,
and such corporation expressly assumes all the obligations of the
Corporation contained in the related Indenture, the Participation
Agreement, the Lease, the Purchase Agreement and the Purchase
Agreement Assignment;
(ii) immediately after giving effect to such consolidation, merger or
transfer, the successor or transferee is in compliance with all of
the terms and conditions of such documents; and
(iii) such consolidation, merger or transfer does not give rise to a
Lease Event of Default.
The Indentures contain no debt covenants or provisions that would
afford the Holders protection in the event of a highly leveraged transaction
involving the Corporation.
Events of Default, Notice and Waiver
The Indenture Events of Default under each Indenture for the
Certificates to be offered pursuant to this Prospectus and any Prospectus
Supplement will be set forth in such Prospectus Supplement. There will be no
cross-default provisions in the Indentures and consequently events resulting
in an Indenture Event of Default under any particular Indenture may not result
in an Indenture Event of Default occurring under any other Indenture.
Each Indenture will provide that the Indenture Trustee must,
within 90 days after the occurrence of any event actually known to a
responsible officer of the Indenture Trustee that is an Indenture Default
thereunder, give notice thereof to the Holders of outstanding Certificates
issued thereunder. Under no circumstances, however, may the Indenture
Trustee give such notice until the expiration of a period of 60 days from
the occurrence of such Indenture Default. The Indenture Trustee will be
protected in withholding such notice, except in the case of a default in
the payment of the principal of, premium, if any, or interest on any
Certificate issued thereunder, if it in good faith determines that the
withholding of such notice is in the interests of the Holders of such
Certificates. (Indenture, Section 7.12)
The Holders of not less than 50% in aggregate principal amount of the
outstanding Certificates issued under an Indenture to which an Indenture
Default relates may on behalf of all Holders waive certain past Indenture
Defaults thereunder and their consequences. Consent from each Holder of an
outstanding Certificate issued under an Indenture, however, is required with
respect to a waiver of an Indenture Default in the payment of the principal
of, premium, if any, or interest on any Certificate then outstanding under
such Indenture or in respect of any covenant or provision of such Indenture or
any other related Operative Agreement that, pursuant to the provisions of such
Indenture, cannot be modified or amended without the consent of each Holder
affected thereby. (Indenture, Section 7.11)
Under each Indenture the Owner Trustee or the related Owner
Participant will have the right under certain circumstances, as specified in
the applicable Prospectus Supplement, to cure an Indenture Event of Default
that results from the occurrence of a Lease Event of Default under the related
Lease. If the Owner Trustee or the related Owner Participant exercises such
cure right, the Indenture Event of Default will be deemed to be cured.
Remedies
Each Indenture will provide that if an Indenture Event of Default has
occurred and is continuing thereunder, the Indenture Trustee may exercise
certain rights or remedies available to it under applicable law, including, if
a Lease Event of Default under the related Lease has occurred, one or more of
the remedies with respect to the Aircraft pledged under such Indenture
afforded to the Owner Trustee by the related Lease for Lease Events of Default
thereunder. The exercise by the Indenture Trustee of such rights or remedies
in connection with a Lease Event of Default will be subject, however, to the
right, if any, of the Owner Trustee or the related Owner Participant, as the
case may be, to cure certain defaults or to prepay the Certificates. The
applicable Prospectus Supplement will describe any limitation on the exercise
of remedies by the Indenture Trustee. Such remedies may be exercised by the
Indenture Trustee to the exclusion of the Owner Trustee and the Owner
Participant. Any Aircraft sold in the exercise of such remedies will be free
and clear of any rights of those parties, including the rights of the
Corporation under the applicable Lease, provided that no exercise of any
remedies by the Indenture Trustee may affect the rights of the Corporation
under a Lease unless a Lease Event of Default under such Lease has occurred
and is continuing. (Indenture, Section 7.02(a))
It is impossible to predict the resale value for any Aircraft to be
sold upon the exercise of the Indenture Trustee's remedies under the related
Indenture. The market for aircraft, whether new or used, is and will be
affected by many factors including, among other things, the supply of
similarly equipped aircraft of the same make and model, the demand for such
aircraft by air carriers and the cost and availability of financing to
potential purchasers of such aircraft. Each of these factors, in turn, will
be affected by various circumstances including, among other things, current
and anticipated demand for passenger and cargo air services, the relative
capacity of air carriers to provide such services, the current and projected
profitability of providing such services, the economic condition of the
domestic and international airline industries and global economic and
financial developments generally.
In addition, the marketability of a particular aircraft will be
affected by factors such as the reputation and actual performance record of
the air carrier operating the aircraft with respect to maintenance, the
compliance of the aircraft with federal noise and other environmental
standards and the degree of technical and other support available from the
manufacturer of the aircraft. Since the market for aircraft will fluctuate
over time to reflect changes in these circumstances, and because of the unique
factors that would affect market value in a forced disposition of an aircraft,
there can be no assurance that the net proceeds realized from the sale or
other disposition of any Aircraft in the exercise of such remedies will be
sufficient to satisfy in full amounts due and payable on the related
Certificates.
If an Indenture Event of Default occurs under an Indenture as a
result of certain specified events of bankruptcy, insolvency or reorganization
of the Owner Trustee, the related Owner Participant or the Corporation, then
the unpaid principal of all outstanding Certificates issued under such
Indenture, together with interest accrued but unpaid thereon and all other
amounts due thereunder and under such Indenture, immediately and without
further act, will become due and payable. If any other Indenture Event of
Default occurs and is continuing under an Indenture, the Indenture Trustee,
acting on its own or at the direction of the Holders of not less than 25% in
aggregate principal amount of the outstanding Certificates of each Series
issued under such Indenture, may declare the principal of all such
Certificates immediately due and payable, together with interest accrued but
unpaid thereon and all other amounts due thereunder and under such Indenture,
by written notice or notices to the Owner Trustee and the Corporation.
The Holders of not less than 50% in aggregate principal amount of the
outstanding Certificates of such Series may rescind any such declaration by
the Indenture Trustee or by such Holders at any time prior to the sale or
disposition of the property subject to the Lien of the Indenture provided
there has been paid to or deposited with the Indenture Trustee an amount
sufficient to pay:
(a) all overdue installments of interest on all such Certificates
(together, to the extent permitted by law, with interest on such
overdue installments of interest);
(b) the principal on any Certificates that has become due otherwise
than by such declaration;
(c) all amounts paid or advanced by the Indenture Trustee under such
Indenture; and
(d) certain other expenses
or all Indenture Events of Default under such Indenture (other than the
non-payment of principal that has become due solely because of such
declaration) have been cured or waived. (Indenture, Sections 7.02(b) and (c))
In the event of the bankruptcy of the Owner Participant, it is
possible that, notwithstanding the fact that the applicable Aircraft will be
owned by the Owner Trustee in trust, such Aircraft and the related Lease and
Certificates might become part of such bankruptcy proceeding. In such event,
payments under such Lease or Certificates might be interrupted and the ability
of the Indenture Trustee to exercise its remedies under such Indenture might
be restricted, although the Indenture Trustee would retain its status as a
secured creditor in respect of such Lease and Aircraft.
The right of any Holder of a Certificate to institute an action for
any remedy under the Indenture pursuant to which such Certificate was issued
(including the right to enforce payment of the principal of, premium, if any,
and interest on such Certificates when due) will be subject to certain
conditions precedent, including a written request to the Indenture Trustee by
the Holders of not less than 25% in aggregate principal amount of outstanding
Certificates issued pursuant to such Indenture to take action, and an offer to
the Indenture Trustee of reasonable indemnification against costs, expenses
and liabilities incurred by it in doing so. (Indenture, Sections 7.08 and
7.09)
The Holders of not less than 50% in aggregate principal amount of
outstanding Certificates of each Series may direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee
or of exercising any trust or power conferred on the Indenture Trustee but, in
such event, the Indenture Trustee is entitled to be indemnified by the Holders
of such Series before proceeding so to act and the Indenture Trustee may not
be held liable for any such action taken in good faith. (Indenture, Section
7.10 and Article XI)
Section 1110 of the Bankruptcy Code provides that the right of
lessors, conditional vendors and holders of security interests with respect to
aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo used by air carriers operating under certificates issued by the
Secretary of Transportation under Chapter 447 of the Transportation Code to
take possession of such aircraft in compliance with the provisions of the
lease, conditional sale contract or security agreement, as the case may be, is
not affected by:
(a) the automatic stay provision of the Bankruptcy Code, which
provision enjoins the taking of any action against a debtor by
a creditor;
(b) the provision of the Bankruptcy Code allowing the trustee in
reorganization or the debtor-in-possession to use, sell or lease
property of the debtor;
(c) the confirmation of a plan by the bankruptcy court; and
(d) any power of the bankruptcy court to enjoin a repossession.
Section 1110 provides, however, that the right of a lessor, conditional vendor
or holder of a security interest to take possession of an aircraft in the
event of a default may not be exercised for 60 days following the date of
commencement of the reorganization proceedings (unless specifically permitted
by the bankruptcy court) and may not be exercised at all if, within such
60-day period, the trustee in reorganization or the debtor-in-possession
agrees to perform the debtor's obligations that become due on or after such
date and cures all existing defaults (other than defaults resulting solely
from the financial condition, bankruptcy, insolvency or reorganization of the
debtor). The Prospectus Supplement for each offering will discuss the
availability of the benefits of Section 1110 of the Bankruptcy Code with
respect to the related Aircraft.
If an Indenture Event of Default occurs and is continuing, any
amounts held or received by the Indenture Trustee may be applied to reimburse
the Indenture Trustee for any tax, expense, charge or other loss incurred by
it and to pay any other amounts due the Indenture Trustee prior to any
payments to Holders of the Certificates with respect to which such Indenture
Event of Default relates. (Indenture, Sections 5.03 and 9.11)
Modification of Agreements
The provisions of the Indenture, the Lease, the Participation
Agreement and the Trust Agreement with respect to any Series may be amended or
modified, except to the extent indicated below, with the consent of the
Holders of more than 50% in aggregate principal amount of outstanding
Certificates of such Series. (Indenture, Section 13.02)
The following changes may be made to the Indenture pursuant to which
a Certificate was issued or the related Lease or Participation Agreement only
with the consent of all Holders of the outstanding Certificates affected
thereby:
(a) reductions in the principal amount of, or premium, if any, or
interest payment payable on such Certificate or changes in the
date on which any such principal, premium, if any, or interest
payment is due and payable or otherwise affect the terms of
payment of such Certificate;
(b) reductions in, and modifications or amendments to, any indemnities
payable by the related Owner Participant in favor of such Holder;
(c) reductions in the amount of any rental payment payable by the
Corporation below the amount required to pay all principal of,
premium, if any, and interest on all such Certificates as and when
due and payable;
(d) creations of any security interest with respect to the property
subject to the Lien of such Indenture ranking prior to or on a
parity with the security interest created by such Indenture or
deprivation to the Holder of any such Certificate of the
benefit of the Lien of such Indenture upon the property subject
thereto; or
(e) reductions in the percentage of the aggregate principal amount of
such Certificates necessary to modify or amend any provision of
such Indenture or to waive compliance therewith. (Indenture,
Article XIII)
Certain provisions of the Indentures, the Leases, the Participation
Agreements and the Trust Agreements may be modified by the Owner Trustee, the
Lessee and the Indenture Trustee without the consent of the Holders of the
outstanding Certificates related thereto. (Indenture, Section 13.01)
The Indenture Trustee
Unless otherwise indicated in the applicable Prospectus Supplement,
The Bank of New York will be the Indenture Trustee under each Indenture. The
Bank of New York acts as trustee under other indentures with respect to other
indebtedness of the Corporation, and the Corporation from time to time borrows
from, and maintains deposit accounts with, The Bank of New York and its
affiliates.
In accordance with the Trust Indenture Act of 1939, as amended, each
Indenture will be deemed to provide that in the case of any Indenture Event of
Default thereunder, the Indenture Trustee shall exercise such of the rights
and powers vested in it by such Indenture and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of its own affairs. Generally, the Indenture
Trustee will not be liable for any error of judgment made in good faith,
unless the Indenture Trustee was negligent in ascertaining the pertinent
facts, or for any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than 50% in aggregate
principal amount of the outstanding Certificates issued under such Indenture.
Subject to such provisions, the Indenture Trustee will be under no obligation
to exercise any of its rights or powers under such Indenture at the request
of any Holders of Certificates issued thereunder unless they shall have
offered to the Indenture Trustee reasonable security or indemnity. Each
Indenture will provide that the Indenture Trustee and the Owner Trustee may
acquire and hold Certificates issued thereunder and, subject to certain
conditions, the Indenture Trustee may otherwise deal with the Owner Trustee
with the same rights it would have if it were not the Indenture Trustee.
(Indenture, Sections 9.02, 9.03 and 9.05)
The Indenture Trustee may resign as trustee under any Indenture at
any time. If the Indenture Trustee ceases to be eligible to continue as
Indenture Trustee under an Indenture or becomes incapable of acting as
Indenture Trustee or becomes insolvent, the Owner Trustee may remove the
Indenture Trustee. Any Holder of a related Certificate who has been a Holder
for at least six months may, on behalf of such Holder 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. In addition,
the Indenture Trustee under any Indenture may be removed without cause by the
Holders of more than 50% in aggregate unpaid principal amount of the related
outstanding Certificates or by the Owner Trustee, with the consent of the
Corporation and such Holders. (Indenture, Section 12.02)
In the case of the resignation or removal of the Indenture Trustee
under an Indenture, the Holders of more than 50% in aggregate unpaid principal
amount of the related outstanding Certificates, or the Owner Trustee, with the
consent of the Corporation and such Holders, may appoint a successor Indenture
Trustee. The resignation or removal of the Indenture Trustee under any
Indenture and the appointment of the successor trustee under such Indenture
does not become effective until acceptance of the appointment by the successor
trustee. (Indenture, Section 12.02) Pursuant to such resignation and
successor trustee provisions, it is possible that a different trustee could
be appointed to act as the successor trustee under each Indenture. All
references in this Prospectus to the Indenture Trustee are to the trustee
acting in such capacity under each of the Indentures and should be read to
take into account the possibility that each of the Indentures could have a
different successor trustee in the event of such a resignation or removal.
The Leases
Terms and Rentals. Each Aircraft will be leased separately by the
related Owner Trustee to the Corporation for a term commencing on the date of
the delivery of the related Aircraft to the Owner Trustee and expiring on a
date not earlier than the latest maturity date of the Certificates issued with
respect to such Aircraft, unless previously terminated or extended, as
permitted by the related Lease. The scheduled rental payments by the
Corporation under each Lease will be payable on the dates specified in the
applicable Prospectus Supplement. The respective payments will be assigned
under the related Indenture by the Owner Trustee to the Indenture Trustee to
provide the funds necessary to make payments of principal and interest due
from such Owner Trustee on the Certificates issued under such Indenture.
Although in certain cases the scheduled rental payments under the Leases may
be adjusted, under no circumstances will such payments that the Corporation
will be unconditionally obligated to make or cause to be made under any Lease
be less than the scheduled payments of principal of and interest on the
Certificates issued under the Indenture relating to such Lease. See "Payments
and Limitations of Liability" above. Scheduled payments of principal of and
interest on the Certificates will be made on the dates specified in the
applicable Prospectus Supplement.
Net Lease. The Corporation's obligations under each Lease in respect
of the related Aircraft will be those of a lessee under a "net lease."
Accordingly, the Corporation will be obligated to pay all costs of operating
the Aircraft and, at its expense, to maintain, service, repair and overhaul
the Aircraft so as to keep the Aircraft in good condition, ordinary wear and
tear excepted, and to enable the airworthiness certification thereof to be
maintained in good standing at all times under the Transportation Code or,
under certain circumstances, under the applicable requirements of the
aeronautical authority of another country of registry. If, however, the
Aircraft loses its airworthiness certification and such loss is curable and
the Corporation, using its reasonable best efforts, undertakes such cure
promptly, diligently and continuously, then the Corporation will not be in
default with respect to such obligation.
Generally, the Corporation will be obligated to replace or cause to
be replaced all parts that may from time to time be incorporated or installed
in or attached to any Aircraft (including in or on any engine) and that may
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use. The Corporation will have the
right to make other alterations, modifications and additions to an Aircraft so
long as such alterations, modifications or additions do not materially
decrease the value or utility of such Aircraft or impair its condition or
airworthiness below its value, utility, condition and airworthiness
immediately prior to such alteration, modification or addition, assuming that
such Aircraft was then in the condition and airworthiness required by the
related Lease. Also, in certain circumstances, the Corporation will be
permitted to remove parts (without replacement) from an Aircraft or any engine
(and therefore from the Lien of the applicable Indenture) if the Corporation
deems such parts to be obsolete or no longer suitable or appropriate for use
thereon so long as such removals do not decrease the utility, condition or
airworthiness of such Aircraft or any such engine, although the value of such
Aircraft or any such engine may be reduced by such removal. The applicable
Prospectus Supplement will contain a description of certain limitations, if
any, applicable to the provisions described above.
Insurance. Unless otherwise indicated in the applicable Prospectus
Supplement, the Corporation will be obligated to carry insurance with insurers
of recognized responsibility with respect to each Aircraft, at its own cost
and expense, in such amounts, against such risks, with such deductibles or
retentions (i) in the case of hull insurance, as the Corporation customarily
maintains with respect to other aircraft in the Corporation's fleet of the
same type and model and operating on the same routes as the respective
Aircraft and (ii) in the case of liability insurance, as is usually carried by
similar corporations engaged in the same or similar business and similarly
situated as the Corporation, owning or operating aircraft similar to the
Aircraft. The Corporation will be permitted to maintain coverage below
certain stipulated values and may be permitted to self-insure (including by
way of deductibles and retentions) in certain circumstances, subject to
certain limits. Therefore, there is no assurance that any insurance will be
carried in the future, or, if it is carried, as to the amount of such
insurance.
The Corporation and any permitted sublessee of an Aircraft will be
named as insured parties under all insurance policies required by the related
Lease. The Indenture Trustee, Owner Trustee and related Owner Participant
will be named additional insureds, which will afford each of them the rights
but not the obligations of an additional insured. Unless otherwise specified
in the applicable Prospectus Supplement, liability insurance proceeds will be
distributed to the respective parties as their interests may appear and hull
insurance proceeds in excess of certain specified amounts will be distributed
to the Indenture Trustee. The applicable Prospectus Supplement will contain a
description of certain limitations, if any, applicable to the provisions
described in this paragraph.
Lease Events of Default; Remedies. The applicable Prospectus
Supplement will describe the Lease Events of Default under the related Leases,
the remedies that the Owner Trustee may exercise with respect to the related
Aircraft, and other provisions relating to the occurrence of a Lease Event of
Default and the exercise of remedies.
The Participation Agreements
The Corporation will be required to indemnify each Owner Participant,
the Owner Trustee, the Indenture Trustee and certain parties affiliated with
the foregoing (but not including Holders) for certain liabilities, losses,
fees and expenses and for certain other matters arising out of the
transactions described herein or relating to the applicable Aircraft or the
use thereof. In addition, under certain circumstances the Corporation will be
required to indemnify such persons against certain taxes, levies, duties,
withholdings and for certain other matters relating to such transactions or
the applicable Aircraft.
Subject to certain restrictions and unless otherwise provided in the
related Prospectus Supplement, each Owner Participant may convey all of its
interest in the related Owner Trust. Although the matter is not entirely free
from doubt, Davis Polk & Wardwell has advised the Corporation that an Owner
Participant's conveyance of its right, title and interest in the related Owner
Trust will not constitute a taxable event to the Holders of the related
Certificates. Moreover, if so provided in the applicable Prospectus
Supplement, in certain limited instances the Corporation may assume an Owner
Trust's obligations under the related Certificates on a full recourse basis.
In this event, Holders will recognize gain or loss on the related Certificates
for federal income tax purposes.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus
Supplement, Certificates may not be purchased by, or with the assets of,
any employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or individual retirement
account or plan subject to Section 4975 of the Code. Certain governmental
plans and non-electing church plans, however, are not subject to Title I of
ERISA or Section 4975 of the Code and, therefore, may purchase the
Certificates.
PLAN OF DISTRIBUTION
The Certificates may be sold to or through underwriters, directly to
other purchasers or through agents.
The distribution of the Certificates may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of Certificates, underwriters or agents
may receive compensation from the Corporation or from purchasers of
Certificates for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Certificates to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers and agents
that participate in the distribution of Certificates may be deemed to be
underwriters, and any discounts or commissions received by them from the
Corporation and any profit on the resale of Certificates by them may be deemed
to be underwriting discounts and commissions, under the Securities Act. Any
such underwriter or agent will be identified, and any such compensation
received from the Corporation will be described, in the applicable Prospectus
Supplement.
Offers to purchase Certificates may be solicited directly and the
sale thereof may be made directly to institutional investors or others, who
may be deemed to be underwriters within the meaning of the Securities Act with
respect to any resale thereof. The terms of any such sales will be described
in the Prospectus Supplement relating thereto.
Under agreements which may be entered into by the Corporation,
underwriters and agents who participate in the distribution of Certificates
may be entitled to indemnification by the Corporation against certain
liabilities, including liabilities under the Securities Act.
Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporation does not intend to apply for the listing of any Series of
Certificates on a national securities exchange. If the Certificates of any
Series are sold to or through underwriters, the underwriters may make a market
in such Certificates, as permitted by applicable laws and regulations. No
underwriter would be obligated, however, to make a market in such
Certificates, and any such market-making could be discontinued at any time at
the sole discretion of the underwriters. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Certificates of any
Series.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with, and perform services for, the
Corporation in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement,
the legality of the Certificates offered hereby will be passed upon for the
Corporation by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, and by counsel for any agents, dealers or underwriters ("Underwriters'
Counsel"). Unless otherwise indicated in the applicable Prospectus
Supplement, both Davis Polk & Wardwell and Underwriters' Counsel may rely on
the opinion of counsel for the Owner Trustee, individually and as Owner
Trustee, as to matters relating to the authorization, execution and delivery
of each Indenture and of the related Series of Certificates by the Owner
Trustee, and of George W. Hearn, Vice President - Law of the Corporation, as
to the Corporation's authorization, execution and delivery of the Indentures.
At May 2, 1996, Mr. Hearn owned zero shares of the Corporation's common stock
and had been granted options to purchase 15,800 shares of the Corporation's
common stock. Of the options granted, 3,750 were vested at such date.
EXPERTS
The consolidated financial statements and schedules of the
Corporation included or incorporated by reference in the Corporation's Annual
Report on Form 10-K for the year ended May 31, 1995 and incorporated by
reference herein, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm
as experts in giving said reports.
With respect to the unaudited interim financial information for the
quarters ended August 31, 1995, November 30, 1995 and February 29, 1996,
included in the Corporation's Quarterly Reports on Form 10-Q for such periods,
which are incorporated by reference in this Prospectus, Arthur Andersen LLP
has applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports thereon state that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act for their reports on
the unaudited interim financial information because those reports are not
"reports" or a "part" of the Registration Statement, of which this Prospectus
is a part, prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act.
==================================== ====================================
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representation not contained in this
Prospectus in connection with the
offering covered by this Prospectus.
If given or made, such information
or representation must not be relied $197,380,000
upon as having been authorized by the
Corporation or the Underwriters. This
Prospectus does not constitute an
offer to sell, or the solicitation [COMPANY LOGO]
of an offer to buy, the Certificates
in any jurisdiction where, or to any
person to whom, it is unlawful to
make such offer or solicitation.
Neither the delivery of this Prospectus $197,380,000
nor any sale made hereunder shall,
under any circumstances, create an
implication that there has not been Equipment Trust Certificates
any change in the facts set forth in
this Prospectus or in the affairs of
the Corporation since the date hereof.
TABLE OF CONTENTS
Page
----
Available Information........... 2
Incorporation of Certain
Documents by Reference........ 2
Federal Express Corporation..... 3 ___________________
Ratio of Earnings to Fixed
Charges....................... 3 P R O S P E C T U S
Use of Proceeds................. 3 ___________________
Outline of Leveraged
Lease Transactions............ 4
Description of the Certificates. 4
ERISA Considerations............ 14
Plan of Distribution............ 14
Legal Matters................... 15 May __, 1996
Experts......................... 16
==================================== ====================================
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 10, 1996
PROSPECTUS
- - ----------
[COMPANY LOGO]
PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES
_______________________________
Up to $197,380,000 aggregate amount of Pass Through Certificates
(the "Pass Through Certificates") may be offered for sale from time to time
pursuant to this Prospectus and one or more Prospectus Supplements. The
Pass Through Certificates may be offered in one or more Series in amounts,
at prices and on terms to be determined at the time of sale. For each
Series of Pass Through Certificates offered pursuant to this Prospectus and
a Prospectus Supplement, a separate Pass Through Trust will be formed
pursuant to the Pass Through Trust Agreement dated as of February 1, 1993,
as amended and restated as of October 1, 1995 (the "Pass Through
Agreement") between Federal Express Corporation (the "Corporation") and The
Bank of New York, and the supplements thereto relating to such Pass Through
Trust (a "Series Supplement") between the Corporation and the trustee named
in such Series Supplements, not in its individual capacity but solely as
the Pass Through Trustee with respect to such Pass Through Trust. Each
Pass Through Certificate in a Series will evidence a fractional undivided
interest in the related Pass Through Trust and will have no rights,
benefits or interest in respect of any other Pass Through Trust or the
Trust Property (as defined below) held in any other such Pass Through
Trust.
The Trust Property of each Pass Through Trust will consist of (a)
equipment purchase certificates issued with recourse to the Corporation (the
"Owned Aircraft Certificates") or (b) equipment trust certificates issued as
nonrecourse obligations by certain Owner Trustees, each acting not in its
individual capacity but solely as the Owner Trustee of a separate Owner Trust,
in connection with separate leveraged lease transactions (the "Leased Aircraft
Certificates" and, together with the Owned Aircraft Certificates, the
"Equipment Certificates"). The Owned Aircraft Certificates will be issued to
finance or refinance all or a portion of the purchase price of each of one or
more aircraft that have been or will be purchased and owned by the Corporation
(the "Owned Aircraft"). The Leased Aircraft Certificates will be issued to
finance or refinance a portion of the payment by each such Owner Trustee of
the purchase price for a specified aircraft which has been or will be leased
to the Corporation (the "Leased Aircraft" and, together with the Owned
Aircraft, the "Aircraft"). The Prospectus Supplement relating to each
offering will describe certain terms of the Pass Through Certificates offered
thereby, the respective Pass Through Trusts, the Equipment Certificates to be
purchased by such Pass Through Trusts, the leveraged lease transactions, if
any, relating thereto and the Aircraft relating to such Equipment Certificates.
For each Aircraft, the related Owner Trustee or the Corporation, as
the case may be, may issue one or more Equipment Certificates, each of which
may have a different interest rate and final maturity date. For each Series
of Pass Through Certificates, the Pass Through Trustee will purchase one or
more Equipment Certificates issued with respect to each of one or more
Aircraft such that all of the Equipment Certificates held in the related Pass
Through Trust will have identical interest rates, in each case equal to the
rate applicable to the Pass Through Certificates issued by such Pass Through
Trust, and such that the latest maturity date for such Equipment Certificates
will occur on or before the final distribution date for such Pass Through
Certificates.
(Continued on following page)
_______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
The date of this Prospectus is May __, 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.
(continued from previous page)
The Owned Aircraft Certificates issued with respect to each Owned
Aircraft will be secured by a security interest in such Owned Aircraft and
will be direct obligations of the Corporation. The Leased Aircraft
Certificates issued with respect to each Leased Aircraft, except during the
Pre-Funding Period, if any, will be secured by a security interest in such
Leased Aircraft and by the Lease relating thereto, including the right to
receive rent payable by the Corporation under such Lease. Although none of
the Leased Aircraft Certificates held in the respective Pass Through Trusts
will be obligations of, or guaranteed by, the Corporation, the amounts payable
by the Corporation under the Lease of each Leased Aircraft will be sufficient
to pay in full when due all principal of and interest on the Leased Aircraft
Certificates relating to such Leased Aircraft, except as described under
"Description of the Equipment Certificates -- General" relating to any
Pre-Funding Period with respect to such Leased Aircraft.
During any Pre-Funding Period, the related Leased Aircraft
Certificates will be secured by a collateral account funded by the net
proceeds of the sale of such Leased Aircraft Certificates to the Pass Through
Trustee and by other security (which may include a letter of credit) to be
described in the applicable Prospectus Supplement. Funds in such collateral
account, together with such other security will be available to pay any
principal due and interest accrued on such Leased Aircraft Certificates during
such Pre-Funding Period, as well as to fund any mandatory prepayment of such
Leased Aircraft Certificates during such Pre-Funding Period.
Interest paid on the Equipment Certificates held in each Pass Through
Trust will be passed through to the registered holders of the Pass Through
Certificates for such Pass Through Trust (for each Pass Through Trust, the
"Certificateholders") on the dates and at the rate per annum set forth in the
Prospectus Supplement relating to such Pass Through Certificates until the
final distribution date for such Pass Through Trust. Principal paid on the
Equipment Certificates held in each Pass Through Trust will be passed through
to the Certificateholders in scheduled amounts on the dates set forth in the
Prospectus Supplement relating to such Pass Through Certificates until the
final distribution date for such Pass Through Trust.
The Pass Through Certificates shall be issued in registered form only
and may, if so specified in the applicable Prospectus Supplement, be issued in
accordance with a book-entry system.
The Pass Through Certificates represent interests in the related Pass
Through Trust only and all payments and distributions shall be made only from
the property of such Pass Through Trust. The Pass Through Certificates do not
represent an interest in or obligation of the Corporation.
The Pass Through Certificates may be sold to or through underwriters
or directly to other purchasers or through agents. The Prospectus Supplement
relating to each offering will set forth the names of any underwriters,
dealers or agents involved in the sale of the Pass Through Certificates in
connection with which this Prospectus is being delivered, the amounts, if any,
to be purchased by underwriters and the compensation, if any, of such
underwriters or agents.
Prior to their issuance, there will have been no market for the Pass
Through Certificates of any Series and there can be no assurance that one will
develop. Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporation does not intend to apply for the listing of any Series of Pass
Through Certificates on a national securities exchange. See "Plan of
Distribution."
This Prospectus may not be used to consummate sales of any Pass
Through Certificates unless accompanied by the Prospectus Supplement
applicable to the Pass Through Certificates being sold.
____________________________
AVAILABLE INFORMATION
Federal Express Corporation (the "Corporation") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy and information statements and other information filed by the
Corporation with the Commission can be inspected, and copies may be obtained
at prescribed rates, at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
Regional Offices of the Commission: Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional
Office, 7 World Trade Center, New York, New York 10048. Such material can
also be inspected and copied at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on
Form S-3 (together with all amendments and exhibits, herein referred to as the
"Registration Statement") filed by the Corporation under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information included in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to the
Corporation and the securities offered hereby.
REPORTS TO PASS THROUGH CERTIFICATEHOLDERS
The Pass Through Trustee under each Pass Through Trust will provide
the Certificateholders of each Pass Through Trust with certain periodic
statements concerning the distributions made from such Pass Through Trust.
See "Description of the Pass Through Certificates -- Statements to
Certificateholders."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission in accordance with
the provisions of the Exchange Act are incorporated herein by reference and
made a part hereof.
1. The Corporation's Annual Report on Form 10-K for the fiscal
year ended May 31, 1995 filed August 4, 1995.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1995, November 30, 1995 and February
29, 1996, respectively, filed October 13, 1995, January 12, 1996
and April 12, 1996, respectively.
3. The Corporation's Current Reports on Form 8-K dated August 14,
1995, August 16, 1995, September 14, 1995, October 17, 1995,
October 25, 1995, October 26, 1995, January 12, 1996 and March
14, 1996, respectively, filed August 15, 1995, August 18, 1995,
September 19, 1995, October 18, 1995, October 27, 1995, October
30, 1995, January 16, 1996 and March 26, 1996, respectively.
All documents filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
before the termination of the offering made by this Prospectus shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will furnish without charge to each person, including
any beneficial owner, to whom this Prospectus is delivered, upon written or
oral request of such person, a copy of any or all documents incorporated by
reference in this Prospectus, without exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Shirlee M. Clark, Manager --
Media Relations, Federal Express Corporation, by mail at Box 727, Memphis,
Tennessee 38194-1850 or by telephone at (901) 395-3490.
FEDERAL EXPRESS CORPORATION
The Corporation offers a wide range of express services for the
time-definite transportation of documents, packages and freight throughout the
world using an extensive fleet of aircraft and vehicles and leading-edge
information technologies. Corporate headquarters are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
Year Ended May 31 February 28 February 29
-------------------------------- ----------- -----------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings
to Fixed Charges(a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x
_________________
(a) Earnings included in the calculation of the ratio of earnings to
fixed charges represent income before income taxes plus fixed
charges (other than capitalized interest). Fixed charges include
interest expense, capitalized interest, amortization of debt
issuance costs and a portion of rent expense representative of
interest.
(b) Earnings were inadequate to cover fixed charges by $173.4
million for the year ended May 31, 1992.
OUTLINE OF PASS THROUGH TRUST STRUCTURE
For each Series of Pass Through Certificates (as such terms are
defined below) offered pursuant to this Prospectus and a related Prospectus
Supplement, a separate pass through trust (a "Pass Through Trust") will be
formed pursuant to a supplemental agreement (a "Series Supplement") between
the Corporation and the trustee named in such Series Supplement, not in its
individual capacity but solely as pass through trustee (the "Pass Through
Trustee"), in accordance with the Pass Through Trust Agreement, dated as of
February 1, 1993, as amended and restated as of October 1, 1995 (the "Pass
Through Agreement") between the Corporation and the Pass Through Trustee, for
the benefit of the registered holders (the "Certificateholders") of the series
(a "Series") of certificates (the "Pass Through Certificates") evidencing
fractional undivided interests in such Pass Through Trust. The property held
in each Pass Through Trust (the "Trust Property") will consist of (a)
equipment purchase certificates issued in connection with the purchase by the
Corporation of one or more aircraft (the "Owned Aircraft Certificates") or (b)
equipment trust certificates issued in connection with one or more leveraged
lease transactions (the "Leased Aircraft Certificates" and, together with the
Owned Aircraft Certificates, the "Equipment Certificates"), as specified in
the applicable Prospectus Supplement.
As more fully described below under "Use of Proceeds," in connection
with each purchase or leveraged lease transaction, one or more Equipment
Certificates may be issued, each of which may have different interest rates
and final maturity dates. Concurrently with the execution and delivery of
each Series Supplement, the Pass Through Trustee, on behalf of the related
Pass Through Trust, will enter into one or more participation agreements
(each, a "Participation Agreement") pursuant to which it will, among other
things, purchase one or more Owned Aircraft Certificates or Leased Aircraft
Certificates, such that the Equipment Certificates that constitute the
property of such Pass Through Trust will have identical interest rates, in
each case equal to the rate applicable to the Pass Through Certificates issued
by such Pass Through Trust, and such that the latest maturity date for such
Equipment Certificates will occur on or before the final distribution date
applicable to such Pass Through Certificates.
For each Pass Through Trust, the aggregate amount of the related
Series of Pass Through Certificates will equal the aggregate principal amount
of the Equipment Certificates constituting the Trust Property of such Pass
Through Trust. The Pass Through Trustee will distribute the amount of
payments of principal, premium, if any, and interest, received by it as holder
of the Equipment Certificates to the Certificateholders of the Pass Through
Trust in which such Equipment Certificates are held. See "Description of the
Pass Through Certificates" and "Description of the Equipment Certificates."
USE OF PROCEEDS
Each Series of Pass Through Certificates offered pursuant to this
Prospectus and a related Prospectus Supplement will be issued to facilitate
(a) the financing of the aggregate principal amount of debt to be issued, or
the refinancing of the aggregate principal amount of the debt previously
issued, by the Corporation with respect to each of the aircraft that have been
or will be purchased and owned by the Corporation (the "Owned Aircraft"), as
specified in the applicable Prospectus Supplement, or (b) the financing or
refinancing of the debt portion and, in certain cases, refinancing some of the
equity portion of one or more separate leveraged lease transactions entered
into or to be entered into by the Corporation, as lessee, with respect to each
of the aircraft that have been or will be leased by the Corporation (the
"Leased Aircraft" and, together with the Owned Aircraft, the "Aircraft"), as
specified in the applicable Prospectus Supplement. Each Prospectus Supplement
will specify the type and model of each Aircraft relating to the Pass Through
Certificates offered thereby, the engines with which such Aircraft is equipped
and whether such Aircraft was or will be delivered new by the manufacturer to
the Corporation or the Owner Trustee, as the case may be, or whether such
Aircraft is already in use in the Corporation's fleet.
The proceeds from the sale of such Pass Through Certificates will be
used by the Pass Through Trustee on behalf of the related Pass Through Trust
(a) to purchase Owned Aircraft Certificates or (b) to purchase Leased Aircraft
Certificates. The Owned Aircraft Certificates will be issued with recourse to
the Corporation to finance or refinance all or a portion of the purchase price
(as specified in the applicable Prospectus Supplement) for one or more Owned
Aircraft which have been or will be purchased and owned by the Corporation.
The Leased Aircraft Certificates will be issued as nonrecourse obligations by
Wilmington Trust Company, not in its individual capacity but solely as the
owner trustee (the "Owner Trustee") of separate owner trusts (each, an "Owner
Trust" created pursuant to a separate "Trust Agreement") for the benefit of
the owner participant named therein (each, an "Owner Participant"), in
connection with one or more leveraged lease transactions, in each case to
finance or refinance not more than, unless otherwise specified in such
Prospectus Supplement, 80% of the purchase price paid or to be paid by the
Owner Trustee for a Leased Aircraft which has been or will be leased by the
related Owner Trustee to the Corporation.
To the extent that any proceeds from the sale of the Pass Through
Certificates for any Pass Through Trust have not been applied by the Pass
Through Trustee by the date specified in the applicable Prospectus Supplement
to the purchase of the Equipment Certificates that were contemplated to be
held in such Pass Through Trust, such proceeds will be distributed on the date
specified in such Prospectus Supplement to the related Certificateholders on a
pro rata basis, together with interest accrued thereon, but without premium.
See "Description of the Pass Through Certificates -- Special Payment Upon
Unavailability of Trust Property."
If, for any Leased Aircraft, under the circumstances discussed below
in "Description of Equipment Certificates -- Delayed Lease Commencement" the
proceeds from the sale of the related Leased Aircraft Certificates to the
applicable Pass Through Trusts are not applied by the Owner Trustee to pay the
purchase price for such Leased Aircraft on the date of the purchase of such
Leased Aircraft Certificates by such Pass Through Trusts, such proceeds, after
deducting certain expenses of the Pass Through Certificate offering, will be
deposited by the Owner Trustee into a Collateral Account (as defined below).
Such Collateral Account, together with the other security, if any, pledged
under the related Indenture (see "Description of the Equipment Certificates
- - -- Security" below), will secure such Leased Aircraft Certificates during the
related Pre-Funding Period (as defined below) and will be available to make
scheduled payments of principal, if any, and interest accrued on such Leased
Aircraft Certificates during the Pre-Funding Period. If the Lease related to
such Leased Aircraft does not commence by the cut-off date specified in the
applicable Prospectus Supplement or an event of loss occurs with respect to
such Leased Aircraft during the Pre-Funding Period, funds in such Collateral
Account, together with such other security will be available to prepay such
Leased Aircraft Certificates as described in such Prospectus Supplement or
will be applied to finance the aggregate principal amount of the debt to be
issued by the Corporation in connection with the acquisition of such Aircraft
by the Corporation so that such Aircraft becomes an Owned Aircraft. See
"Description of the Equipment Certificates -- Delayed Lease Commencement" and
"--Mandatory Prepayment During the Pre-Funding Period."
For each Leased Aircraft, the related Leased Aircraft Certificates
have been or will be issued by the Owner Trustee and authenticated by the
trustee named in such trust indenture and security agreement, as indenture
trustee (the "Indenture Trustee") under a separate trust indenture and
security agreement (each, a "Leased Aircraft Indenture") between the Owner
Trustee and the Indenture Trustee. Each Owner Participant will have provided
or will provide, from sources other than the related Leased Aircraft
Certificates, at least, unless otherwise specified in the applicable
Prospectus Supplement, 20% of the purchase price for the related Leased
Aircraft. No Owner Participant, however, will be personally liable for any
amount payable under the related Leased Aircraft Indenture or the Leased
Aircraft Certificates issued thereunder. For each Owned Aircraft, the related
Owned Aircraft Certificates have been or will be issued under a separate trust
indenture and security agreement (each, an "Owned Aircraft Indenture," and
together with any Leased Aircraft Indentures, the "Indentures") between the
Indenture Trustee and the Corporation. The Owned Aircraft Certificates will be
direct obligations of the Corporation.
DIAGRAM OF PAYMENTS
The following diagram illustrates certain aspects of the payment
flows in the Pass Through Trust structure (1) for a possible transaction
for Leased Aircraft among the Corporation, the Owner Trustee, the related
Owner Participant, the Indenture Trustee, the Pass Through Trustee and the
Certificateholders, assuming each Leased Aircraft is leased by the
Corporation upon issuance of the Pass Through Certificates, and (2) for a
possible transaction for Owned Aircraft among the Corporation, the
Indenture Trustee, the Pass Through Trustee and the Certificateholders.
For each Aircraft included in a particular Pass Through Certificate
offering, one or more Equipment Certificates will be issued, each of which
may have a different interest rate and final maturity date and will be held
in a separate Pass Through Trust. Each Pass Through Trust may hold
Equipment Certificates relating to more than one Aircraft. The number of
Aircraft included in each offering and the interest rates and final
maturity dates of the Equipment Certificates held by each Pass Through
Trust will be described in the applicable Prospectus Supplement.
In a Leased Aircraft transaction, the Corporation will lease each
Leased Aircraft from the Owner Trustee under a separate Lease. The
Corporation will make scheduled rental payments for each Leased Aircraft under
the related Lease. As a result of the assignment under the related Leased
Aircraft Indenture of certain rights of the Owner Trustee under such Lease,
the Corporation will make these payments directly to the Indenture Trustee.
From these rental payments the Indenture Trustee will pay to the Pass Through
Trustee for each Pass Through Trust the interest or interest and principal due
from the Owner Trustee on the Leased Aircraft Certificates issued under the
related Leased Aircraft Indenture and held in such Pass Through Trust. After
such payments have been made, the Indenture Trustee will pay the remaining
balance to the Owner Trustee for the benefit of the related Owner Participant.
The Pass Through Trustee for each Pass Through Trust will distribute to the
related Certificateholders payments received on the Leased Aircraft
Certificates held in such Pass Through Trust. See "Description of the Pass
Through Certificates -- Payments and Distributions" and "Description of the
Equipment Certificates -- Delayed Lease Commencement" for a discussion of
payments during any Pre-Funding Period.
In an Owned Aircraft transaction, the Corporation will make scheduled
payments on the Owned Aircraft Certificates relating to each Owned Aircraft to
the Indenture Trustee. From these payments the Indenture Trustee will pay to
the Pass Through Trustee for each Pass Through Trust the interest or interest
and principal due on the Owned Aircraft Certificates issued under the related
Owned Aircraft Indenture and held in such Pass Through Trust.
The Pass Through Trustee for each Pass Through Trust will distribute
to the related Certificateholders payments received on the Owned Aircraft
Certificates held in such Pass Through Trust.
[GRAPHIC -- SEE APPENDIX A]
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
In connection with each offering of Pass Through Certificates, one or
more separate Pass Through Trusts will be formed, and one or more
corresponding Series of Pass Through Certificates will be issued, pursuant to
the Pass Through Agreement and one or more separate Series Supplements to be
entered into between the Corporation and the Pass Through Trustee. The
following summary relates to the Pass Through Agreement and each of the Series
Supplements, the Pass Through Trusts to be formed thereby and the Pass Through
Certificates to be issued by each Pass Through Trust, except as otherwise
described in the applicable Prospectus Supplement.
The discussion that follows is a summary and does not purport to be
complete. The summary includes descriptions of the material terms of the Pass
Through Agreement which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Series Supplement relating
to each Series of Pass Through Certificates and the forms of the related
Indentures and Participation Agreements and, if the Pass Through Certificates
relate to Leased Aircraft, the related Leases, Trust Agreements and Collateral
Agreements, if any, will be filed as exhibits to a post-effective amendment to
this Registration Statement, a Current Report on Form 8-K, a Quarterly Report
on Form 10-Q or an Annual Report on Form 10-K, as applicable, to be filed with
the Commission in connection with the issuance of each such Series of Pass
Through Certificates. This summary makes use of terms defined in and is
qualified in its entirety by reference to the Pass Through Agreement as
so supplemented.
Each Prospectus Supplement will include a glossary of certain defined
terms used in connection with the Pass Through Certificates offered thereby
and the related Equipment Certificates. To the extent that any provision in
any Prospectus Supplement is inconsistent with any provision of this summary,
the provision of such Prospectus Supplement will control.
General
The Pass Through Certificates will be issued in fully registered form
only and may, if so specified in the applicable Series Supplement, be
registered in the name of Cede & Co. ("Cede") as the nominee of The Depository
Trust Company ("DTC"). If the Pass Through Certificates are so registered, no
Certificateholder will be entitled to receive a certificated Pass Through
Certificate representing such person's interest in the related Pass Through
Trust unless such certificates are issued as described below. Unless
certificated Pass Through Certificates are issued, all references to actions
by Certificateholders shall refer to actions taken by DTC upon instructions
from DTC Participants (as defined below), and all references herein to
distributions, notices, reports and statements to Certificateholders shall
refer, as the case may be, to distributions, notices, reports and statements
to DTC or Cede, as the registered holder of the Pass Through Certificates, or
to DTC Participants for distribution to Certificateholders in accordance with
DTC procedures. See "Description of the Pass Through Certificates --
Book-Entry Procedures." (Pass Through Agreement, Section 2.12)
Each Pass Through Certificate will represent a fractional undivided
interest in the separate Pass Through Trust formed by the Pass Through
Agreement and the related Series Supplement pursuant to which such Pass
Through Certificate is issued. The property of each Pass Through Trust will
include the Equipment Certificates held in such Pass Through Trust, all monies
at any time paid thereon, all monies due and to become due thereunder and
funds from time to time deposited with the Pass Through Trustee in accounts
relating to such Pass Through Trust. Each Pass Through Certificate will
represent a pro rata share of the outstanding principal amount of the
Equipment Certificates and other property held in the related Pass Through
Trust and will be issued, unless otherwise specified in the applicable
Prospectus Supplement, in minimum denominations of $1,000 or any integral
multiple of $1,000. (Pass Through Agreement, Article II)
The applicable Prospectus Supplement will describe the specific
Series of Pass Through Certificates offered thereby, including:
(1) the specific designation and title of such Pass Through
Certificates;
(2) the Pass Through Trustee for such series of Pass Through
Certificates;
(3) the Regular Distribution Dates (as herein defined) and Special
Distribution Dates (as herein defined) applicable to such Pass
Through Certificates and the applicable Cut-Off Date (as herein
defined), if any;
(4) the specific form of such Pass Through Certificates;
(5) a description of the Equipment Certificates to be purchased by such
Pass Through Trust, including the period or periods within which,
the price or prices at which, and the terms and conditions upon
which such Certificates may or must be repaid in whole or in part,
by the Corporation or, with respect to Leased Aircraft
Certificates, the related Owner Trustee;
(6) a description of the related Aircraft, including whether the
Aircraft is a Leased Aircraft or an Owned Aircraft;
(7) a description of the related Participation Agreement and Indenture,
including a description of the events of default under the related
Indentures, the remedies exercisable upon the occurrence of such
events of default and any limitations on the exercise of such
remedies with respect to such Equipment Certificates;
(8) if such Pass Through Certificates relate to Leased Aircraft, a
description of the related Lease, Trust Agreement and Collateral
Agreement, if any, including (a) the names of the related Owner
Trustee, (b) a description of the events of default under the
related Lease, the remedies exercisable upon the occurrence of such
events of default and any limitations on the exercise of such
remedies with respect to such Leased Aircraft Certificates, and (c)
the rights, if any, of the related Owner Trustee or Owner
Participant to cure failures of the Corporation to pay rent under
the related Lease;
(9) the extent, if any, to which the provisions of the operative
documents applicable to such Equipment Certificates may be amended
by the parties thereto without the consent of the Holders, or upon
the consent of the Holders of a specified percentage of aggregate
principal amount of, such Equipment Certificates; and
(10) any other special terms pertaining to such Pass Through
Certificates.
Interest will be passed through to Certificateholders of each Pass
Through Trust at the rate per annum payable on the Equipment Certificates held
in such Pass Through Trust, as set forth for such Pass Through Trust on the
cover page of the applicable Prospectus Supplement.
The Pass Through Certificates represent interests in the related Pass
Through Trust only and all payments and distributions shall be made only from
the Trust Property of such Pass Through Trust. The Pass Through Certificates
do not represent an interest in or obligation of the Corporation, the Pass
Through Trustee, any related Owner Participant, the Owner Trustee in its
individual capacity or any affiliate of any of the foregoing. Each
Certificateholder by its acceptance of a Pass Through Certificate agrees to
look solely to the income and proceeds from the Trust Property of the related
Pass Through Trust as provided in the Pass Through Agreement and the
applicable Series Supplement. (Pass Through Agreement, Section 3.06)
The Pass Through Agreement does not, and the Indentures will not,
contain any debt covenants or provisions that would afford Certificateholders
protection in the event of a highly leveraged transaction involving the
Corporation. However, the Certificateholders of each Series will have the
benefit of a lien on the specific Aircraft securing the related Equipment
Certificates held in the related Pass Through Trust. See "Description of the
Equipment Certificates - Security" below for a discussion of security for
Leased Aircraft Certificates during any Pre-Funding Period.
Book-Entry Procedures
If specified in the applicable Prospectus Supplement, the Pass
Through Certificates will be subject to the provisions described below. Upon
issuance, each Series of Pass Through Certificates will be represented by one
fully registered global certificate. Each global certificate will be
deposited with, or on behalf of, DTC, and registered in its name or in the
name of Cede, its nominee. No Certificateholder will be entitled to receive
a certificated Pass Through Certificate, except as set forth below.
DTC has advised the Corporation that DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for its participants ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Access
to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Certificateholders that are not DTC Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests, in Pass
Through Certificates may do so only through DTC Participants. In addition,
Certificateholders will receive all distributions of principal and interest
from the Pass Through Trustee through the DTC Participants. Under the rules,
regulations and procedures creating and affecting DTC and its operation, DTC
is required to make book-entry transfers of Pass Through Certificates among
DTC Participants on whose behalf it acts and to receive and transmit
distributions of principal of, and interest on, the Pass Through Certificates.
Under the book-entry system, Certificateholders may experience some delay in
receipt of payments, since such payments will be forwarded by the Pass Through
Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments
to the appropriate DTC Participants. Distributions by DTC Participants to
Certificateholders will be the responsibility of such DTC Participants and
will be made in accordance with customary industry practices. Accordingly,
although Certificateholders will not have possession of the Pass Through
Certificates, the rules of DTC provide a mechanism by which participants will
receive payments and will be able to transfer their interests. Although the
DTC Participants are expected to convey the rights represented by their
interests in any global security to the related Certificateholders, because
DTC can only act on behalf of DTC Participants, the ability of
Certificateholders to pledge Pass Through Certificates to persons or entities
that are not DTC Participants or to otherwise act with respect to such Pass
Through Certificates, may be limited due to the lack of physical certificates
for such Pass Through Certificates.
None of the Corporation, the Pass Through Trustee or any other agent
of the Corporation or the Pass Through Trustee will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in the Pass Through Certificates or
for supervising or reviewing any records relating to such beneficial ownership
interests. Since the only "Certificateholder" will be Cede, as nominee of
DTC, Certificateholders will not be recognized by the Pass Through Trustee as
Certificateholders, as such term is used in the Pass Through Agreement, and
Certificateholders will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants. DTC has
advised the Corporation that it will take any action permitted to be taken by
a Certificateholder under the Pass Through Agreement and any Prospectus
Supplement only at the direction of one or more DTC Participants to whose
accounts with DTC the related Pass Through Certificates are credited.
Additionally, DTC has advised the Corporation that it will take such actions
with respect to any percentage of the beneficial interest of
Certificateholders held in each Pass Through Trust only at the direction of
and on behalf of DTC Participants whose holders include undivided interests
that satisfy any such percentage. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of DTC Participants whose holders include such undivided interests.
Same-Day Settlement and Payment. All payments made by the
Corporation to the Indenture Trustee under each Lease will be in immediately
available funds and will be passed through to DTC in immediately available
funds.
The Pass Through Certificates will trade in DTC's Same Day Funds
Settlement System until maturity, and secondary market trading activity in the
Pass Through Certificates will be required by DTC to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Pass
Through Certificates.
Certificated Form. The Pass Through Certificates will be issued in
fully registered, certificated form to Certificateholders, or their nominees,
rather than to DTC or its nominee, only if DTC advises the Pass Through
Trustee in writing that it is no longer willing or able to discharge properly
its responsibilities as depository with respect to the Pass Through
Certificates and the Corporation is unable to locate a qualified successor or
if the Corporation, at its option, elects to terminate the book-entry system
through DTC. In such event, the Pass Through Trustee will notify all
Certificateholders through DTC Participants of the availability of such
certificated Pass Through Certificates. Upon surrender by DTC of the
definitive global certificate representing the series of Pass Through
Certificates and receipt of instructions for reregistration, the Pass Through
Trustee will reissue the Pass Through Certificates in certificated form to
Certificateholders or their nominees. (Pass Through Agreement, Section 2.12)
Certificates in certificated form will be freely transferable and
exchangeable at the office of the Pass Through Trustee upon compliance with
the requirements set forth in the Pass Through Agreement and the applicable
Series Supplements. No service charge will be imposed for any registration of
transfer or exchange, but payment of a sum sufficient to cover any tax or
other governmental charge may be required.
Payments and Distributions
The Corporation will make scheduled payments of principal of, and
interest on the unpaid amount of, the Owned Aircraft Certificates to the
Indenture Trustee under the related Owned Aircraft Indenture, and the
Indenture Trustee will distribute such principal and interest payments to the
Pass Through Trustee for each of the Pass Through Trusts that hold such Owned
Aircraft Certificates. Upon commencement of the Lease for any Leased
Aircraft, the Corporation will make scheduled rental payments for each Leased
Aircraft under the related Lease. After any Pre-Funding Period for a Leased
Aircraft, these scheduled rental payments will be assigned under the
applicable Leased Aircraft Indenture by the related Owner Trustee to the
Indenture Trustee to provide the funds necessary to make the corresponding
payments of principal and interest due from the Owner Trustee on the Leased
Aircraft Certificates issued under such Leased Aircraft Indenture.
Until the Corporation has entered into a Lease in connection with
a Leased Aircraft, the Corporation will not be obligated to make any
scheduled rental payments and during any Pre-Funding Period for such Leased
Aircraft the related Leased Aircraft Certificates will not be secured by
such Leased Aircraft or the related Lease, including any rental payments
under such Lease. During the Pre-Funding Period, if any, for such Leased
Aircraft, however, the related Collateral Account, together with the other
security pledged under the related Indenture or otherwise provided to the
Indenture Trustee will be available to provide funds necessary to make the
corresponding scheduled payments of principal, if any, and interest accrued
on the related Leased Aircraft Certificates during such Pre-Funding Period,
and to pay the portion, if any, of principal and interest due on the first
payment date after the Pre-Funding Period to the extent exceeding the
amount of rent payable by the Corporation on such payment date. See
"Description of the Equipment Certificates -- Delayed Lease Commencement."
Following any Pre-Funding Period, after the Indenture Trustee has
made such principal and interest payments to the Pass Through Trustee for each
of the Pass Through Trusts on the Leased Aircraft Certificates held in such
Pass Through Trust, the Indenture Trustee will, except under certain
circumstances, pay the remaining balance, if any, to the Owner Trustee for the
benefit of the related Owner Participant. The Pass Through Trustee for each
such Pass Through Trust will distribute to the Certificateholders of such Pass
Through Trust payments received on the Equipment Certificates held in such
Pass Through Trust as described below. During any Pre-Funding Period for a
Leased Aircraft, the Indenture Trustee will not make any payments to the Owner
Trustee for the benefit of the related Owner Participant.
Payments of principal of, and interest on the unpaid amount of, the
Equipment Certificates held in each Pass Through Trust will be scheduled to be
received by the Pass Through Trustee on the dates specified in the applicable
Prospectus Supplement (such scheduled payments of principal of, and interest
on, the Equipment Certificates are referred to herein as "Scheduled Payments,"
and the dates specified for distributions of Scheduled Payments to the Pass
Through Trustee in the applicable Prospectus Supplement are referred to herein
as "Regular Distribution Dates"). For each Pass Through Trust, the Pass
Through Trustee will distribute on each Regular Distribution Date to the
related Certificateholders any Scheduled Payment received by the Pass Through
Trustee on such Regular Distribution Date.
If a Scheduled Payment is not received by the Pass Through Trustee on
or before a Regular Distribution Date but is received within five Business
Days thereafter, it will be distributed on the date received to the
Certificateholders. Each such distribution of a Scheduled Payment will be made
by the Pass Through Trustee to the Certificateholders of record of such Pass
Through Trust on the fifteenth day prior to such Regular Distribution Date,
subject to certain exceptions. Each such Certificateholder will be entitled
to receive a pro rata share of any such distribution. (Pass Through
Agreement, Sections 5.01 and 5.02) If a Scheduled Payment is received more
than five Business Days after the applicable Regular Distribution Date, it
will be treated as a Special Payment and will be distributed as described
below.
After any prepayment of principal, any redemption or any default in
respect of some or all of the Equipment Certificates held in any Pass Through
Trust, any Certificateholder of such Pass Through Trust should refer to the
Pool Balance and the Pool Factor (as such terms are defined below) for such
Pass Through Trust reported periodically by the Pass Through Trustee, in order
to calculate such Certificateholder's pro rata share of such Pass Through
Trust. See "Pool Factors" and "Statements to Certificateholders" below.
For any Pass Through Trust, any payments of principal, premium, if
any, or interest, other than Scheduled Payments, received by the Pass Through
Trustee on any of the Equipment Certificates held in such Pass Through Trust,
including payments received (i) for the prepayment of such Equipment
Certificates in connection with certain events specified in the applicable
Prospectus Supplement (including payments upon unavailability of Trust
Property and prepayments during any Pre-Funding Period as described below),
(ii) upon the prepayment by the related Owner Trustee of such Equipment
Certificates following a default in respect of such Equipment Certificates,
and (iii) on account of the sale of such Equipment Certificates by the Pass
Through Trustee (such payments are referred to herein as "Special Payments"),
will be distributed on the dates determined as set forth in the applicable
Prospectus Supplement (each, a "Special Distribution Date" and, together with
the Regular Distribution Dates, the "Distribution Dates"). See "Description
of the Equipment Certificates -- Mandatory Prepayment During the Pre-Funding
Period" for a discussion of the funding of such prepayments during any
Pre-Funding Period.
Prior to any Special Payment for any Pass Through Trust, the Pass
Through Trustee will notify the Certificateholders of record of such Pass
Through Trust of such Special Payment and the anticipated Special Distribution
Date therefor in accordance with the Pass Through Agreement. Each
distribution of a Special Payment, other than the final distribution, for any
Pass Through Trust will be made by the Pass Through Trustee to the
Certificateholders of record of such Pass Through Trust on the fifteenth day
prior to such Special Distribution Date, unless otherwise specified in the
applicable Prospectus Supplement. Each such Certificateholder will be
entitled to receive a pro rata share of any such distribution. (Pass Through
Agreement, Section 5.02) See "Description of the Equipment Certificates --
Prepayment" and "Description of the Pass Through Certificates -- Events of
Default and Certain Rights Upon an Event of Default."
The Pass Through Agreement requires that the Pass Through Trustee
establish and maintain, for each Pass Through Trust and for the benefit of the
related Certificateholders, one or more non-interest bearing accounts (a
"Certificate Account") for the deposit of Scheduled Payments on the Equipment
Certificates held in such Pass Through Trust and one or more accounts which
will, except in connection with Permitted Investments as defined below, be
non-interest bearing (a "Special Payments Account") for the deposit of Special
Payments on such Equipment Certificates. The Pass Through Trustee is required
to deposit any Scheduled Payments relating to a Pass Through Trust received by
it in the related Certificate Account and to deposit any Special Payments so
received by it in the related Special Payments Account pending distribution
thereof. (Pass Through Agreement, Section 5.01) Special Payments that are not
promptly distributed by the Pass Through Trustee will, to the extent
practicable, be invested by the Pass Through Trustee in Permitted Investments
pending the distribution of such funds on a Special Distribution Date, and the
income and earnings on such investment will be distributed with such Special
Payment. "Permitted Investments" are non-callable and non-redeemable direct
obligations of the United States of America maturing on or prior to the day
required for the distribution of any such funds on the applicable Special
Distribution Date. (Pass Through Agreement, Article I and Section 5.04)
If at any time, the Pass Through Certificates of any Pass Through
Trust are issued in the form of certificated Pass Through Certificates and not
to Cede, as nominee for DTC, distributions by the Pass Through Trustee from a
Certificate Account or a Special Payments Account of any Pass Through Trust on
any Distribution Date will be paid to each Certificateholder of record of such
Pass Through Trust on the applicable record date at its address appearing on
the register maintained for such Pass Through Trust. (Pass Through Agreement,
Section 5.02) The final distribution for each Pass Through Trust, however,
will be made only upon presentation and surrender of the Pass Through
Certificates for such Pass Through Trust at the office or agency of the Pass
Through Trustee specified in the notice given by the Pass Through Trustee of
such final distribution. The Pass Through Trustee will mail such notice of
the final distribution to the Certificateholders of such Pass Through Trust,
specifying the date set for such final distribution and the amount of such
distribution. (Pass Through Agreement, Section 12.01) See "Termination of
Pass Through Trusts" below.
If any Distribution Date is not a Business Day, distributions
scheduled to be made on such Distribution Date may be made on the next
succeeding Business Day without additional interest. (Pass Through Agreement,
Section 13.15)
Pool Factors
Except as provided below, the Pool Factor (as defined below) for any
Pass Through Trust will decline in proportion to the scheduled repayments of
principal on the Equipment Certificates held in such Pass Through Trust as
described in the applicable Prospectus Supplement. Where any Equipment
Certificates held in a Pass Through Trust have been prepaid, a scheduled
repayment of principal thereon has not been made or certain actions have been
taken following a default thereon, as discussed in the applicable Prospectus
Supplement or below in "Events of Default and Certain Rights Upon an Event of
Default," the Pool Factor and the Pool Balance (as defined below) of such Pass
Through Trust will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Pass Through Trust.
Each Pass Through Trust will have a separate Pool Factor.
Unless otherwise described in the applicable Prospectus Supplement,
the "Pool Balance" for each Pass Through Trust indicates, as of any date, the
aggregate unpaid principal amount of the Equipment Certificates held in such
Pass Through Trust on such date plus any amounts in respect of principal on
such Equipment Certificates held by the Pass Through Trustee and not yet
distributed plus any amounts transferred to the Corporation and deposited in a
deposit trust account in connection with a delayed purchase of the Equipment
Certificates. The Pool Balance for each Pass Through Trust as of any
Distribution Date will be computed after giving effect to the payment of
principal, if any, on the Equipment Certificates held in such Pass Through
Trust and the distribution thereof being made on that date. (Pass Through
Agreement, Article I)
Unless otherwise described in the applicable Prospectus Supplement,
the "Pool Factor" for each Pass Through Trust as of any Distribution Date is
the quotient (rounded to the seventh decimal place) computed by dividing (i)
the Pool Balance, by (ii) the aggregate original principal amount of the
Equipment Certificates held in such Pass Through Trust. The Pool Factor for
each Pass Through Trust as of any Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the Equipment
Certificates held in such Pass Through Trust and the distribution thereof
being made on that date. The Pool Factor for each Pass Through Trust will
initially be 1.0000000; thereafter, the Pool Factor for each Pass Through
Trust will decline as described above to reflect reductions in the Pool
Balance of such Pass Through Trust. For any Pass Through Trust, the amount of
any Certificateholder's pro rata share of the Pool Balance of such Pass
Through Trust can be determined by multiplying the original denomination of
such Certificateholder's Pass Through Certificate by the Pool Factor for such
Pass Through Trust as of the applicable Distribution Date. (Pass Through
Agreement, Article I)
Statements to Certificateholders
On each Distribution Date, the Pass Through Trustee will include with
each distribution of a Scheduled Payment or Special Payment to
Certificateholders of record of the related Pass Through Trust a statement,
giving effect to such distribution being made on such Distribution Date,
setting forth the following information (per $1,000 in aggregate amount of
Pass Through Certificates for such Pass Through Trust, as to (i) and (ii)
below):
(i) the amount of such distribution allocable to principal and
allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust.
So long as the Pass Through Certificates of any related Pass Through
Trust are registered in the name of Cede, as nominee for DTC, on the record
date prior to each Distribution Date, the Pass Through Trustee will request
from DTC a securities position listing setting forth the names of all DTC
Participants reflected on DTC's books as holding interests in the Pass Through
Certificates of such related Pass Through Trust on such record date. On each
Distribution Date, the Pass Through Trustee will mail to each such DTC
Participant the statement described above, and will make available additional
copies as requested by such DTC Participant, to be available for forwarding to
Certificateholders.
In addition, after the end of each calendar year, the Pass Through
Trustee will prepare and deliver to each Certificateholder of each Pass
Through Trust at any time during the preceding calendar year a report
containing the sum of the amounts determined pursuant to clauses (i) and (ii)
above with respect to each such Pass Through Trust for such calendar year or,
in the event such person was a Certificateholder during a portion of such
calendar year, for the applicable portion of such calendar year. Such report
and such other items will be prepared on the basis of information supplied to
the Pass Through Trustee by the DTC Participants, and shall be delivered by
the Pass Through Trustee to such DTC Participants to be available for
forwarding by such DTC Participants to Certificateholders in the manner
described above. (Pass Through Agreement, Section 5.03)
At such time, if any, as the Pass Through Certificates of a related
Pass Through Trust are issued in certificated form, the related Pass Through
Trustee will prepare and deliver the information described above to each
Certificateholder of record of such Trust as the name and period of record
ownership of such Certificateholder appears on the records on the registrar
for such Pass Through Trust.
Voting of Equipment Certificates
The Pass Through Trustee, as holder of the Equipment Certificates
held in each Pass Through Trust, has the right to vote and give consents and
waivers in respect of such Equipment Certificates under the related
Indentures. The Pass Through Agreement sets forth the circumstances in which
the Pass Through Trustee shall direct any action or cast any vote as the
holder of the Equipment Certificates held in the applicable Pass Through Trust
at its own discretion and the circumstances in which the Pass Through Trustee
shall seek instructions from the Certificateholders of such Pass Through
Trust. Prior to an Event of Default (as defined below) with respect to any
Pass Through Trust, the principal amount of the Equipment Certificates held in
such Pass Through Trust directing any action or being voted for or against any
proposal will be in proportion to the principal amount of Pass Through
Certificates held by the Certificateholders of such Pass Through Trust taking
the corresponding position. (Pass Through Agreement, Section 7.01)
Events of Default and Certain Rights Upon an Event of Default
The Pass Through Agreement defines an event of default for any Pass
Through Trust (an "Event of Default") as the occurrence and continuance of an
event of default under one or more of the related Indentures (an "Indenture
Event of Default"). The Indenture Events of Default under the Indentures will
be described in the applicable Prospectus Supplement and, for the Leased
Aircraft, will include events of default under the related Leases ("Lease
Events of Default"). Since the Equipment Certificates outstanding under an
Indenture may be held in more than one Pass Through Trust, a continuing
Indenture Event of Default under such Indenture would result in an Event of
Default with respect to each such Pass Through Trust. All of the Equipment
Certificates issued under the same Indenture, however, will relate to a
specific Aircraft and there will be no cross-collateralization or
cross-default provisions in the Indentures. Consequently, events resulting in
an Indenture Event of Default under any particular Indenture will not
necessarily result in an Indenture Event of Default occurring under any other
Indenture. If an Indenture Event of Default occurs in fewer than all of the
Indentures related to a Pass Through Trust, the Equipment Certificates issued
pursuant to the related Indentures with respect to which an Indenture Event of
Default has not occurred will continue to be held in such Pass Through Trust
and payments of principal of, premium, if any, and interest on such Equipment
Certificates will continue to be distributed to the Certificateholders of such
Pass Through Trust as originally scheduled.
The Equipment Certificates in any Pass Through Trust, and therefore
the related Pass Through Certificates, will not have the benefit of any debt
covenants or provisions in the Indentures relating to such Equipment
Certificates or Pass Through Certificates that would afford the holders
thereof protection in the event of a highly leveraged transaction involving
the Corporation.
Under each Leased Aircraft Indenture the related Owner Trustee and
the Owner Participant will have the right under certain circumstances to cure
an Indenture Event of Default that results from the occurrence of a Lease
Event of Default under the related Lease. If the Owner Trustee or the Owner
Participant chooses to exercise such cure right, the Indenture Event of
Default and consequently the Event of Default under any Pass Through Trust
holding the related Leased Aircraft Certificates will be deemed to be cured.
The applicable Prospectus Supplement will contain a more detailed discussion
of certain provisions described in this paragraph.
The Pass Through Agreement provides that if an Indenture Event of
Default under an Indenture relating to Equipment Certificates held in a Pass
Through Trust shall have occurred and be continuing, the Pass Through Trustee
may vote all of the Equipment Certificates issued under such Indenture that
are held in such Pass Through Trust, and upon the direction of the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust, shall vote a
corresponding majority of such Equipment Certificates, in each case in favor
of directing the Indenture Trustee to declare the unpaid principal amount of
all Equipment Certificates issued under such Indenture and any accrued and
unpaid interest thereon to be due and payable. The Pass Through Agreement
also provides that if an Indenture Event of Default under an Indenture
relating to Equipment Certificates held in a Pass Through Trust shall have
occurred and be continuing, the Pass Through Trustee may, and upon the
direction of the Certificateholders evidencing fractional undivided interests
aggregating not less than a majority in interest of such Pass Through Trust
shall, vote all of the Equipment Certificates issued under such Indenture that
are held in such Pass Through Trust in favor of directing the Indenture
Trustee as to the time, method and place of conducting any proceeding for any
remedy available to such Indenture Trustee or of exercising any trust or power
conferred on such Indenture Trustee under such Indenture. (Pass Through
Agreement, Sections 7.01 and 7.09)
The ability of the Certificateholders of any one Pass Through Trust
to cause the Indenture Trustee for any Equipment Certificates held in such
Pass Through Trust to accelerate the payment on such Equipment Certificates
under the related Indenture or to direct the exercise of remedies by such
Indenture Trustee under the related Indenture will depend, in part, upon the
proportion of the aggregate principal amount of the Equipment Certificates
outstanding under such Indenture and held in such Pass Through Trust to the
aggregate principal amount of all Equipment Certificates outstanding under
such Indenture. Each Pass Through Trust will hold Equipment Certificates
outstanding under such Indenture. Each Pass Through Trust will hold Equipment
Certificates with different terms from those of the Equipment Certificates
held in any other Pass Through Trust and, therefore, the Certificateholders of
a Pass Through Trust may have divergent or conflicting interests from those of
the Certificateholders of the other Pass Through Trusts holding Equipment
Certificates relating to the same Indenture. In addition, so long as the same
institution or an affiliate of such institution acts as Pass Through Trustee
of one or more Pass Through Trusts holding Equipment Certificates issued under
such Indenture, in the absence of instructions from the Certificateholders of
any such Pass Through Trust, the Pass Through Trustee for such Pass Through
Trust could for the same reason be faced with a potential conflict of interest
upon an Indenture Event of Default. In such event, the initial Pass Through
Trustee has indicated that it would resign as Pass Through Trustee of one or
all of such Pass Through Trusts, and a successor pass through trustee would be
appointed in accordance with the terms of the Pass Through Agreement and the
applicable Series Supplement. See "The Pass Through Trustee; the Indenture
Trustee" below for a discussion of resignation procedures.
As an additional remedy, if an Indenture Event of Default under an
Indenture has occurred and is continuing, the Pass Through Agreement provides
that the Pass Through Trustee of a Pass Through Trust holding Equipment
Certificates issued under such Indenture may, and upon the direction of the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust will, sell all or
part of such Equipment Certificates for cash to any person at a price or
prices that it may reasonably deem advisable. Any proceeds received by the
Pass Through Trustee upon any such sale will be deposited in the Special
Payments Account for such Pass Through Trust and will be distributed to the
Certificateholders of such Pass Through Trust on a Special Distribution Date.
(Pass Through Agreement, Sections 7.01 and 7.02)
The market for Equipment Certificates in default may be very limited
and there can be no assurance that they could be sold for a reasonable price.
Furthermore, so long as the same institution or an affiliate of such
institution acts as Pass Through Trustee of one or more Pass Through Trusts
holding Equipment Certificates issued under such Indenture, it may be faced
with a conflict in deciding from which Pass Through Trust to sell Equipment
Certificates to available buyers. If the Pass Through Trustee sells any such
Equipment Certificates with respect to which an Indenture Event of Default
exists for less than the outstanding principal amount thereof, the
Certificateholders of such Pass Through Trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against the Pass Through Trustee, or the Corporation or, in the case
of Leased Aircraft Certificates, the Owner Trustee or any related Owner
Participant, as the case may be. Furthermore, neither the Pass Through
Trustee nor the Certificateholders of such Pass Through Trust could take any
action with respect to any remaining Equipment Certificates held in such Pass
Through Trust so long as no Indenture Event of Default existed with respect
thereto.
For any Pass Through Trust, any amount distributed to the Pass
Through Trustee by the Indenture Trustee under any Indenture on account of the
Equipment Certificates held in such Pass Through Trust following an Indenture
Event of Default under such Indenture will be deposited in the Special
Payments Account for such Pass Through Trust and will be distributed to the
Certificateholders of such Pass Through Trust on a Special Distribution Date.
In addition, if, following an Indenture Event of Default under any Leased
Aircraft Indenture, the related Owner Trustee or Owner Participant, as the
case may be, exercises its option, if any, to prepay or purchase the
outstanding Leased Aircraft Certificates issued under such Indenture as
described in the related Prospectus Supplement, the price paid by such Owner
Trustee or the Owner Participant to the Pass Through Trustee for such Leased
Aircraft Certificates held in such Pass Through Trust will be deposited in the
related Special Payments Account and will be distributed to the
Certificateholders of such Pass Through Trust on a Special Distribution Date.
(Pass Through Agreement, Sections 5.01 and 5.02)
Any funds representing payments received with respect to any
Equipment Certificates held in a Pass Through Trust in default, or the
proceeds from the sale by the Pass Through Trustee of any such Equipment
Certificates, held by the Pass Through Trustee in the Special Payments Account
for such Pass Through Trust will, to the extent practicable, be invested by
the Pass Through Trustee in Permitted Investments pending the distribution of
such funds on a Special Distribution Date. (Pass Through Agreement, Article I
and Section 5.04)
The Pass Through Agreement provides that the Pass Through Trustee
will, within 90 days after the occurrence of a default (as defined below)
under any Pass Through Trust, notify the Certificateholders of such Pass
Through Trust by mail of all uncured or unwaived defaults with respect to such
Pass Through Trust known to it. Under no circumstances, however, may the Pass
Through Trustee give such notice until the expiration of a period of 60 days
from the occurrence of such default. The Pass Through Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders,
except in the case of default in the payment of principal of, premium, if any,
or interest on any of the Equipment Certificates held in such Pass Through
Trust. The term "default" means the occurrence of any Event of Default with
respect to a Pass Through Trust as described above, except that in determining
whether any such Event of Default has occurred any grace period or notice in
connection therewith shall be disregarded. (Pass Through Agreement, Section
7.11)
The Pass Through Agreement provides that for each Pass Through Trust,
subject to the duty of the Pass Through Trustee during a default to act with
the required standard of care, the Pass Through Trustee is entitled to be
indemnified by the Certificateholders of such Pass Through Trust before
proceeding to exercise any right or power under such Pass Through Trust at the
request of such Certificateholders. (Pass Through Agreement, Section 8.03)
In certain cases, the Certificateholders of a Pass Through Trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such Pass Through Trust may on behalf of all the
Certificateholders of such Pass Through Trust waive any past default or Event
of Default with respect to such Pass Through Trust and thereby annul any
direction given by such Certificateholders to the Pass Through Trustee or the
Indenture Trustee with respect thereto, except (i) a default in payment of the
principal of, premium, if any, or interest on any of the Equipment
Certificates held in such Pass Through Trust and (ii) a default in respect of
any covenant or provision of the Pass Through Agreement or the related Series
Supplement that cannot be modified or amended without the consent of each
Certificateholder of such Pass Through Trust affected thereby. Any such
waiver, however, will be effective to waive any such past default or Event of
Default if, but only if, the correlative Indenture Event of Default has been
waived under the related Indenture by the requisite holders of the Equipment
Certificates outstanding thereunder. (Pass Through Agreement, Section 7.10)
Each Indenture will provide that, with certain exceptions, the
holders of a majority in aggregate unpaid principal amount of the Equipment
Certificates issued thereunder may on behalf of all such holders waive any
past default or Indenture Event of Default thereunder. If, as described
above, the Certificateholders of a Pass Through Trust elect to waive a past
default or Event of Default with respect to such Pass Through Trust, the
principal amount of the Equipment Certificates issued under the related
Indenture and held in such Pass Through Trust will be counted in favor of the
waiver of the corresponding past default or Indenture Event of Default under
the related Indenture when the Indenture Trustee determines whether such past
default or Indenture Event of Default has been waived by the requisite
majority in aggregate unpaid principal amount of Equipment Certificates under
such Indenture. If, for example, the Equipment Certificates issued under an
Indenture held in a Pass Through Trust constitute only 45% in aggregate unpaid
principal amount of the Equipment Certificates issued and unpaid under such
Indenture, even if all the Certificateholders of such Pass Through Trust were
to instruct the Pass Through Trustee not to waive a past default or Event of
Default with respect to such Pass Through Trust and, consequently, to vote
such Equipment Certificates against the waiver of the corresponding past
default or Indenture Event of Default under such Indenture, the Equipment
Certificates so voted by the Pass Through Trustee on behalf of such Pass
Through Trust would not alone be sufficient under the terms of such Indenture
to compel the Indenture Trustee to refrain from giving such waiver. Moreover,
there would be no assurance that the Certificateholders of any other Pass
Through Trust holding Equipment Certificates issued under such Indenture would
at such time vote such Equipment Certificates against such waiver. Therefore,
if the Certificateholders of a Pass Through Trust or Trusts waive a past
default or Event of Default such that the principal amount of the Equipment
Certificates held either individually in such Pass Through Trust or in the
aggregate in such Pass Through Trusts constitutes the required majority in
aggregate unpaid principal amount under the applicable Indenture, such past
default or Indenture Event of Default under such Indenture will be waived
whether or not the Certificateholders of any other Pass Through Trust holding
Equipment Certificates issued under such Indenture waive such past default or
Event of Default with respect to such other Pass Through Trust.
Modifications of the Pass Through Agreement
The Pass Through Agreement contains provisions permitting the
Corporation and the Pass Through Trustee to enter into an agreement
supplemental to any Pass Through Trust, without the consent of the
Certificateholders of such Pass Through Trust, to:
(i) provide for the formation of any Pass Through Trust and the
issuance of the related Pass Through Certificates;
(ii) evidence the succession of another corporation to the
Corporation and the assumption by such corporation of the
Corporation's obligations under the Pass Through Agreement and
the applicable Series Supplement;
(iii) add to the covenants of the Corporation for the protection of
the related Certificateholders;
(iv) surrender any right or power conferred upon the Corporation in
the Pass Through Agreement or any Series Supplement;
(v) cure any ambiguity or correct or supplement any defective or
inconsistent provision of such Pass Through Agreement or the
applicable Series Supplement, or make any other provisions in
regard to matters or questions arising thereunder that will not
adversely affect the interests of the related
Certificateholders;
(vi) correct or amplify the description of property that constitutes
Trust Property or the conveyance of such property to the Pass
Through Trustee;
(vii) evidence and provide for a successor Pass Through Trustee for
some or all of the Pass Through Trusts;
(viii) modify, eliminate or add to the provisions of the Pass Through
Agreement or any Series Supplement to the extent necessary to
continue to qualify such Pass Through Agreement or such Series
Supplement under the Trust Indenture Act or any similar Federal
statute enacted thereafter;
(ix) make any other amendments or modifications which shall only
apply to any Pass Through Trust established thereafter; and
(x) add, eliminate or change any provision under the Pass Through
Agreement that will not adversely affect the interests of the
Certificateholders,
provided that in each case such modification does not cause the Pass Through
Trust to become taxable as an "association" within the meaning of Treasury
Regulation Section 301.7701-4. (Pass Through Agreement, Section 11.01)
The Pass Through Agreement also provides that the Corporation and the
Pass Through Trustee, with the consent of the Certificateholders evidencing
fractional undivided interests aggregating not less than a majority in
interest of the affected Pass Through Trust, may execute supplemental
agreements adding any provisions to or changing or eliminating any of the
provisions of the Pass Through Agreement, to the extent relating to such Pass
Through Trust, and the applicable Series Supplement, or modifying the rights
of such Certificateholders. No such supplemental agreement may, however,
without the consent of each Certificateholder so affected:
(a) reduce the amount of, or delay the timing of, any receipt by
the Pass Through Trustee of payments on the Equipment
Certificates held in such Pass Through Trust, or distributions
in respect of any Pass Through Certificate of such Pass Through
Trust, or make distributions payable in a currency other than
that provided for in such Pass Through Certificates, or impair
the right of any such Certificateholder to institute suit for
the enforcement of any payment when due;
(b) reduce, modify or amend any indemnities in favor of any
Certificateholder (unless consented to by each such holder
adversely affected thereby);
(c) create or permit the creation of any lien on the Trust Property
or deprive any holder of any such Equipment Certificate of the
benefit of the related Pass Through Trust with respect to the
Trust Property whether by disposition or otherwise, except as
provided in the Pass Through Agreement or the applicable Series
Supplement;
(d) reduce the percentage of the aggregate fractional undivided
interests of the Pass Through Trust that is required to approve
any supplemental agreement or any waiver provided for in the
Pass Through Agreement or such Series Supplement; or
(e) cause the Pass Through Trust to become taxable as an
"association" within the meaning of Treasury Regulation Section
301.7701-4. (Pass Through Agreement, Section 11.02)
Modification, Consents and Waivers under the Indenture and Related Agreements
If the Pass Through Trustee, as the holder of any Equipment
Certificates held in a Pass Through Trust, receives a request for its consent
to any amendment, modification or waiver under the Indenture, or other
document relating to such Equipment Certificates (including any Lease with
respect to Leased Aircraft Certificates), the Pass Through Trustee will mail a
notice of such proposed amendment, modification or waiver to each
Certificateholder of such Pass Through Trust as of the date of such notice.
The Pass Through Trustee will request instructions from such
Certificateholders as to whether or not to consent to such amendment,
modification or waiver. The Pass Through Trustee will vote or consent with
respect to such Equipment Certificates in the same proportion as the Pass
Through Certificates of such Pass Through Trust are actually voted by such
Certificateholders by a certain date. If an Event of Default relating to such
Indenture has occurred and is continuing under such Pass Through Trust, the
Pass Through Trustee may, in the absence of instructions from
Certificateholders holding a majority in interest of such Pass Through Trust,
in its own discretion consent to such amendment, modification or waiver, and
may so notify the Indenture Trustee. (Pass Through Agreement, Section 11.08)
Termination of Pass Through Trusts
The obligations of the Corporation and the Pass Through Trustee with
respect to a Pass Through Trust will terminate upon the distribution to the
Certificateholders of such Pass Through Trust of all amounts required to be
distributed to them pursuant to the Pass Through Agreement and the applicable
Series Supplement and the disposition of all property held in such Pass
Through Trust. The Pass Through Trustee will notify each Certificateholder of
record of such Pass Through Trust by mail of, among other things, the
termination of such Pass Through Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Pass Through Trust. The final distribution for each Certificateholder of
such Pass Through Trust will be made only upon surrender of such
Certificateholder's Pass Through Certificates at the office or agency of the
Pass Through Trustee specified in such termination notice. (Pass Through
Agreement, Section 12.01)
Delayed Purchase
If, on the date of issuance of any Pass Through Certificates, all of
the proceeds from the sale of such Pass Through Certificates are not used to
purchase the Equipment Certificates contemplated to be held in the related
Pass Through Trust, such Equipment Certificates may be purchased by the Pass
Through Trustee at any time on or prior to the date specified in the
applicable Prospectus Supplement. In such event, the Pass Through Trustee
will transfer the proceeds from the sale of such Pass Through Certificates not
used to purchase Equipment Certificates on such date of issuance to the
Corporation which will deposit such amount into a deposit trust account
pending the purchase of the Equipment Certificates not so purchased. Such
proceeds will be invested in specified investments at the direction and risk
of, and for the benefit of, the Corporation until applied to such purchase.
Earnings on specified investments in such deposit trust account will be paid
to the Corporation periodically, and the Corporation will be responsible for
any losses.
Subject to a Special Payment upon unavailability of the Trust
Property as described below, in return for its interest in the funds
transferred to the deposit trust account, if the Equipment Certificates that
were not so purchased become available for purchase on or prior to the date
specified in the applicable Prospectus Supplement, then the Corporation will
cause an amount equal to the purchase price of such Equipment Certificates to
be transferred from the deposit trust account to the Pass Through Trustee on
the date for such delayed purchase. On the initial Regular Distribution Date,
the Corporation will pay to the Pass Through Trustee an amount equal to the
interest that would have accrued on any Equipment Certificates purchased after
the date of the issuance of such Pass Through Certificates from the date of
the issuance of such Pass Through Certificates to, but excluding, the date of
the purchase of such Equipment Certificates by the Pass Through Trustee. (Pass
Through Agreement, Section 2.02)
Special Payment Upon Unavailability of Trust Property
For any Pass Through Trust, to the extent that any of the proceeds
from the sale of the related Pass Through Certificates are not applied on or
prior to the date specified in the applicable Prospectus Supplement to
purchase the Equipment Certificates that were contemplated to be held in such
Pass Through Trust, the Corporation will cause an amount equal to such
unapplied proceeds to be paid from the deposit trust account to the Pass
Through Trustee. The Pass Through Trustee will distribute such proceeds to
the Certificateholders of such Pass Through Trust on a pro rata basis upon not
less than 20 days' prior notice to them as a Special Payment on the date
specified in the applicable Prospectus Supplement, together with interest
thereon at a rate equal to the rate applicable to such Pass Through
Certificates, but without premium. The Corporation will also pay to the Pass
Through Trustee on such date an amount equal to such interest. The
Corporation will be responsible for any losses in the deposit trust account.
(Pass Through Agreement, Section 2.02)
The Pass Through Trustee; the Indenture Trustee
The Pass Through Trustee for each of the Pass Through Trusts will be
named in the Prospectus Supplement. The Pass Through Trustee and any of its
affiliates may hold Pass Through Certificates in their own names. (Pass
Through Agreement, Section 8.05)
Unless otherwise specified in the related Prospectus Supplement, The
Bank of New York will be the Indenture Trustee under the Indentures under
which the Equipment Certificates have been or will be issued. The Bank of New
York acts as trustee under other indentures with respect to other indebtedness
by the Corporation, and the Corporation from time to time borrows from, and
maintains deposit accounts with, The Bank of New York and its affiliates.
The Pass Through Trustee may resign as trustee under any or all of
the Pass Through Trusts at any time. If the Pass Through Trustee ceases to
be eligible to continue as Pass Through Trustee with respect to a Pass
Through Trust or becomes incapable of acting as Pass Through Trustee or
becomes insolvent, the Corporation may remove such Pass Through Trustee, or
any Certificateholder of such Pass Through Trust holding Pass Through
Certificates for at least six months may, on behalf of such
Certificateholder and all others similarly situated, petition any court of
competent jurisdiction for the removal of such Pass Through Trustee and the
appointment of a successor trustee. In addition, the Pass Through Trustee
of any Pass Through Trust may be removed without cause by the
Certificateholders holding more than 50% in aggregate amount of the related
Pass Through Certificates.
In the case of the resignation or removal of the Pass Through
Trustee, the Certificateholders holding more than 50% in aggregate amount of
the related Pass Through Certificates may appoint a successor Pass Through
Trustee. The resignation or removal of the Pass Through Trustee for any Pass
Through Trust and the appointment of the successor trustee for such Pass
Through Trust does not become effective until acceptance of the appointment by
the successor trustee. (Pass Through Agreement, Article X) Pursuant to such
resignation and successor trustee provisions, it is possible that a different
trustee could be appointed to act as the successor trustee with respect to
each Pass Through Trust. All references in this Prospectus to the Pass
Through Trustee are to the trustee acting in such capacity under each of the
Pass Through Trusts and should be read to take into account the possibility
that each of the Pass Through Trusts could have a different successor trustee
in the event of such a resignation or removal.
The Pass Through Agreement provides that the Corporation will pay the
Pass Through Trustee's fees and expenses and that the Pass Through Trustee
will have a priority claim on the related Trust Property to the extent such
fees and expenses are not paid. The Pass Through Agreement further provides
that the Pass Through Trustee in its individual capacity will be entitled to
indemnification by the Corporation for, and will be held harmless against, any
loss, liability or expenses (other than income or similar taxes) incurred by
the Pass Through Trustee in its individual capacity in connection with the
administration of any Pass Through Trust, except to the extent incurred
through its own willful misconduct, bad faith or gross negligence or by reason
of a breach of any of its representations or warranties set forth in the Pass
Through Agreement or the applicable Series Supplement or any related
documents. In certain circumstances, the Pass Through Trustee will be entitled
to be reimbursed from the applicable Pass Through Trust for any tax (other
than income or similar taxes) incurred in its trust capacity in connection
with the administration of any Pass Through Trust. (Pass Through Agreement,
Articles VIII and IX).
DESCRIPTION OF THE EQUIPMENT CERTIFICATES
The discussion that follows is a summary that does not purport to be
complete and is qualified in its entirety by the detailed information
appearing in the applicable Prospectus Supplement. The following summary
includes descriptions of the material terms of the Equipment Certificates and
the Indentures. Except as otherwise indicated below or as described in the
applicable Prospectus Supplement, the following summary will apply to the
Equipment Certificates, the Indenture and the Participation Agreement relating
to each Aircraft and, for Leased Aircraft, the Lease and the Collateral
Agreement, if any, relating thereto. Where no distinction is made between the
Leased Aircraft Certificates and the Owned Aircraft Certificates or between
their respective Indentures, the summary applies to any Equipment Certificate
and any Indenture. Additional provisions with respect to the Equipment
Certificates, the Indentures and the Participation Agreements and, for Leased
Aircraft, the Leases and the Collateral Agreements, if any, relating to any
particular offering of Pass Through Certificates will be described in the
applicable Prospectus Supplement. To the extent that any provision in any
Prospectus Supplement is inconsistent with any provision of this summary, the
provision of such Prospectus Supplement will control.
General
For each Owned Aircraft, the related Owned Aircraft Certificates will
be issued as direct obligations by the Corporation and will be authenticated
under an Owned Aircraft Indenture by the Indenture Trustee. All of the Owned
Aircraft Certificates issued under the same Owned Aircraft Indenture will
relate to a specific Owned Aircraft and will not be secured by any other
Aircraft. The Owned Aircraft relating to each Owned Aircraft Indenture and
the related Owned Aircraft Certificates will be specified in the applicable
Prospectus Supplement. The Corporation will be directly obligated under each
Owned Aircraft Indenture to make payments of principal of, premium, if any,
and interest on the related Owned Aircraft Certificates.
For each Leased Aircraft, the related Leased Aircraft Certificates
will be issued as nonrecourse obligations by the Owner Trustee, in each case
acting for a separate Owner Trust for the benefit of an Owner Participant, and
will be authenticated under a Leased Aircraft Indenture by the Indenture
Trustee. All of the Leased Aircraft Certificates issued under the same Leased
Aircraft Indenture will relate to and, after any related Pre-Funding Period,
as discussed below under "Delayed Lease Commencement," will be secured by a
specific Leased Aircraft and will not be secured by any other Aircraft. In
each case, the Owner Trustee will lease the related Leased Aircraft to the
Corporation pursuant to a separate Lease between such Owner Trustee and the
Corporation. See "Delayed Lease Commencement" below for a discussion of the
circumstances under which the Lease for an Aircraft may commence after the
date of issuance of the related Leased Aircraft Certificates.
The Leased Aircraft subject to each Lease and the Leased Aircraft
Certificates issued under the related Leased Aircraft Indenture will be
specified in the applicable Prospectus Supplement. Upon the commencement
of the Lease for any Leased Aircraft, the Corporation will be obligated to
make rental payments under such Lease that will be sufficient to pay the
principal of and accrued interest on the related Leased Aircraft
Certificates when and as due and payable except that, with respect to a
Delayed Lease Aircraft (as defined below), on the first scheduled payment
date after the related Pre-Funding Period, any difference between the
rental payment due on such date by the Corporation and the scheduled
payment of principal, if any, and interest then due on such Leased Aircraft
Certificates will be payable from the related Collateral Account and any
other security pledged under the related Indenture or otherwise available
to the Indenture Trustee. See "Delayed Lease Commencement" below. The
Leased Aircraft Certificates will not, however, be obligations of, or
guaranteed by, the Corporation. The Corporation's obligations to pay rent
and to cause other payments to be made under each Lease will be general
obligations of the Corporation.
In certain circumstances described in the applicable Prospectus
Supplement, the Corporation will have the right to purchase an Owner Trustee's
right, title and interest in and to the related Aircraft and to assume the
related Leased Aircraft Certificates on a full recourse basis, which would
reflect a financing contemplated by an Owned Aircraft Indenture.
For any Owned Aircraft, if specified in the applicable Prospectus
Supplement, the Corporation may arrange for an Owner Trustee, acting for an
Owner Trust for the benefit of an Owner Participant, to purchase such Owned
Aircraft from the Corporation and lease such Aircraft back to the Corporation
under a "net lease," subsequent to the sale of the related Owned Aircraft
Certificates to the Pass Through Trustee for each applicable Pass Through
Trust and the offering and sale of the related Pass Through Certificates
pursuant to such Prospectus Supplement. In such event, such Owner Trustee
will assume, on a nonrecourse basis, the obligations of the Corporation to
make payments of principal and interest on the related Equipment Certificates.
However, the related Equipment Certificates will no longer be direct
obligations of, and will not be guaranteed by, the Corporation, although the
Corporation will be obligated under the related Lease to make rental payments
that will be sufficient to pay the principal of and accrued interest on the
related Equipment Certificates when and as due and payable, and such Equipment
Certificates will continue to be secured by a security interest in the related
Aircraft, in addition to being secured by an assignment by such Owner Trustee
to the Indenture Trustee of such Owner Trustee's rights under such Lease and
the agreements relating to the purchase of such Aircraft. See "Security,"
"Payments and Limitation of Liability" below and "Federal Income Tax
Consequences." The terms and conditions under which any such sale and
leaseback transaction may be consummated will be described in the applicable
Prospectus Supplement.
Until the Corporation has entered into a Lease in connection with a
Leased Aircraft, the Corporation will not be obligated to make any scheduled
rental payments and during any Pre-Funding Period for such Leased Aircraft the
related Leased Aircraft Certificates will not be secured by such Leased
Aircraft or the related Lease, including any rental payments under such Lease.
During any Pre-Funding Period for such Leased Aircraft, however, the related
Collateral Account, together with the other security pledged under the related
Indenture or otherwise available to the Indenture Trustee will be available to
provide funds necessary to make the corresponding scheduled payments of
principal, if any, and interest accrued on the related Leased Aircraft
Certificates during such Pre-Funding Period, including the portion, if any, of
principal and interest due on the first payment date after the Pre-Funding
Period to the extent exceeding the amount of rent payable by the Corporation
pursuant to the related Lease. See "Delayed Lease Commencement" below.
Principal and Interest Payments
Interest received by the Pass Through Trustee on the Equipment
Certificates constituting Trust Property of each Pass Through Trust will be
passed through to the Certificateholders of such Pass Through Trust on a pro
rata basis on the dates and at the rate per annum set forth in the applicable
Prospectus Supplement. Interest on the Equipment Certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Each Pass Through Trust will hold Equipment Certificates on which
principal is payable in scheduled amounts and on specified dates as set forth
in the applicable Prospectus Supplement. Principal received by the Pass
Through Trustee on such Equipment Certificates will be passed through to the
Certificateholders of such Pass Through Trust on a pro rata basis as set forth
in the Prospectus Supplement.
Prepayment
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the related Equipment
Certificates may or must be prepaid prior to the stated maturity date thereof,
in whole or in part, the premium, if any, applicable upon certain prepayments
and other terms applying to the prepayment of such Equipment Certificates.
See "Mandatory Prepayment During the Pre-Funding Period" below for a
discussion of certain events which would require prepayment of Leased Aircraft
Certificates related to a Leased Aircraft during any related Pre-Funding
Period.
Security
Except during any related Pre-Funding Period, the Leased Aircraft
Certificates issued under each Leased Aircraft Indenture will be secured by:
(i) an assignment by the related Owner Trustee to the Indenture
Trustee of such Owner Trustee's rights (except for certain
limited rights described below) under the applicable Lease,
including the right to receive rent and other payments
thereunder;
(ii) a security interest granted to the Indenture Trustee in the
related Leased Aircraft, subject to the rights of the
Corporation under such Lease and to certain other liens and
encumbrances; and
(iii) an assignment to such Indenture Trustee of such Owner Trustee's
rights relating to such Leased Aircraft and the related engines
under the agreements for the purchase thereof between the
Corporation and the respective manufacturers of such Leased
Aircraft and of such engines. See "Registration of the
Aircraft" below.
The assignment by such Owner Trustee to the Indenture Trustee of its rights
under each Lease will exclude rights of such Owner Trustee and the related
Owner Participant relating to:
(i) indemnification by the Corporation for certain matters;
(ii) proceeds of public liability insurance payable to such Owner
Trustee in its individual capacity and to such Owner
Participant under insurance maintained by the Corporation under
such Lease; and
(iii) proceeds of any insurance policies separately maintained by
such Owner Trustee in its individual capacity or by such Owner
Participant.
The right of the Indenture Trustee, however, to exercise any of the rights of
the Owner Trustee under the related Lease, except the right to receive
payments of rent due thereunder, will be subject to certain limitations as
described in the applicable Prospectus Supplement.
The Owned Aircraft Certificates issued under each Owned Aircraft
Indenture will be secured by (i) a security interest granted to the Indenture
Trustee in all of the Corporation's right, title and interest in and to the
related Owned Aircraft and (ii) an assignment to such Indenture Trustee of
certain of the Corporation's rights relating to such Owned Aircraft and the
related engines under the agreements for the purchase thereof between the
Corporation and the respective manufacturers of such Owned Aircraft and of
such engines. See "Registration of the Aircraft" below.
There will be no cross-collateralization provisions in the Indentures
and consequently the Equipment Certificates issued in respect of one of the
Aircraft will not be secured by any other Aircraft or, in the case of Leased
Aircraft Certificates, the Leases related thereto. There will be no
cross-default provisions in the Indentures and consequently events resulting
in an Indenture Event of Default under any particular Indenture may not result
in an Indenture Event of Default occurring under any other Indenture.
Section 1110 of the United States Bankruptcy Code (the "Bankruptcy
Code") provides that the right of lessors, conditional vendors and holders of
security interests with respect to aircraft capable of carrying ten (10) or
more individuals or 6,000 pounds or more of cargo used by air carriers
operating under certificates issued by the Secretary of Transportation under
Chapter 447 of the Transportation Code to take possession of such aircraft in
compliance with the provisions of the lease, conditional sale contract or
security agreement, as the case may be, is not affected by:
(a) the automatic stay provision of the Bankruptcy Code, which
provision enjoins the taking of any action against a debtor by
a creditor;
(b) the provision of the Bankruptcy Code allowing the trustee in
reorganization or the debtor-in-possession to use, sell or
lease property of the debtor;
(c) the confirmation of a plan by the bankruptcy court; and
(d) any power of the bankruptcy court to enjoin a repossession.
Section 1110 provides, however, that the right of a lessor, conditional vendor
or holder of a security interest to take possession of an aircraft in the
event of a default may not be exercised for 60 days following the date of
commencement of the reorganization proceedings (unless specifically permitted
by the bankruptcy court) and may not be exercised at all if, within such
60-day period, the trustee in reorganization or the debtor-in-possession
agrees to perform the debtor's obligations that become due on or after such
date and cures all existing defaults (other than defaults resulting solely
from the financial condition, bankruptcy, insolvency or reorganization of the
debtor). The Prospectus Supplement for each offering will discuss the
availability of the benefits of Section 1110 of the Bankruptcy Code with
respect to the related Aircraft.
If the applicable Prospectus Supplement provides that a Pre-Funding
Period will apply to a Leased Aircraft, then during such Pre-Funding Period
the related Leased Aircraft Certificates will not be secured by such Leased
Aircraft or a related Lease. During such Pre-Funding Period, however, such
Leased Aircraft Certificates will be secured by the related Collateral
Account and, if the Prospectus Supplement so provides, certain additional
security which may include, unless otherwise specified in the applicable
Prospectus Supplement, a letter of credit issued by a bank (within the
meaning of Section 3(a)(2) of the Securities Act) whose obligations at the
time of the relevant Pass Through Certificate offering carry a credit
rating at least as high as the Corporation's ("Additional Collateral").
See "Delayed Lease Commencement" below.
Registration of the Aircraft
The Corporation will be required, except under certain circumstances,
to register and keep each Aircraft registered under Title 49 of the United
States Code (the "Transportation Code"), in the name of the Corporation,
in the case of an Owned Aircraft, or in the name of the Owner Trustee,
after commencement of a Lease in the case of a Leased Aircraft,
and to record and maintain the recordation of the Indenture and the
Lease, if any, relating to each such Aircraft under the Transportation
Code. Such recordation of the Indenture and the Lease, if any, relating to
each Aircraft will give the Indenture Trustee a security interest in each such
Aircraft perfected under the Transportation Code, which perfected security
interest will, with certain limited exceptions, be recognized in those
jurisdictions that have ratified to the Convention on the International
Recognition of Rights in Aircraft (the "Convention").
The Corporation will be able, in certain circumstances, to
re-register any Aircraft in certain countries other than the United States.
Unless otherwise specified in the applicable Prospectus Supplement, prior to
any such change in the jurisdiction of registry, the Indenture Trustee and,
for Leased Aircraft, the related Owner Participant must receive certain
assurances, including that such other country would provide substantially
equivalent protection for the rights of owner participants, lessors and
lenders in similar transactions as is provided under United States law, except
that, for the purpose of such determination, rights and remedies similar to
those available under Section 1110 of the Bankruptcy Code will not be required
in the absence of restrictions of rights and remedies of lessors and secured
parties that are similar to those imposed by Sections 362, 363 and 1129
of the Bankruptcy Code. While such assurances are intended to provide
that the Corporation's (in the case of an Owned Aircraft) or the Owner
Trustee's (in the case of a Leased Aircraft) title to the Aircraft and the
Indenture Trustee's lien thereon will be recognized in such jurisdiction and
that the Indenture Trustee may exercise the rights granted to it in the
Indentures, there is no guarantee that, even if such jurisdiction is a
party to the Convention, as a practical matter, the Indenture Trustee would
be able to realize upon its security interest in the case of an Indenture
Event of Default.
Also, each Aircraft may be operated by the Corporation, or placed
under lease, sublease or interchange arrangements with carriers domiciled
outside of the United States. The ability of the Indenture Trustee in the
case of an Indenture Event of Default, to realize upon its security interest
in the Aircraft could be adversely affected as a legal or practical matter if
the Aircraft were located outside the United States.
Merger, Consolidation and Transfer of Assets
With respect to each Aircraft, the Corporation will be prohibited
from consolidating with or merging into any other corporation under
circumstances in which the Corporation is not the surviving corporation, or
from transferring all or substantially all of its assets as an entirety to any
other corporation, unless, among other things:
(i) the successor or transferee corporation is a U.S. Citizen, an
"air carrier" within the meaning of and operating under the
Transportation Code and a corporation organized and existing
under the laws of the United States or a political subdivision
thereof, and such corporation expressly assumes all the
obligations of the Corporation contained in the related
Indenture, the Participation Agreement, the Lease, the Purchase
Agreement and the Purchase Agreement Assignment;
(ii) immediately after giving effect to such consolidation, merger
or transfer, the successor or transferee is in compliance with
all of the terms and conditions of such documents; and
(iii) such consolidation, merger or transfer does not (or would not,
if prior to commencement of the related Lease) give rise to a
Lease Event Default under the related Lease or, in the case of
an Owned Aircraft, an Indenture Event of Default under the
related Owned Aircraft Indenture.
Delayed Lease Commencement
If the applicable Prospectus Supplement provides that a Pre-Funding
Period will apply to a Leased Aircraft, then until commencement of a Lease
with respect to such Leased Aircraft and the Indenture Trustee's release of
funds from the related Collateral Account, which is expected to occur at the
same time as the commencement of such Lease, such Leased Aircraft is referred
to as a "Delayed Lease Aircraft" and the period prior to the Indenture
Trustee's release of such funds is referred to as the "Pre-Funding Period."
In the case of Leased Aircraft Certificates relating to a Delayed
Lease Aircraft, the proceeds from sale of such Leased Aircraft Certificates to
the applicable Pass Through Trusts, after deducting certain expenses of the
offering of the related Pass Through Certificates, will be deposited by the
Owner Trustee, on the date of such sale, in a collateral account (a
"Collateral Account") established pursuant to the Indenture or a
collateral agreement between the Owner Trustee and the Indenture Trustee
(a "Collateral Agreement"). Such Collateral Account will secure payment
of the related Leased Aircraft Certificates. In addition if the Prospectus
Supplement so provides, the Corporation will be required to provide to the
Indenture Trustee Additional Collateral for such Leased Aircraft Certificates
during the related Pre-Funding Period. See "Security" above.
Funds in the Collateral Account will be invested at the risk of the
Owner Trustee in U.S. government obligations pursuant to the related
Collateral Agreement or Indenture and further described in the applicable
Prospectus Supplement. Earnings on such investments will be retained in the
Collateral Account pending distribution as contemplated below.
Unless otherwise specified in an applicable Prospectus Supplement,
the Leased Aircraft Certificates relating to a Delayed Lease Aircraft will be
issued in an amount such that the net proceeds thereof, together with expected
earnings on the investments in the Collateral Account, will be sufficient (i)
to make scheduled payments of principal, if any, and interest accrued on such
Leased Aircraft Certificates during the related scheduled Pre-Funding Period
specified in such Prospectus Supplement and (ii) to finance a portion of the
purchase price of such Delayed Lease Aircraft, as specified in such Prospectus
Supplement.
Subject to any mandatory prepayment contemplated below, under the
Collateral Agreement relating to a Delayed Lease Aircraft, on each date during
the scheduled Pre-Funding Period for the scheduled payments of principal, if
any, and interest on the related Leased Aircraft Certificates, the Indenture
Trustee shall withdraw from the Collateral Account the amount necessary to
make the scheduled payment then due. If the Indenture Trustee shall not have
released the funds in the Collateral Account on the date scheduled for the
commencement of the Lease relating to such Delayed Lease Aircraft, then on
each scheduled payment date during the Pre-Funding Period that occurs after
such scheduled commencement date, the Indenture Trustee shall withdraw from
the Collateral Account the excess of the amount therein over the amount
specified to be retained in such Collateral Account to be applied to the
purchase price of the Delayed Lease Aircraft. If the amount withdrawn is less
than the scheduled payment then due, the Indenture Trustee shall draw the
deficiency from any available Additional Collateral and will apply such amount
to satisfy the corresponding payment obligation. On the first scheduled
payment date after any Pre-Funding Period with respect to a Delayed Lease
Aircraft, the Indenture Trustee will withdraw from the Collateral Account or
otherwise realize from any Additional Collateral the difference between the
scheduled payment then due and the rental payment due on such payment from the
Corporation.
Mandatory Prepayment During the Pre-Funding Period
To the extent that the Lease related to a Delayed Lease Aircraft has
not commenced on or prior to the cut-off date specified in the applicable
Prospectus Supplement as the last date of the related permitted Pre-Funding
Period either (i) a "Deemed Event of Loss" will occur and the Collateral
Account and, to the extent necessary, any Additional Collateral will be drawn
upon and the related Leased Aircraft Certificates will be prepaid at a
prepayment price equal to the aggregate principal amount of such Leased
Aircraft Certificates, together with accrued but unpaid interest thereon to
the date designated for such prepayment specified in such Prospectus
Supplement or (ii) the Corporation will assume the Leased Aircraft
Certificates on a full recourse basis.
With respect to any Delayed Lease Aircraft, the applicable Prospectus
Supplement also will set forth (i) any mandatory prepayment of the related
Leased Aircraft Certificates, and the prepayment price therefor, upon the
occurrence of any event of loss with respect to such Delayed Lease Aircraft
during such Pre-Funding Period and (ii) any option the Corporation may have to
convert the leveraged lease financing for a Delayed Lease Aircraft into the
type of financing available for Owned Aircraft.
Owned Aircraft Indenture Covenants
Maintenance. The Corporation will be obligated to pay all costs of
operating the Owned Aircraft and, at its expense, to maintain, inspect,
service, repair and overhaul the Owned Aircraft so as to keep the Owned
Aircraft in good condition, ordinary wear and tear excepted, and to enable the
airworthiness certification thereof to be maintained in good standing at all
times under the Transportation Code or, under certain circumstances, under the
applicable requirements of the aeronautical authority of another country of
registry. If, however, the Owned Aircraft loses its airworthiness
certification and such loss is curable, and the Corporation, using its
reasonable best efforts, undertakes such cure promptly, diligently and
continuously, then the Corporation will not be in default with respect to such
obligation.
Generally, the Corporation will be obligated to replace or cause to
be replaced all parts that may from time to time be incorporated or installed
in or attached to any Owned Aircraft (including in or on any engine) and that
may become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use. The Corporation will
have the right to make other alterations, modifications and additions to an
Owned Aircraft so long as such alterations, modifications or additions do not
materially decrease the value or utility of such Owned Aircraft or impair its
condition or airworthiness below its value, utility, condition and
airworthiness immediately prior to such alteration, modification or addition,
assuming that such Owned Aircraft was then in the condition and airworthiness
required by the related Indenture. Also, in certain circumstances, the
Corporation will be permitted to remove parts (without replacement) from an
Owned Aircraft or any engine (and therefore from the Lien of the applicable
Indenture) if the Corporation deems such parts to be obsolete or no longer
suitable or appropriate for use thereon so long as such removals do not
decrease the utility, condition or airworthiness of such Owned Aircraft or any
such engine, although the value of such Owned Aircraft or any such engine may
be reduced by such removal. The applicable Prospectus Supplement will contain
a description of certain limitations, if any, applicable to provisions
described in this paragraph.
Insurance. Unless otherwise indicated in the applicable Prospectus
Supplement, the Corporation will be obligated to carry insurance with insurers
of recognized responsibility with respect to each Owned Aircraft, at its own
cost and expense, in such amounts, against such risks, with such deductibles
or retentions (i) in the case of hull insurance, as the Corporation
customarily maintains with respect to other aircraft in the Corporation's
fleet of the same type and model and operating on the same routes as the
respective Owned Aircraft and (ii) in the case of liability insurance, as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Corporation, owning or operating
aircraft similar to the Aircraft. The Corporation will be permitted to
maintain coverage below certain stipulated values and may be permitted to
self-insure (including by way of deductibles and retentions) in certain
circumstances, subject to certain limits. Therefore, there is no assurance
that any insurance will be carried in the future, or, if it is carried, as to
the amount of such insurance.
The Corporation and any permitted lessee of an Owned Aircraft will be
named as insured parties under all insurance policies required by the related
Indenture. The Indenture Trustee will be named as an additional insured,
which will afford such Indenture Trustee the rights but not the obligations of
an additional insured. Unless otherwise specified in the applicable
Prospectus Supplement, liability insurance proceeds will be distributed to the
respective parties as their interests may appear and hull insurance proceeds
will be distributed to the Indenture Trustee if the amount of such proceeds
exceeds certain specified amounts. The applicable Prospectus Supplement will
contain a description of certain limitations, if any, applicable to provisions
described in this paragraph.
Payments and Limitation of Liability
All payments of principal of, premium, if any, and interest on any
Leased Aircraft Certificates will be made only from the assets subject to the
Lien of the related Leased Aircraft Indenture. The income and proceeds
received by the Indenture Trustee therefrom or from certain payments received
by the Indenture Trustee to be applied pursuant to such Leased Aircraft
Indenture, including, during any Pre-Funding Period relating to a Leased
Aircraft, the Collateral Account and any Additional Collateral provided in
connection with such Pre-Funding Period and, on and after the commencement of
the related Lease and, in the case of a Delayed Lease Aircraft, after the
related Pre-Funding Period, rent payable by the Corporation under the related
Lease. The Leased Aircraft Certificates will not be direct obligations of, or
guaranteed by the Corporation. The Corporation's obligations to pay rent and
to cause other payments to be made under each Lease will be general
obligations of the Corporation.
Neither the Owner Trustee or the Indenture Trustee (in their
individual capacities) will be liable to any Certificateholder or, in the case
of the Owner Trustee, in its individual capacity, to the Corporation or the
Indenture Trustee for any amounts payable or for any liability under the
Equipment Certificates or the Indentures, except as provided in the Indentures
and the Participation Agreements and except for the gross negligence or
willful misconduct of the Owner Trustee.
The Corporation's obligations under each Owned Aircraft Indenture and
under the related Owned Aircraft Certificates will be general obligations of
the Corporation.
Indenture Events of Default and Remedies
For any Pass Through Trust, the applicable Prospectus Supplement will
describe the Indenture Events of Default under the Indentures related to the
Equipment Certificates to be held by such Pass Through Trust, the remedies
that the Indenture Trustee may exercise with respect to the related Aircraft,
either at its own initiative or upon instruction from holders of the related
Equipment Certificates, and other provisions relating to the occurrence of an
Indenture Event of Default and the exercise of remedies. There will be no
cross-default provisions in the Indentures and events resulting in an
Indenture Event of Default under any particular Indenture will not necessarily
result in an Indenture Event of Default under any other Indenture.
The Leases
Upon the commencement of any Lease, the following terms will be applicable:
Terms and Rentals. Each Leased Aircraft will be leased separately by
the related Owner Trustee to the Corporation for a term commencing on the date
of the delivery of the related Leased Aircraft to such Owner Trustee and
expiring on a date not earlier than the latest maturity date of the Leased
Aircraft Certificates issued with respect to such Leased Aircraft, unless
previously terminated or extended, as permitted by the related Lease. The
scheduled rental payments by the Corporation under each Lease will be payable
on the dates specified in the applicable Prospectus Supplement. The
respective payments will be assigned under the related Leased Aircraft
Indenture by the Owner Trustee to the Indenture Trustee to provide the funds
necessary to make payments of principal and interest due from such Owner
Trustee on the Leased Aircraft Certificates issued under such Leased Aircraft
Indenture. Although in certain cases the scheduled rental payments under the
Leases may be adjusted, under no circumstances will such payments that the
Corporation will be unconditionally obligated to make or cause to be made
under any Lease be less than the scheduled payments of principal and interest
on the Leased Aircraft Certificates issued under the Leased Aircraft Indenture
relating to such Lease. See "Payments and Limitations of Liability" above.
For any Delayed Lease Aircraft, upon the commencement of the Lease
for such Aircraft and after the related Pre-Funding Period, the Corporation
will be obligated to make scheduled rental payments under the related Lease
that will be sufficient to pay in full when due all principal of and interest
on, to the extent accrued from and after the related Pre-Funding Period, the
related Leased Aircraft Certificates, except that on the first scheduled
payment date after the related Pre-Funding Period, the difference between the
rental payment due on such date by the Corporation and the scheduled payment
of principal, if any, and interest then due on such Leased Aircraft
Certificates will be payable from the related Collateral Account and any
related Additional Collateral. See "Payments and Limitations of Liability"
above. Scheduled payments of principal and interest on the Leased Aircraft
Certificates will be made on the dates specified in the applicable Prospectus
Supplement.
Net Lease. The Corporation's obligations under each Lease in respect
of the related Leased Aircraft will be those of a lessee under a "net lease."
Accordingly, the Corporation will be obligated to pay all costs of operating
the Leased Aircraft and, at its expense, to maintain, service, repair and
overhaul the Leased Aircraft so as to keep the Leased Aircraft in good
condition, ordinary wear and tear excepted, and to enable the airworthiness
certification thereof to be maintained in good standing at all times under the
Transportation Code or, under certain circumstances, under the applicable
requirements of the aeronautical authority of another country of registry.
If, however, the Leased Aircraft loses its airworthiness certification and
such loss is curable, and the Corporation, using its reasonable best efforts,
undertakes such cure promptly, diligently and continuously, then the
Corporation will not be in default with respect to such obligation.
Generally, the Corporation will be obligated to replace or cause to
be replaced all parts that may from time to time be incorporated or installed
in or attached to any Leased Aircraft (including in or on any engine) and that
may become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use. The Corporation will
have the right to make other alterations, modifications and additions to a
Leased Aircraft so long as such alterations, modifications or additions do not
materially decrease the value or utility of such Leased Aircraft or impair its
condition or airworthiness below its value, utility, condition and
airworthiness immediately prior to such alteration, modification or addition,
assuming that such Leased Aircraft was then in the condition and airworthiness
required by the related Lease. Also, in certain circumstances, the
Corporation will be permitted to remove parts (without replacement) from a
Leased Aircraft or any engine (and therefore from the Lien of the applicable
Indenture) if the Corporation deems such parts to be obsolete or no longer
suitable or appropriate for use on such Leased Aircraft so long as such
removals do not decrease the utility, condition or airworthiness of such
Leased Aircraft or any such engine, although the value of such Leased Aircraft
or any such engine may be reduced by such removal. The applicable Prospectus
Supplement will contain a description of certain limitations, if any,
applicable to provisions described above.
Insurance. Unless otherwise indicated in the applicable Prospectus
Supplement, the Corporation will be obligated to carry insurance with insurers
of recognized responsibility with respect to each Leased Aircraft, at its own
cost and expense, in such amounts, against such risks, with such deductibles
or retentions (i) in the case of hull insurance, as the Corporation
customarily maintains with respect to other aircraft in the Corporation's
fleet of the same type and model and operating on the same routes as the
respective Leased Aircraft and (ii) in the case of liability insurance, as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Corporation, owning or operating
aircraft similar to the Aircraft. The Corporation will be permitted to
maintain coverage below certain stipulated values and may be permitted to
self-insure (including by way of deductibles and retentions) in certain
circumstances, subject to certain limits. Therefore, there is no assurance
that any insurance will be carried in the future, or, if it is carried, as to
the amount of such insurance.
The Corporation and any permitted sublessee of a Leased Aircraft will
be named as insured parties under all insurance policies required by the
related Lease. The Indenture Trustee, Owner Trustee and related Owner
Participant will be named additional insureds, which will afford each of them
the rights but not the obligations of an additional insured. Unless otherwise
specified in the applicable Prospectus Supplement, liability insurance
proceeds will be distributed to the respective parties as their interests may
appear and hull insurance proceeds will be distributed to the Indenture
Trustee if the amount of such proceeds exceeds certain specified amounts. The
applicable Prospectus Supplement will contain a description of certain
limitations, if any, applicable to provisions described in this paragraph.
Lease Events of Default; Remedies. The applicable Prospectus
Supplement will describe the Lease Events of Default under the related Leases,
the remedies that the Owner Trustee may exercise with respect to the related
Leased Aircraft, and other provisions relating to the occurrence of a Lease
Event of Default and the exercise of remedies.
The Participation Agreements
The Corporation will be required to indemnify each Indenture Trustee
and, in the case of Leased Aircraft Certificates, each Owner Participant and
each Owner Trustee, and certain parties affiliated with the foregoing (but not
including holders of the Equipment Certificates or the Certificateholders),
for certain liabilities, losses, fees and expenses and for certain other
matters arising out of the transactions described herein or relating to the
applicable Aircraft or the use thereof. In addition, under certain
circumstances the Corporation will be required to indemnify such persons
against certain taxes, levies, duties, withholdings and for certain other
matters relating to such transactions or the applicable Aircraft. Subject to
certain restrictions, each Owner Participant may convey all of its right,
title and interest relating to any Leased Aircraft. Moreover, if so provided
in the applicable Prospectus Supplement, in certain limited instances the
Corporation may assume an Owner Trust's obligations under the related Leased
Aircraft Certificates on a full recourse basis.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Davis Polk & Wardwell, tax counsel to the
Corporation, the following discussion accurately describes the principal
United States federal income tax consequences of ownership and disposition of
the Pass Through Certificates to the initial purchasers thereof at the "issue
price" who hold such Pass Through Certificates as a capital asset, and should
be read in conjunction with any additional discussion of federal income tax
consequences included in the applicable Prospectus Supplement. This opinion
is based on laws, regulations, rulings and decisions in effect as of the date
hereof. Changes to existing law, which could have retroactive effect, may
alter the consequences described below. This opinion does not purport to
address federal income tax consequences applicable to particular categories of
investors, some of which (for example, insurance companies, financial
institutions, dealers in securities and foreign investors) may be subject to
special rules. Persons considering purchasing interests in Pass Through
Certificates should consult their own tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any
state, local or foreign jurisdiction. The Pass Through Trusts are not
indemnified for any federal income taxes that may be imposed upon them, and
the imposition of any such taxes on a Pass Through Trust could result in a
reduction in the amounts available for distribution to the Certificateholders
of such Pass Through Trust.
General
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 (the "Code"), and each Certificateholder will be treated as the
owner of a pro rata undivided interest in each of the Equipment Certificates
and any other property held in the related Pass Through Trust. Each
Certificateholder will be required to report on its federal income tax return
its pro rata share of the entire income from each of the Equipment
Certificates and any other property held in the related Pass Through Trust, in
accordance with such Certificateholder's method of accounting.
A purchaser of an interest in a Pass Through Certificate will be
treated as purchasing an interest in each Equipment Certificate and any other
property in the related Pass Through Trust at a price determined by allocating
the purchase price paid for the Pass Through Certificate among such Equipment
Certificates and other property in proportion to their fair market values at
the time of purchase of the Pass Through Certificate. Unless otherwise
indicated in a Prospectus Supplement, the Corporation anticipates that when
all the Equipment Certificates have been acquired by the related Pass Through
Trust the purchase price paid for a Pass Through Certificate of such Pass
Through Trust by an original purchaser of such Pass Through Certificate should
be allocated among the Equipment Certificates held in such Pass Through Trust
in proportion to their respective principal amounts.
If an Equipment Certificate held by a Pass Through Trust is prepaid
for an amount that differs from a Certificateholder's aggregate adjusted basis
in the Equipment Certificate, the Certificateholder will be considered to have
sold his pro rata share of that Equipment Certificate, and will recognize any
gain or loss equal to the difference between the Certificateholder's adjusted
basis and the amount realized from such prepayment (except to the extent
attributable to accrued interest, which would be taxable as interest income if
not previously included in income). Any such gain or loss will be long-term
capital gain or loss if the Equipment Certificate is considered to have been
held for more than one year. Net capital gains of individuals are, under
certain circumstances, taxed at lower rates than items of ordinary income.
With respect to the Leased Aircraft Certificates, although the matter is not
entirely free from doubt, an Owner Participant's conveyance of its interest in
an Owner Trust will not constitute a taxable event to the holders of interests
in the related Leased Aircraft Certificates. However, if the Corporation were
to assume an Owner Trust's obligations under the related Leased Aircraft
Certificates upon a purchase of the related Aircraft by the Corporation, or an
Owner Trust were to assume the Corporation's obligations under Owned Aircraft
Certificates upon a conversion of an Owned Aircraft to a Leased Aircraft, such
assumption would be treated for federal income tax purposes as a taxable
exchange of the respective Equipment Certificates resulting in the recognition
of taxable gain or loss under the rules discussed above. For this purpose the
amount realized, as determined under current Treasury regulations on original
issue discount, will be equal to the fair market value of the
Certificateholder's pro rata share of the respective Equipment Certificates at
such time.
Sales or Exchanges of Pass Through Certificates
A Certificateholder that sells or exchanges a Pass Through
Certificate will be considered to have sold his pro rata portion of the
property held by the Pass Through Trust, and will recognize gain or loss on
the basis discussed in the preceding paragraph.
Backup Withholding
Payments made on the Pass Through Certificates, and proceeds from the
sale or exchange of the Pass Through Certificates to or through certain
brokers, may be subject to a "backup" withholding tax of 31% unless the
Certificateholder complies with certain reporting procedures or is an exempt
recipient under the Code. Any such withheld amounts will be allowed as a
credit against the Certificateholder's federal income tax and may entitle such
Certificateholder to a refund, provided that the required information is
furnished to the Internal Revenue Service.
CERTAIN NEW YORK TAXES
The Pass Through Trustee is a New York state banking corporation
with its corporate trust office in New York. Powell, Goldstein, Frazer &
Murphy, special state tax counsel for the Pass Through Trustee, has advised
the Corporation that, in its opinion, under currently applicable law, assuming
the accuracy of the statements with respect to federal income taxes set forth
herein and in the Prospectus (including the assumption that each Pass Through
Trust will not be taxable as a corporation for federal income tax purposes,
but rather will be classified as a grantor trust under subpart E, Part I of
Subchapter J of the Code, i.e. all of the property of the Pass Through
Trust will be deemed owned by and all of the income thereon taxable to the
grantors or beneficiaries thereof on a pro-rata basis), assuming that the
Equipment Trust Certificates will be treated as debt for federal income tax
purposes, assuming that the Pass Through Trustee will engage in only those
activities contemplated herein and in the Prospectus (i.e. engaging in no
activity other than holding the Equipment Trust Certificates, issuing the Pass
Through Certificates, distributing the payments thereon and performing other
incidental activities), and assuming that each Pass Through Trust does not
otherwise engage in business in New York, (i) the Pass Through Trusts will
not be subject to any tax (including, without limitation, net or gross income,
unicorporated business, tangible or intangible property, net worth, capital,
franchise or doing business tax), fee or other governmental charge under the
laws of the State of New York or any political subdivision thereof and (ii)
Certificateholders that are not residents of or otherwise subject to tax in
New York will not be subject to any tax (including, without limitation, net or
gross income, unincorporated business, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of New York or any political subdivision
thereof as a result of purchasing, owning (including receiving payments with
respect to) or selling a Pass Through Certificate.
Neither the Pass Through Trusts nor the Certificateholders will be
indemnified for any state or local taxes imposed on them, and the imposition
of any such taxes on a Pass Through Trust could result in a reduction in the
amounts available for distribution to the Certificateholders of such Pass
Through Trust. However, a majority in interest of the Certificateholders of
each Series may remove the Pass Through Trustee from the relevant Pass Through
Trust and appoint a successor Pass Through Trustee in another jurisdiction.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
Pass Through Certificates may not be purchased by, or with the assets of, any
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or individual retirement account
or plan subject to Section 4975 of the Code. Certain governmental plans and
non-electing church plans, however, are not subject to Title I of ERISA or
Section 4975 of the Code and, therefore, may purchase the Pass Through
Certificates.
PLAN OF DISTRIBUTION
The Pass Through Certificates may be sold to or through underwriters,
directly to other purchasers or through agents.
The distribution of the Pass Through Certificates may be effected
from time to time in one or more transactions at a fixed price or prices,
which may be changed, or at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
In connection with the sale of Pass Through Certificates,
underwriters or agents may receive compensation from the Corporation or from
purchasers of Pass Through Certificates for whom they may act as agents in the
form of discounts, concessions or commissions. Underwriters may sell Pass
Through Certificates to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution
of Pass Through Certificates may be deemed to be underwriters, and any
discounts or commissions received by them from the Corporation and any profit
on the resale of Pass Through Certificates by them may be deemed to be
underwriting discounts and commissions, under the Securities Act. Any such
underwriter or agent will be identified, and any such compensation received
from the Corporation will be described, in the applicable Prospectus
Supplement.
Offers to purchase Pass Through Certificates may be solicited
directly and the sale thereof may be made directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto.
Under agreements which may be entered into by the Corporation,
underwriters and agents who participate in the distribution of Pass Through
Certificates may be entitled to indemnification by the Corporation against
certain liabilities, including liabilities under the Securities Act.
Unless otherwise indicated in the applicable Prospectus Supplement,
the Corporation does not intend to apply for the listing of any Series of Pass
Through Certificates on a national securities exchange. If the Pass Through
Certificates of any Series are sold to or through underwriters, the
underwriters may make a market in such Pass Through Certificates, as permitted
by applicable laws and regulations. No underwriter would be obligated,
however, to make a market in such Pass Through Certificates, and any such
market-making could be discontinued at any time at the sole discretion of the
underwriters. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Pass Through Certificates of any Series.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with, and perform services for, the
Corporation in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement,
the legality of the Pass Through Certificates offered hereby will be passed
upon for the Corporation by Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017, and by counsel for any agents, dealers or underwriters
("Underwriters' Counsel"). Unless otherwise indicated in the applicable
Prospectus Supplement, both Davis Polk & Wardwell and Underwriters' Counsel
may rely on the opinion of counsel for the Pass Through Trustee, as to matters
relating to the authorization, execution and delivery of the Pass Through
Agreement and of each Series of Pass Through Certificates by the Pass Through
Trustee, and of George W. Hearn, Vice President - Law of the Corporation, as
to the Corporation's authorization, execution and delivery of the Pass Through
Agreement. At May 2, 1996, Mr. Hearn owned zero shares of the Corporation's
common stock and had been granted options to purchase 15,800 shares of the
Corporation's common stock. Of the options granted, 3,750 were vested at such
date.
EXPERTS
The consolidated financial statements and schedules of the
Corporation included or incorporated by reference in the Corporation's Annual
Report on Form 10-K for the year ended May 31, 1995 and incorporated by
reference herein, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm
as experts in giving said reports.
With respect to the unaudited interim financial information for
the quarters ended August 31, 1995, November 30, 1995 and February 29,
1996, included in the Corporation's Quarterly Reports on Form 10-Q for such
periods, which are incorporated by reference in this Prospectus, Arthur
Andersen LLP has applied limited procedures in accordance with professional
standards for a review of such information. However, their separate
reports thereon state that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on that information should be restricted in light
of the limited nature of the review procedures applied. In addition, the
accountants are not subject to the liability provisions of Section 11 of
the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
Registration Statement, of which this Prospectus is a part, prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
===================================== =====================================
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representation not contained in this
Prospectus in connection with the $197,380,000
offering covered by this Prospectus.
If given or made, such information or
representation must not be relied
upon as having been authorized by the
Corporation or the Underwriters.
This Prospectus does not constitute an [COMPANY LOGO]
offer to sell, or the solicitation
of an offer to buy, the Pass Through
Certificates in any jurisdiction where,
or to any person to whom, it is unlawful
to make such offer or solicitation.
Neither the delivery of this Prospectus $197,380,000
nor any sale made hereunder or thereunder
shall, under any circumstances, create an
implication that there has not been
any change in the facts set forth in
this Prospectus or the affairs of the Pass Through Certificates
Corporation since the date hereof.
TABLE OF CONTENTS
Prospectus
Page
----
Available Information............. 3
Reports to Pass Through
Certificateholders.............. 3
Incorporation of Certain
Documents by Reference.......... 3
Federal Express Corporation....... 4
Ratio of Earnings to Fixed
Charges......................... 4
Outline of Pass Through Trust ___________________
Structure....................... 4
Use of Proceeds................... 5 P R O S P E C T U S
Diagram of Payments............... 7 ___________________
Description of the Pass Through
Certificates................... 8
Description of the Equipment
Certificates................... 23
Federal Income Tax Consequences... 32
Certain New York Taxes............ 34
ERISA Considerations.............. 34
Plan of Distribution.............. 34
Legal Matters..................... 35 May ___, 1996
Experts........................... 36
===================================== =====================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following are the estimated expenses of the issuance and
distribution of the securities (other than underwriting discounts and
commissions) being registered, all of which will be paid by the Registrant:
SEC Registration Fee............................................ $ 17,241
Printing and Engraving.......................................... 25,000
Attorneys' Fees and Expense..................................... 600,000
Trustees' Fees.................................................. 20,000
Accounting Fees and Expenses.................................... 20,000
Blue Sky Fees and Expenses...................................... 5,000
Rating Agency Fees.............................................. 125,000
Miscellaneous................................................... 5,000
_________
Total................................................ $ 817,241
All of the above amounts, other than the SEC Registration Fee, are estimated.
Item 15. Indemnification of Directors and Officers
(a) Reference is made to Section 145 of the Delaware General
Corporation Law ("DGCL") as to indemnification by the Registrant of
officers and directors.
(b) Section 13 of Article III of the by-laws of the Registrant
provides for indemnification of directors as follows:
Section 13. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the
fact that he, his testator or intestate is or was a director of the
corporation or serves or served as a director, officer, employee or
agent of any other enterprise at the request of the corporation.
Section 18 of Article V of the by-laws of the Registrant provides for
indemnification of officers as follows:
Section 18. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact
that he, his testator or intestate is or was an officer or Managing
Director of the corporation or serves or served as a director, officer,
employee or agent of any other enterprise at the request of the
corporation.
(c) The Registrant has also entered into an indemnification agreement
with each of its directors based on the sections of the DGCL that recognize
the validity of additional indemnity rights granted by agreement. The
indemnification agreement alters or clarifies the statutory indemnity with
respect to the Registrant's directors in the following respects: (i)
indemnity is explicitly provided for settlements, fines and judgments in
derivative actions to the maximum extent permitted by Delaware law, (ii)
prompt payment of expenses is provided in advance of indemnification,
provided the director undertakes to repay such amount if it is finally
determined the director is not entitled to be indemnified and (iii)
indemnification for all matters involving a director as a party by reason
of the person being a director unless the person violates the law or the
person's conduct is finally adjudged to have been knowingly fraudulent,
deliberately dishonest or willful misconduct. Therefore, a director who
has entered into the indemnification agreement will be entitled to
indemnification automatically according to its terms without prior
independent review of such director's conduct and approval of the
indemnification payment by either disinterested directors, independent
counsel or the stockholders.
Certain of the provisions of the indemnification agreement have not been
tested in court and remain subject to public policy considerations with
respect to their enforceability. The Registrant has been advised that
indemnification of a judgment or amounts paid in settlement in a derivative
suit may be contrary to public policy in the State of Delaware. Because
substantial uncertainty exists as to the validity of such payments, the
Registrant will not make an indemnification payment for fines, judgments or
amounts paid in settlement in a derivative suit without first obtaining an
opinion of independent counsel that such payment is permitted under Delaware
law.
(d) The Underwriting Agreements filed as Exhibits 1(a) and 1(b) to
this Registration Statement provide, under certain circumstances, for
indemnification for the Registrant and certain other persons against
certain liabilities.
(e) The Registrant has purchased insurance designed to protect the
Registrant and its directors and officers against losses arising from
certain claims, including claims under the Securities Act of 1933.
Item 16. Exhibits
Exhibit
Number Description of Exhibits
- - ------- -----------------------
1(a) Form of Underwriting Agreement relating to Equipment Trust
Certificates (Filed as Exhibit 1(a) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference, except that reference in such
Exhibit to such File Number shall be left blank.)
1(b) Form of Underwriting Agreement relating to Pass Through
Certificates (Filed as Exhibit 1(b) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference, except that reference in such
Exhibit to such File Number shall be left blank.)
4(a)(1) Pass Through Trust Agreement, dated as of February 1, 1993 as
amended and restated as of October 1, 1995, between Federal
Express Corporation and the Pass Through Trustee for an offering
of Pass Through Certificates (Filed as Exhibit 4.a.1 to
Registrant's Current Report on Form 8-K, dated October 26, 1995,
Commission File No. 1-7806, and incorporated herein by
reference.)
4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1))
4(b)(1) Form of Trust Indenture and Security Agreement among the Owner
Trustee, the Indenture Trustee and Federal Express Corporation,
as Lessee, for an offering of Equipment Trust Certificates
(Filed as Exhibit 4(b)(1) to Registrant's Registration Statement
on Form S-3, Commission File No. 33-52142, and incorporated
herein by reference.)*
4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1))
4(c) Form of Trust Indenture and Security Agreement (Leased Aircraft
Indenture) between the Owner Trustee and the Indenture Trustee,
relating to Equipment Certificates (Leased Aircraft
Certificates) in connection with an offering of Pass Through
Certificates (Filed as Exhibit 4(c) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference.)*
4(d)(1) Form of Trust Indenture, Mortgage and Security Agreement (Owned
Aircraft Indenture) between Federal Express Corporation and the
Indenture Trustee, relating to Equipment Certificates (Owned
Aircraft Certificates) in connection with an offering of Pass
Through Certificates* +
4(e)(1) Form of Participation Agreement among Federal Express
Corporation, as Lessee, the Owner Participant, the Owner
Trustee, the Original Loan Participants, if any, the Indenture
Trustee and, when in connection with an offering of Pass Through
Certificates, the Pass Through Trustee, relating to Equipment
Trust Certificates or, when in connection with an offering of
Pass Through Certificates, Equipment Certificates (Leased
Aircraft Certificates) (Filed as Exhibit 4(e)(1) to Registrant's
Registration Statement on Form S-3, Commission File No.
33-52142, and incorporated herein by reference.)*
4(e)(2) Form of Participation Agreement among Federal Express
Corporation, the Pass Through Trustee and the Indenture Trustee
for Equipment Certificates (Owned Aircraft Certificates) in
connection with an offering of Pass Through Certificates* +
4(f) Form of Trust Agreement between the Owner Participant and the
Owner Trustee relating to Equipment Certificates (Leased
Aircraft Certificates) in connection with an offering of
Equipment Trust Certificates or Pass Through Certificates (Filed
as Exhibit 4(f) to Registrant's Registration Statement on Form
S-3, Commission File No. 33-52142, and incorporated herein by
reference.)*
4(g) Form of Lease Agreement between the Owner Trustee, as the
Lessor, and Federal Express Corporation, as Lessee, relating to
Equipment Certificates (Leased Aircraft Certificates) in
connection with an offering of Equipment Trust Certificates or
Pass Through Certificates (Filed as Exhibit 4(g) to Registrant's
Registration Statement on Form S-3, Commission File No.
33-52142, and incorporated herein by reference.)*
4(h) Form of Collateral Agreement between the Owner Trustee and the
Indenture Trustee (Filed as Exhibit 4.g to Registrant's
Registration Statement No. 33-51623, and incorporated herein by
reference.)
5(a)(1) Opinion of Davis Polk & Wardwell, counsel for Federal Express
Corporation, relating to Equipment Trust Certificates+
5(a)(2) Opinion of Davis Polk & Wardwell, counsel for Federal Express
Corporation, relating to Pass Through Certificates+
5(b)(1) Opinion of Powell, Goldstein, Frazer & Murphy, counsel for
the Pass Through Trustee
5(b)(2) Opinion of Bingham, Dana & Gould, counsel for State Street
Bank and Trust Company
5(c) Opinion of Potter Anderson & Corroon, counsel for the Owner
Trustee+
5(d) Opinion of George W. Hearn, Vice President - Law of Federal
Express Corporation, relating to Equipment Trust Certificates
and Pass Through Certificates+
8(a) Tax Opinion of Davis Polk & Wardwell, counsel for Federal
Express Corporation (included under the caption "Federal Income
Tax Consequences" in the Prospectus relating to Pass Through
Certificates)
8(b) Tax Opinion of Powell, Goldstein, Frazer & Murphy, counsel
for the Pass Through Trustee (included under the caption
"Certain New York Taxes" in the Prospectus relating to Pass
Through Certificates) (included in Exhibit 5(b))
12 Computation of Ratio of Earnings to Fixed Charges (Filed as
Exhibit 12.1 to Registrant's FY96 Third Quarterly Report on Form
10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
15(a) Letters of Arthur Andersen LLP, independent public accountants
(Filed as Exhibits 15.1 to Registrant's FY96 First, Second and
Third Quarterly Reports on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
23(a) Consent of Davis Polk & Wardwell, counsel for Federal Express
Corporation (included in Exhibits 5(a)(1) and 5(a)(2))+
23(b)(1) Consent of Powell, Goldstein, Frazer & Murphy, counsel for
the Pass Through Trustee (included in Exhibit 5(b)(1))
23(b)(2) Consent of Bingham, Dana & Gould, counsel for State Street
Bank and Trust Company (included in Exhibit 5(b)(2))
23(c) Consent of Potter Anderson & Corroon, counsel for the Owner
Trustee (included in Exhibit 5(c))+
23(d) Consent of George W. Hearn (included in Exhibit 5(d))+
23(f) Consent of Arthur Andersen LLP, independent public accountants
24 Powers of Attorney+
25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Indenture
Trustee and as Pass Through Trustee
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of State Street Bank and Trust Company, as
Indenture Trustee and as Pass Through Trustee if named as
such in a Series Supplement
_________________
* Separate Indentures, Participation Agreements, Trust Agreements and Lease
Agreements will be entered into with respect to each Leased Aircraft in
connection with any particular offering of Equipment Trust Certificates
or Pass Through Certificates. Separate Indentures and Participation
Agreements will be entered into with respect to each Owned Aircraft in
connection with an offering of Pass Through Certificates. The
Prospectus Supplement for each offering of Equipment Trust Certificates
or Pass Through Certificates will set forth any material details in
which such Indentures, Participation Agreements, Trust Agreements or
Lease Agreements, as the case may be, differ from the corresponding
Exhibit for the form of such documents.
+ Previously filed
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act of 1933 if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions referred
to in Item 15 of this Registration Statement, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of section 310 of
the Trust Indenture Act of 1939 in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(c) of the
Trust Indenture Act of 1939.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Post-Effective Amendment No. 1 to Registration Statement No. 33-56569
to be signed on its behalf by the undersigned, thereunto duly authorized in
the City of Memphis, State of Tennessee, on this 10th day of May 1996
FEDERAL EXPRESS CORPORATION
(Registrant)
By: /s/ Alan B. Graf, Jr.
________________________________
Alan B. Graf, Jr.
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement No. 33-56569
has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ Frederick W. Smith* Chairman of the Board,
- - ------------------------------- President and Chief
Frederick W. Smith Executive Officer (Principal
Executive Officer) and
Director
/s/ Alan B. Graf, Jr. Executive Vice President and
- - ------------------------------- Chief Financial Officer
Alan B. Graf, Jr. (Principal Financial Officer) May 10, 1996
/s/ James S. Hudson Vice President and Controller May 10, 1996
- - ------------------------------- (Principal Accounting Officer)
James S. Hudson
/s/ Robert H. Allen* Director
- - -------------------------------
Robert H. Allen
/s/ Howard H. Baker, Jr.* Director
- - -------------------------------
Howard H. Baker, Jr.
/s/ Anthony J. A. Bryan* Director
- - -------------------------------
Anthony J. A. Bryan
/s/ Robert L. Cox* Director
- - -------------------------------
Robert L. Cox
/s/ Ralph D. Denunzio* Director
- - -------------------------------
Ralph D. DeNunzio
/s/ Judith L. Estrin* Director
- - -------------------------------
Judith L. Estrin
/s/ Philip Greer* Director
- - -------------------------------
Philip Greer
/s/ J. R. Hyde, III* Director
- - -------------------------------
J. R. Hyde, III
/s/ Charles T. Manatt* Director
- - -------------------------------
Charles T. Manatt
Director
- - -------------------------------
George J. Mitchell
/s/ Jackson W. Smart, Jr.* Director
- - -------------------------------
Jackson W. Smart, Jr.
/s/ Joshua I. Smith* Director
- - -------------------------------
Joshua I. Smith
/s/ Peter S. Willmott* Director
- - -------------------------------
Peter S. Willmott
*By: /s/ Alan B. Graf, Jr. May 10, 1996
- - -------------------------------
Alan B. Graf, Jr.
Attorney-in-Fact
EXHIBIT INDEX
Exhibits Exhibit Description
- - -------- -------------------
1(a) Form of Underwriting Agreement relating to Equipment Trust
Certificates (Filed as Exhibit 1(a) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference, except that reference in such
Exhibit to such File Number shall be left blank.)
1(b) Form of Underwriting Agreement relating to Pass Through
Certificates (Filed as Exhibit 1(b) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference, except that reference in such
Exhibit to such File Number shall be left blank.)
4(a)(1) Pass Through Trust Agreement, dated as of February 1, 1993 as
amended and restated as of October 1, 1995, between Federal
Express Corporation and the Pass Through Trustee for an offering
of Pass Through Certificates (Filed as Exhibit 4.a.1 to
Registrant's Current Report on Form 8-K, dated October 26, 1995,
Commission File No. 1-7806, and incorporated herein by
reference.)
4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1))
4(b)(1) Form of Trust Indenture and Security Agreement among the Owner
Trustee, the Indenture Trustee and Federal Express Corporation,
as Lessee, for an offering of Equipment Trust Certificates
(Filed as Exhibit 4(b)(1) to Registrant's Registration Statement
on Form S-3, Commission File No. 33-52142, and incorporated
herein by reference.)*
4(b)(2) Form of Equipment Trust Certificate (included in Exhibit
4(b)(1))
4(c) Form of Trust Indenture and Security Agreement (Leased Aircraft
Indenture) between the Owner Trustee and the Indenture Trustee,
relating to Equipment Certificates (Leased Aircraft
Certificates) in connection with an offering of Pass Through
Certificates (Filed as Exhibit 4(c) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and
incorporated herein by reference.)*
4(d)(1) Form of Trust Indenture, Mortgage and Security Agreement (Owned
Aircraft Indenture) between Federal Express Corporation and the
Indenture Trustee, relating to Equipment Certificates (Owned
Aircraft Certificates) in connection with an offering of Pass
Through Certificates* +
4(e)(1) Form of Participation Agreement among Federal Express
Corporation, as Lessee, the Owner Participant, the Owner
Trustee, the Original Loan Participants, if any, the Indenture
Trustee and, when in connection with an offering of Pass Through
Certificates, the Pass Through Trustee, relating to Equipment
Trust Certificates or, when in connection with an offering of
Pass Through Certificates, Equipment Certificates (Leased
Aircraft Certificates) (Filed as Exhibit 4(e)(1) to Registrant's
Registration Statement on Form S-3, Commission File No.
33-52142, and incorporated herein by reference.)*
4(e)(2) Form of Participation Agreement among Federal Express
Corporation, the Pass Through Trustee and the Indenture Trustee
for Equipment Certificates (Owned Aircraft Certificates) in
connection with an offering of Pass Through Certificates* +
4(f) Form of Trust Agreement between the Owner Participant and the
Owner Trustee relating to Equipment Certificates (Leased
Aircraft Certificates) in connection with an offering of
Equipment Trust Certificates or Pass Through Certificates (Filed
as Exhibit 4(f) to Registrant's Registration Statement on Form
S-3, Commission File No. 33-52142, and incorporated herein by
reference.)*
4(g) Form of Lease Agreement between the Owner Trustee, as the
Lessor, and Federal Express Corporation, as Lessee, relating to
Equipment Certificates (Leased Aircraft Certificates) in
connection with an offering of Equipment Trust Certificates or
Pass Through Certificates (Filed as Exhibit 4(g) to Registrant's
Registration Statement on Form S-3, Commission File No.
33-52142, and incorporated herein by reference.)*
4(h) Form of Collateral Agreement between the Owner Trustee and the
Indenture Trustee (Filed as Exhibit 4.g to Registrant's
Registration Statement No. 33-51623, and incorporated herein by
reference.)
5(a)(1) Opinion of Davis Polk & Wardwell, counsel for Federal Express
Corporation, relating to Equipment Trust Certificates+
5(a)(2) Opinion of Davis Polk & Wardwell, counsel for Federal Express
Corporation, relating to Pass Through Certificates+
5(b)(1) Opinion of Powell, Goldstein, Frazer & Murphy, counsel for
the Pass Through Trustee
5(b)(2) Opinion of Bingham, Dana & Gould, counsel for State Street
Bank and Trust Company
5(c) Opinion of Potter Anderson & Corroon, counsel for the Owner
Trustee+
5(d) Opinion of George W. Hearn, Vice President - Law of Federal
Express Corporation, relating to Equipment Trust Certificates
and Pass Through Certificates+
8(a) Tax Opinion of Davis Polk & Wardwell, counsel for Federal
Express Corporation (included under the caption "Federal Income
Tax Consequences" in the Prospectus relating to Pass Through
Certificates)
8(b) Tax Opinion of Powell, Goldstein, Frazer & Murphy, counsel
for the Pass Through Trustee (included under the caption
"Certain New York Taxes" in the Prospectus relating to Pass
Through Certificates) (included in Exhibit 5(b))
12 Computation of Ratio of Earnings to Fixed Charges (Filed as
Exhibit 12.1 to Registrant's FY96 Third Quarterly Report on Form
10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
15(a) Letters of Arthur Andersen LLP, independent public accountants
(Filed as Exhibits 15.1 to Registrant's FY96 First, Second and
Third Quarterly Reports on Form 10-Q, Commission File No.
1-7806, and incorporated herein by reference.)
23(a) Consent of Davis Polk & Wardwell, counsel for Federal Express
Corporation (included in Exhibits 5(a)(1) and 5(a)(2))+
23(b)(1) Consent of Powell, Goldstein, Frazer & Murphy, counsel for
the Pass Through Trustee (included in Exhibit 5(b)(1))
23(b)(2) Consent of Bingham, Dana & Gould, counsel for State Street
Bank and Trust Company (included in Exhibit 5(b)(2))
23(c) Consent of Potter Anderson & Corroon, counsel for the Owner
Trustee (included in Exhibit 5(c))+
23(d) Consent of George W. Hearn (included in Exhibit 5(d))+
23(f) Consent of Arthur Andersen LLP, independent public accountants
24 Powers of Attorney+
25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Indenture
Trustee and as Pass Through Trustee
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of State Street Bank and Trust Company, as
Indenture Trustee and as Pass Through Trustee if named as
such in a Series Supplement
__________________
* Separate Indentures, Participation Agreements, Trust Agreements and
Lease Agreements will be entered into with respect to each Leased
Aircraft in connection with any particular offering of Equipment
Trust Certificates or Pass Through Certificates. Separate
Indentures and Participation Agreements will be entered into with
respect to each Owned Aircraft in connection with an offering of
Pass Through Certificates. The Prospectus Supplement for each
offering of Equipment Trust Certificates or Pass Through
Certificates will set forth any material details in which such
Indentures, Participation Agreements, Trust Agreements or Lease
Agreements, as the case may be, differ from the corresponding
Exhibit for the form of such documents.
+ Previously filed
APPENDIX A
A diagram is included following the third paragraph of "Diagram of
Payments." The diagram contains boxes representing the parties identified
in the first paragraph of "Diagram of Payments," which are connected by
arrows demonstrating the cash flows described in each of the second and
third paragraphs.
Exhibit 5(B)(1)
May 10, 1996
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Attention: Chief Financial Officer
Re: Federal Express Corporation -- Pass Through Certificates -- Shelf
Registration
Dear Sirs:
We have acted as special counsel to The Bank of New York, a New York
banking corporation (the "Bank"), in its individual capacity and as successor
pass through trustee (the "Pass Through Trustee"), under a Pass Through Trust
Agreement dated as of February 1, 1993 (the "Agreement") between Federal
Express Corporation (the "Corporation") and the Pass Through Trustee.
Pursuant to the Agreement and one or more supplemental agreements thereto to
be entered into between the Corporation and the Pass Through Trustee, the Pass
Through Trustee will execute, authenticate and deliver, upon the Corporation's
request, pass through certificates in one or more series in an aggregate
principal amount of up to $197,380,000 (the "Pass Through Certificates"), to
be registered with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), under the Corporation's
Registration Statement on Form S-3 No. 33-56569 filed with the SEC (the
"Registration Statement").
As such counsel, we have examined the forms of the Agreement and the Pass
Through Certificates which you have furnished to us and which have been filed
as exhibits to the Registration Statement. We have also examined and relied
upon originals, or copies certified or otherwise identified to our
satisfaction, of such documents, corporate records and other instruments as we
have deemed necessary or appropriate for the purposes of this opinion,
including a certificate of the State of New York Banking Department as to the
Bank's existence as a banking organization and trust company. With respect to
the discussion in the Prospectus forming part of the Registration Statement
entitled "Certain New York Taxes," the assumptions set forth therein are
specifically incorporated herein. In addition, we have assumed that each Pass
Through Trust will not be classified as a Partnership as defined in Section
7701 of the Internal Revenue Code of 1986, as amended, and the Pass Through
Trust does not otherwise engage in business in New York.
The opinions set forth herein are limited to the laws of the State of
New York governing taxation and the banking and trust powers of the Pass
Through Trustee and the federal laws of the United States of America governing
the banking and trust powers of the Pass Through Trustee. With respect to the
opinions contained in paragraph 3 below regarding the validity and binding
nature of the Agreement and the Pass Through Certificates, which we note are
governed by the laws of the State of New York, we have relied, with your
permission, entirely upon the opinion of Davis Polk & Wardwell dated
November 22, 1994, and the opinions set forth herein are subject to each of
the assumptions, exceptions, qualifications and limitations contained in such
opinion letter. In addition, the opinions set forth below are based on the
assumption that the Corporation has duly authorized, executed and delivered
the Agreement and, at the time of such authorization, execution and delivery,
had the full power, authority and legal right to have done so.
Based on the foregoing, we are of the opinion that:
1. The Bank is a validly existing banking organization and trust
company under the supervision of the State of New York Banking Department
under the laws of the State of New York.
2. The execution, authentication, issuance and delivery by the Pass
Through Trustee of the Pass Through Certificates and the Agreement have been
duly authorized by the Pass Through Trustee, in its individual (to the extent
provided therein) and trust capacities.
3. With respect to the Pass Through Certificates of each series, when
(a) the Agreement establishing the terms of the Pass Through Certificates of
such series and forming the related Pass Through Trust shall have been duly
authorized, executed and delivered by the Corporation and the Pass Through
Trustee in accordance with the terms and conditions of the Agreement (assuming
that (x) the terms and conditions of the Agreement are in compliance with then
applicable law at the time of such authorization, execution and delivery and
(y) the Pass Through Trustee continues in existence as a validly existing New
York banking organization and trust company at the time of such authorization,
execution and delivery), and (b) the Pass Through Certificates of such series
shall have been duly executed, authenticated, issued and delivered by the Pass
Through Trustee and sold as contemplated by each of the Registration Statement
and the Prospectus included therein relating to the Pass Through Certificates,
the supplement or supplements to such Prospectus relating to the Pass Through
Certificates of such series, the purchase agreement or underwriting agreement
between the Corporation and the purchasers or underwriters named therein, as
the case may be, relating thereto, the Agreement and the related Series
Supplement (assuming that (x) the terms of the Pass Through Certificates of
such series are in compliance with then applicable law at the time of such
authorization, execution and delivery and (y) the Pass Through Trustee
continues in existence as a validly existing New York banking organization and
trust company at the time of such authorization, execution and delivery), (i)
the Agreement, as supplemented by the Series Supplement, will constitute a
valid and binding obligation of the Pass Through Trustee in accordance with
its terms, except as the provisions thereof may be limited by bankruptcy,
reorganization, insolvency, arrangement, fraudulent conveyance, moratorium, or
other similar laws generally affecting creditors' rights or debtors' relief
from time to time in effect, and (ii) each of the Pass Through Certificates of
such series will be validly issued and will be entitled to the benefits of the
Agreement and related Series Supplement pursuant to which it was issued. The
opinions expressed above as to the enforceability of the documents referred to
above further are subject in each case to applicable laws and usual equitable
principles that may render certain remedial provisions in the documents
referred to above invalid or unenforceable.
4. The discussion in the Prospectus forming part of the Registration
Statement entitled "Certain New York Taxes," insofar as it relates to
statements of law or legal conclusions, is correct in all material respects.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us under the captions "Legal
Matters" and "Certain New York Taxes" in the Prospectus forming part of
the Registration Statement.
Very truly yours,
POWELL, GOLDSTEIN, FRAZER & MURPHY
00752641.W51
Exhibit 5(B)(2)
[Letterhead of Bingham, Dana & Gould LLP]
May 10, 1996
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Attention: Chief Financial Officer
RE: FEDERAL EXPRESS CORPORATION
PASS THROUGH CERTIFICATES
Ladies and Gentlemen:
We are acting as special counsel to State Street Bank and Trust Company,
individually ("SSB"), and as Pass Through Trustee (the "Pass Through Trustee")
under certain supplemental agreements to be entered into from time to time
pursuant to the Pass Through Trust Agreement, dated as of February 1, 1993,
as amended and restated as of October 1, 1995 (the "Agreement"), between
Federal Express Corporation (the "Company") and The Bank of New York, as
pass through trustee. Pursuant to the Agreement and the supplemental
agreements to be entered into from time to time, the Pass Through Trustee
will execute, authenticate and deliver, upon the Company's request, Pass
Through Certificates in one or more series in an aggregate principal amount
of up to $197,380,000.00 ("Pass Through Certificates"), to be registered
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "1933 Act"), under the Company's Registration Statement on
Form S-3 filed on the date hereof, (the "Registration Statement"). Except
as otherwise defined herein, terms used herein shall have the meanings set
forth in the Agreement.
Our representation of the Pass Through Trustee 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) certificates
delivered to us by the management of SSB and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined the Agreement, the Pass Through Certificates, the
Certificate of the Massachusetts Commissioner of Banks as to SSB, and
originals, or copies certified or otherwise identified to our satisfaction,
of other such records, documents, 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 SSB 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 SSB and the Pass Through Trustee).
Each opinion set forth below relating to the enforceability of any
agreement or instrument against the Pass Through Trustee, is subject to the
following general qualifications:
(i) as to any agreement to which the Pass Through Trustee, as applicable,
is a party, we assume that such agreement is the legal, valid and binding
obligation of each other party (other than the Pass Through Trustee) thereto;
(ii) the enforceability of any obligation of the Pass Through Trustee may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, marshalling and other similar laws and rules of law affecting
the enforcement generally of creditors' rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights); and
(iii) the enforcement of any rights and the availability of any specific or
equitable relief of any kind may in all cases be subject to an implied duty of
good faith and to general principles of equity (regardless of whether such
enforceability or relief is considered in a proceeding at law or in equity).
Subject to the limitation set forth below, we have made such examination
of law as we have deemed necessary for the purposes of this opinion. The
opinions set forth in paragraphs 1 and 2 below are based on and limited
to the Federal laws of the United States and the internal substantive laws of
the Commonwealth of Massachusetts. 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,
no opinion is expressed as to matters governed by Title 49 of the United
States 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 Engines.
With your permission, with respect to paragraph 2 below in connection
with our opinion relating to the legality, validity and binding effect 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 jurisdictions whose laws govern such documents are not
materially different from the internal substantive laws of the Commonwealth
of Massachusetts.
Based on and subject to the foregoing, we are of the opinion that:
1. State Street Bank 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 with the power and
authority to execute, deliver and carry out, individually or as Pass Through
Trustee, as the case may be, the terms of the Agreement, the supplements
contemplated thereby and the Pass Through Certificates.
2. With respect to the Pass Through Certificates, when (a) supplemental
agreements contemplated by the Agreement shall have been prepared in
accordance with the terms of the Agreement, (b) such supplemental
agreements shall have been duly authorized, executed and delivered by the
the Company and the Pass Through Trustee in accordance with the terms
and conditions of the Agreement, and (c) the Pass Through Certificates
shall have been duly executed, authenticated, issued and delivered by the
Pass Through Trustee and sold as contemplated by each of the Registration
Statement, the Prospectus and the Agreement as so supplemented,
assuming that the terms of the Pass Through Certificates are in compliance
with then applicable law, (i) the Agreement, as so supplemented will
constitute a valid and binding obligation of the Pass Through Trustee
enforceable against the Pass Through Trustee in accordance with its
terms, and (ii) the Pass Through Certificates will be validly issued and
will be entitled to the benefits of the Agreement as so supplemented.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement, and to the reference to us under the caption
"Legal Matters" in the Prospectus. In giving this consent, we do not
thereby admit that we are in the category of person whose consent is
required under Section 7 of the 1933 Act or the Rules and Regulations
of the Securities and Exchange Commission.
Very truly yours,
BINGHAM, DANA & GOULD LLP
Exhibit 23(f)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our reports dated June
29, 1995, included (or incorporated by reference) in Federal Express
Corporation's Form 10-K for the year ended May 31, 1995, and to all references
to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee
May 3, 1996.
Exhibit 25(A)
==============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
FEDERAL EXPRESS CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 71-0427007
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2005 Corporate Avenue
Memphis, TN 38132
(Address of principal executive offices) (Zip code)
______________________
Pass Through Certificates
Equipment Trust Certificates
(Title of the indenture securities)
==============================================================================
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
---------------------------------------------------------------------
Name Address
---------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, N.Y.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule
24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1
to Form T-1 filed with Registration Statement No. 33-6215,
Exhibits 1a and 1b to Form T-1 filed with Registration Statement
No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of
New York, and State of New York, on the 9th day of May, 1996.
THE BANK OF NEW YORK
By: /s/ ROBERT F. MCINTYRE
--------------------------
Name: Robert F. McIntyre
Title: Vice President
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1995, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant
to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
- - ------ --------------
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin........................... $ 4,500,312
Interest-bearing balances................... 643,938
Securities:
Held-to-maturity securities................. 806,221
Available-for-sale securities............... 2,036,768
Federal funds sold and securities
purchased under agreements to resell........
in domestic offices of the bank:
Federal funds sold.......................... 4,166,720
Securities purchased under
agreements to resell........................ 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income...................................27,068,535
LESS: Allowance for loan and
lease losses............................. 520,024
LESS: Allocated transfer risk
reserve:................................. 1,000
Loans and leases, net of unearned
income and allowance and reserve......... 26,547,511
Assets held in trading accounts............... 758,462
Premises and fixed assets (including
capitalized leases)......................... 615,330
Other real estate owned................. 63,769
Investments in unconsolidated
subsidiaries and associated
companies............................. 223,174
Customers' liability to this bank on
acceptances outstanding............... 900,795
Intangible assets....................... 212,220
Other assets............................ 1,186,274
---------
Total assets............................ $42,711,907
-----------
LIABILITIES
- - -----------
Deposits:
In domestic offices......................... $21,248,127
Noninterest-bearing......................... 9,172,079
Interest-bearing............................12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBF's........... 9,535,088
Noninterest-bearing......................... 64,417
Interest bearing............................ 9,470,671
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds purchased..................... 2,095,668
Securities sold under agreements
to repurchase............................. 69,212
Demand notes issued to the U.S.
Treasury.................................... 107,340
Trading liabilities........................... 615,718
Other borrowed money:
With original maturity of one year or less.. 1,638,744
With original maturity of more than
one year................................... 120,863
Bank's liability on acceptances
executed and outstanding................... 909,527
Subordinated notes and debentures............. 1,047,860
Other liabilities............................. 1,836,573
---------
Total liabilities............................. 39,224,720
----------
EQUITY CAPITAL
- - --------------
Common stock.................................. 942,284
Surplus....................................... 525,666
Undivided profits and capital
reserves.................................... 1,995,316
Net unrealized holding gains (losses)
on available-for-sale securities............ 29,668
Cumulative foreign currency
translation adjustments..................... ( 5,747)
---------
Total equity capital.......................... 3,487,187
---------
Total liabilities and equity capital.......... $42,711,907
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of Condition
has been prepared in conformance with the instructions issued by the
Board of Governors of the Federal Reserve System and is true to the
best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and
to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Samuel F. Chevalier
Exhibit 25(B)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
Form T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(Name, address and telephone number of agent for service)
_____________________
Federal Express Corporation
(Exact name of obligor as specified in its charter)
Delaware 71-0427007
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
(Address of principal executive offices) (Zip Code)
____________________
Equipment Trust Certificates; Pass Through Certificates
(Title of indenture securities)
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Boston Corporation.
(See note on page 6.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
to the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein
by reference thereto.
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility and
Qualification which relates to matters peculiarly within the knowledge of
the obligor or any underwriter for the obligor, the trustee has relied upon
information furnished to it by the obligor and the underwriters, and the
trustee disclaims responsibility for the accuracy or completeness of such
information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which
would have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts,
has duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Boston and The Commonwealth of Massachusetts, on the 3rd day of
May, 1996.
STATE STREET BANK AND TRUST COMPANY
/s/ E. Decker Adams
By: _____________________________
E. Decker Adams
Vice President
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by
Federal Express Corporation, of its Equipment Trust Certificates; Pass
Through Certificates, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon request
therefor.
STATE STREET BANK AND TRUST COMPANY
/s/ E. Decker Adams
By: __________________________
E. Decker Adams
Vice President
Dated: May 3, 1996
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust
Company of Boston, Massachusetts and foreign and domestic subsidiaries, a
state banking institution organized and operating under the banking laws of
this commonwealth and a member of the Federal Reserve System, at the close
of business December 31, 1995, published in accordance with a call made by
the Federal Reserve Bank of this District pursuant to the provisions of the
Federal Reserve Act and in accordance with a call made by the Commissioner
of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of
Dollars
------------
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin....... 1,331,827
Interest-bearing balances................................ 5,971,326
Securities................................................... 6,325,054
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary...................... 5,436,994
Loans and lease financing receivables:
Loans and leases, net of unearned income ... 4,308,339
Allowance for loan and lease losses ........ 63,491
Loans and leases, net of unearned income and allowances.. 4,244,848
Assets held in trading accounts.............................. 1,042,846
Premises and fixed assets.................................... 374,362
Other real estate owned...................................... 3,223
Investments in unconsolidated subsidiaries................... 31,624
Customers' liability to this bank on acceptances outstanding. 57,472
Intangible assets............................................ 68,384
Other assets ................................................. 670,058
-----------
Total assets................................................... 25,558,018
===========
LIABILITIES
Deposits:
In domestic offices.......................................... 6,880,231
Noninterest-bearing ........................ 4,728,115
Interest-bearing ........................... 2,152,116
In foreign offices and Edge subsidiary....................... 9,607,427
Noninterest-bearing ........................ 28,265
Interest-bearing ........................... 9,579,162
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary...................... 5,913,969
Demand notes issued to the U.S. Treasury and
Trading Liabilities......................................... 530,406
Other borrowed money......................................... 493,191
Bank's liability on acceptances executed and outstanding..... 57,387
Other liabilities............................................ 620,287
-----------
Total liabilities............................................. 24,102,898
-----------
EQUITY CAPITAL
Common stock.................................................. 29,176
Surplus....................................................... 228,448
Undivided profits............................................. 1,197,496
-----------
Total equity capital.......................................... 1,455,120
-----------
Total liabilities and equity capital.......................... 25,558,018
============
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true
and correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
