As filed with the Securities and Exchange Commission on April 22, 1997
Registration No. 333-07691
==============================================================================
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 Identification No.)
incorporation or organization)
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]
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 four forms of prospectus: each, as
supplemented, to be used in connection with offerings of (1) equipment trust
certificates; (2) pass through certificates; (3) debt securities; or (4)
common stock and preferred stock, respectively. No 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 APRIL 22, 1997
PROSPECTUS
FEDEX LOGO
EQUIPMENT TRUST CERTIFICATES
_____________________
Up to $813,872,000 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. 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 such Lease 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 will be issued in
registered form only and, unless otherwise specified in the applicable
Prospectus Supplement, 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 April , 1997.
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
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. and 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, 1996 filed August 9, 1996.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1996, November 30, 1996 and February 28, 1997 filed
October 10, 1996, January 14, 1997 and April 11, 1997, respectively.
3. The Corporation's Current Reports on Form 8-K dated June 5, 1996, June
7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997 filed June 10,
1996, June 21, 1996, August 28, 1996, October 22, 1996 and April 21, 1997,
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: Rebecca M. Halvorson,
Managing Director -- Investor Relations, Federal Express Corporation, by
mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901)
395-5038.
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
February February
Year Ended May 31 29 28
-------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x
- ----------
(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, the Owner Trustee or any prior owner, as the
case may be. Each Aircraft has been or will be sold to First Security Bank,
National Association, 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
State Street Bank and Trust Company, 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 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 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.
Book-Entry Procedures
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates will be subject to the provisions described below. The
Certificates will be fully registered and issued in the form of one or more
temporary or permanent global security or securities without coupons, in
minimum denominations of $1,000 or any integral multiple of $1,000. 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 Certificate in certificated
form, 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 Exchange Act. 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 Certificates
may do so only through DTC Participants. In addition, Certificateholders will
receive all distributions of principal and interest from the Indenture 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 Certificates among DTC Participants on whose behalf it
acts and to receive and transmit distributions of principal of, and interest
on, the Certificates. Under the book-entry system, Certificateholders may
experience some delay in receipt of payments, since such payments will be
forwarded by the Indenture 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 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 Certificates to persons or
entities that are not DTC Participants or to otherwise act with respect to
such Certificates, may be limited due to the lack of physical certificates for
such Certificates.
None of the Corporation, the Indenture Trustee or any other agent of the
Corporation or the Indenture 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 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 Indenture Trustee as
Certificateholders, as such term is used in the Indenture, 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 Indenture and any Prospectus Supplement only at
the direction of one or more DTC Participants to whose accounts with DTC the
related 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 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 Certificates will trade in DTC's Same-Day Funds Settlement System
until maturity, and secondary market trading activity in the 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 Certificates.
Certificated Form. The 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 Indenture Trustee in writing that it is
no longer willing or able to discharge properly its responsibilities as
depository with respect to the 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 Indenture
Trustee will notify all Certificateholders through DTC Participants of the
availability of such certificated Certificates. Upon surrender by DTC of
the definitive global certificate representing the series of Certificates
and receipt of instructions for reregistration, the Indenture Trustee will
reissue the Certificates in certificated form to Certificateholders or
their nominees.
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.
If the Certificates are issued in certificated form as discussed above,
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
Boston, Massachusetts 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) Such Certificates may be
surrendered for registration of transfer or exchange for Certificates of the
same Series, maturity and interest rate at facilities established for such
purpose by the Indenture Trustee in Boston, Massachusetts. 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
any 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.
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 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 rent 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,
State Street Bank and Trust Company will be the Indenture Trustee under each
Indenture. State Street Bank and Trust Company 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, State Street Bank and Trust Company 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 its 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. However, 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 April 21, 1997, Mr. Hearn owned zero shares of the Corporation's common
stock and had been granted options to purchase 41,600 shares of the
Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997,
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
upon as having been authorized by the
Corporation or the Underwriters. This
Prospectus does not constitute an offer to sell, or
the solicitation 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 nor any sale made hereunder shall,
under any circumstances, create an implication
that there has not been 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..................... 3
Incorporation of Certain
Documents by Reference.................. 3
Federal Express Corporation............... 4
Ratio of Earnings to Fixed Charges........ 4
Use of Proceeds........................... 4
Outline of Leveraged
Lease Transactions...................... 4
Description of the Certificates........... 5
ERISA Considerations...................... 15
Plan of Distribution...................... 15
Legal Matters............................. 16
Experts................................... 16
======================================================
$813,872,000
FEDEX LOGO
$813,872,000
Equipment Trust Certificates
____________________
P R O S P E C T U S
____________________
April ___, 1997
======================================================
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 22, 1997
PROSPECTUS
FEDEX LOGO
PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES
_______________________________
Up to $813,872,000 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 (the "Pass Through Agreement")
between Federal Express Corporation (the "Corporation") and State Street
Bank and Trust Company, 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, except
as may be contained in any intercreditor agreement, 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, final maturity date and ranking
in respect of priority of payment. Unless otherwise specified in the
applicable Prospectus Supplement, 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 ranking and 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 April __, 1997.
(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.
Unless otherwise specified in the applicable Prospectus Supplement,
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, if
specified in the applicable Prospectus Supplement, by other security (which
may include a letter of credit). Funds in such collateral account, together
with any 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 will be issued in registered form only
and, unless otherwise specified in the applicable Prospectus Supplement, will
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 will 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.
____________________________
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 accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. and 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, 1996 filed August 9, 1996.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1996, November 30, 1996 and February 28,
1997 filed October 10, 1996, January 14, 1997 and April 11, 1997,
respectively.
3. The Corporation's Current Reports on Form 8-K dated June 5, 1996,
June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997
filed June 10, 1996, June 21, 1996, August 28, 1996, October 22,
1996 and April 21, 1997, 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: Rebecca M. Halvorson,
Managing Director -- Investor Relations, Federal Express Corporation, by
mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901)
395-5038.
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
February February
Year Ended May 31 29 28
-------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x
- ----------
(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 (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,
final maturity dates and rankings in respect of priority of payment.
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 identical
priority of payment relative to each of the other Equipment Certificates held
by such Pass Through Trust. 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
First Security Bank, National Association, or another bank or 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,
together with interest accrued thereon, but without premium. See "Description
of the Pass Through Certificates -- Special Payment Upon Unavailability of
Trust Property."
Unless otherwise specified in the applicable Prospectus Supplement, 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, final maturity date and ranking in respect of priority of
payment, 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, final
maturity dates and rankings in respect of priority of payment, 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.
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 the form of 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, Participation Agreements, Leases if the Pass
Through Certificates relate to Leased Aircraft, Intercreditor Agreement, if
any, Liquidity Facility, if any, 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.
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, unless otherwise 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 and, if specified
in the applicable Prospectus Supplement, rights under any intercreditor
agreement relating to cross-subordination arrangements and monies
receivable under any liquidity facility. 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:
(a) 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;
(b) the payment priority of such Equipment Certificates in
relation to any other Equipment Certificates issued with
respect to the related Aircraft;
(c) any additional security or liquidity enhancements therefor;
(d) any intercreditor issues between or among the holders of
Equipment Certificates having different priorities issued by
the same Owner Trustee; and
(e) other specific terms of the Equipment Certificates during any
Pre-Funding Period;
(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;
(10) a description of any cross-default or cross-collateralization
provisions in the related Indenture;
(11) a description of any subordination provisions among the holders of
Pass Through Certificates, including any cross-subordination
provisions among the holders of Pass Through Certificates in
separate Pass Through Trusts;
(12) any additional security or liquidity facilities for the Pass Through
Certificates; and
(13) any other special terms pertaining to such Pass Through
Certificates. (Pass Through Agreement, Article II)
The Equipment Certificates issued under an Indenture may be held in more
than one Pass Through Trust and one Pass Through Trust may hold Equipment
Certificates issued under more than one Indenture. Unless otherwise provided
in the applicable Prospectus Supplement, only Equipment Certificates having
the same priority of payment (the Equipment Certificates of any such priority,
a "Class") may be held in the same Pass Through Trust.
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
Unless otherwise 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 or more fully registered global certificates. 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.
Unless otherwise specified in the applicable Prospectus Supplement, during the
Pre-Funding Period, if any, for such Leased Aircraft, however, the related
Collateral Account, together with any 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"). Subject to the effect of any
cross-subordination provisions set forth in the applicable Prospectus
Supplement, 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. (Pass Through Agreement, Section 5.02)
If a Scheduled Payment is not received by the Pass Through Trustee on or
before a Regular Distribution Date but is received within seven 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. Subject to the effect of any
cross-subordination provisions set forth in the applicable Prospectus
Supplement, each such Certificateholder will be entitled to receive a pro rata
share of any such distribution. (Pass Through Agreement, Article I; Sections
5.01 and 5.02) If a Scheduled Payment is received more than seven Business
Days after the applicable Regular Distribution Date, it will be treated as a
Special Payment and will be distributed as described below.
Subject to the effect of any cross-subordination provisions set forth in
the applicable Prospectus Supplement, 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), (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"), except that unless otherwise
specified in the applicable Prospectus Supplement payments received by the
Pass Through Trustee following default in respect of the Equipment
Certificates on a Regular Distribution Date as a result of a drawing under any
liquidity facility specified in the applicable Prospectus Supplement, provided
for the benefit of the Certificateholders, will be distributed on such Regular
Distribution Date. 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. Subject to the effect of any
cross-subordination provisions set forth 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 (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America;
(b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and
Moody's Investors Service, Inc., respectively or, if such ratings are
unavailable, rated by any nationally recognized rating organization in the
United States equal to the highest rating assigned by such rating
organization; (c) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; and (d) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America of any bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500 million.
(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.
(Pass Through Agreement, Section 5.03)
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
Subject to the effect of any cross-subordination provisions and any
intercreditor provisions described in the applicable Prospectus Supplement,
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) If specified in the
applicable Prospectus Supplement, the right of the Pass Through Trustee to
vote and give consents and waivers with respect to the Equipment Certificates
held in the related Pass Through Trust may, in the circumstances set forth in
an intercreditor agreement to be executed by such Pass Through Trustee, be
exercisable by another person specified in such Prospectus Supplement.
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"). With respect to any Equipment Certificates which are
supported by a liquidity facility, the Events of Default or Indenture Events
of Default may include events of default under such liquidity facility.
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, unless otherwise specified in the applicable Prospectus
Supplement. Consequently, unless otherwise specified in the applicable
Prospectus Supplement, 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. If the applicable Prospectus Supplement contains the terms of any
cross-subordination provisions among Certificateholders of separate Pass
Through Trusts, payments made pursuant to a related Indenture under which no
Indenture Event of Default has occurred will be distributed first to the
holders of Pass Through Certificates issued under the Pass Through Trust which
holds the most senior Equipment Certificates issued under all related
Indentures.
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, subject to any intercreditor
agreement, 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, subject to any intercreditor agreement, 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. In addition, if cross-subordination provisions are applicable to
the Pass Through Certificates, the ability of the Certificateholders of any
one Pass Through Trust holding Equipment Certificates issued under related
Indentures to cause the Indenture Trustee to accelerate such Equipment
Certificates or to direct the exercise of remedies by the Indenture Trustee
under the related Indenture will depend, in part, on the Class of Equipment
Certificates held in such Pass Through Trust.
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)
If an intercreditor agreement applies, a Certificateholder will have
certain rights, as described in the applicable Prospectus Supplement, to
purchase the class of Pass Through Certificates senior to the Pass Through
Certificates held by the purchasing Certificateholders. (Pass Through
Agreement, Section 7.01)
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 or any
intercreditor agreement at the request of such Certificateholders. (Pass
Through Agreement, Section 8.03)
Subject to any intercreditor agreement, 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 (x) may on behalf of all the Certificateholders of such Pass
Through Trust or (y) if the Pass Through Trustee is the controlling party
under an intercreditor agreement, may direct the Pass Through Trustee to
instruct the applicable Indenture Trustee to, 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, any intercreditor agreement or
any Liquidity Facility, 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, any intercreditor
agreement or any Liquidity Facility 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;
(e) waive, amend or modify the priority of distributions of any
intercreditor agreement in a manner adverse to the
Certificateholders; or
(f) 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 and subject to any intercreditor agreement, in its own
discretion consent to such amendment, modification or waiver, and may so
notify the Indenture Trustee. (Pass Through Agreement, Section 11.08)
Cross-Subordination Issues
The Equipment Certificates issued under an Indenture may be held in more
than one Pass Through Trust and one Pass Through Trust may hold Equipment
Certificates issued under more than one related Indenture. Unless otherwise
provided in the applicable Prospectus Supplement, only Equipment Certificates
of the same Class may be held in the same Pass Through Trust. In addition,
the Pass Through Trustee may enter into an intercreditor agreement which
provides that payments made on account of a subordinate Class of Equipment
Certificates issued under a related Indenture may, under circumstances
described in the applicable Prospectus Supplement, be subordinated to the prior
payment of all amounts owing to Certificateholders of a Pass Through Trust
which holds senior Equipment Certificates issued under all related Indentures.
The applicable Prospectus Supplement related to an issuance of Pass Through
Certificates will describe any such intercreditor agreement and the
cross-subordination provisions and any related terms, including the percentage
of Certificateholders under any Pass Through Trust which are permitted to (i)
grant waivers of defaults under any related Indenture, (ii) consent to the
amendment or modification of any related Indentures or (iii) direct the
exercise of remedial actions under any related Indentures.
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
Unless otherwise specified in the applicable Prospectus Supplement,
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. (Pass Through Agreement, Article I and Section
2.02)
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)
Liquidity Facility
The applicable Prospectus Supplement may provide that one or more
payments of interest on the Pass Through Certificates of one or more Series
will be supported by a liquidity facility issued by an institution identified
in such Prospectus Supplement (the "Liquidity Facility"). The provider of
such liquidity facility will have a claim senior to the Certificateholders' as
specified in the Prospectus Supplement.
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, State
Street Bank and Trust Company will be the Indenture Trustee under the
Indentures under which the Equipment Certificates have been or will be issued.
State Street Bank and Trust Company 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, State
Street Bank and Trust Company 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. (Pass Through
Agreement, Section 10.01)
In the case of the resignation or removal of the Pass Through Trustee,
the Corporation or 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 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, the Lease for Leased Aircraft 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, the Participation Agreements, the Leases, if
any, 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.
Unless otherwise specified in the applicable Prospectus Supplement, during any
Pre-Funding Period for such Leased Aircraft, however, the related Collateral
Account, together with any 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 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.
Unless otherwise specified in the applicable Prospectus Supplement,
there will be no cross-collateralization provisions in the Indentures and
consequently, unless so specified, 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.
Unless otherwise specified in the applicable Prospectus Supplement, there will
be no cross-default provisions in the Indentures and consequently, unless so
specified, 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 or other facility 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."
Unless otherwise specified in the applicable Prospectus Supplement, 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 pursuant to the related Collateral Agreement or Indenture in
U.S. government obligations or such other obligations as 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.
Ranking of Equipment Certificates
Some of the Equipment Certificates related to one or more Aircraft, as
described in the applicable Prospectus Supplement, may be subordinated and
junior in right of payment to other Equipment Certificates related to the same
Aircraft. The terms of such subordination, if any, will be described in the
applicable Prospectus Supplement.
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. Unless otherwise
specified in the applicable Prospectus Supplement, there will be no
cross-default provisions in the Indentures and, unless so specified, 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.
Liquidity Facility
The applicable Prospectus Supplement may provide that one or more
payments of interest on the related Equipment Certificates of one or more
Series or distributions made by the Pass Through Trustee of the related Pass
Through Trust will be supported by a liquidity facility issued by an
institution identified in the applicable Prospectus Supplement. Unless
otherwise provided in the applicable Prospectus Supplement, the provider of
the liquidity facility will have a senior claim upon the assets securing the
Equipment Certificates.
Intercreditor Issues
Equipment Certificates may be issued in different Classes, which means
that the Equipment Certificates may have different payment priorities even
though issued by the same Owner Trustee and relate to the same Aircraft. In
such event, the applicable Prospectus Supplement will describe the priority of
distributions among such Equipment Certificates (and any liquidity facilities
therefor), the ability of any Class to exercise and enforce any or all remedies
with respect to the related Aircraft (and, if the Equipment Certificates are
Leased Aircraft Certificates, the Lease related thereto) and certain other
intercreditor terms and provisions.
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, an Owner Participant's conveyance of its
interest in an Owner Trust should 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 Company'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.
Effect of Subordination of Subordinated Certificateholders
If any Pass Through Trust with respect to a Series is subordinated
with respect to other Pass Through Trusts of the same Series (such Pass
Through Trusts being the "Subordinated Trusts" and the related Pass Through
Certificates being the "Subordinated Certificates") receives less than the
full amount of the receipts of principal or interest paid with respect to
the Equipment Certificates held by it (any shortfall in such receipts being
the "Shortfall Amounts") because of the subordination of the Equipment
Certificates held by such Pass Through Trust under the Intercreditor
Agreement, the corresponding owners of beneficial interests in the
Subordinated Certificates (the "Subordinated Certificateholders") would
probably be treated for federal income tax purposes as if they had (1)
received as distributions their full share of such receipts, (2) paid over
to the relevant preferred class of Certificateholders an amount equal to
their share of such Shortfall Amount and (3) retained the right to
reimbursement of such amounts to the extent of future amounts payable to
such Subordinated Certificateholders with respect to such Shortfall Amount.
Under this analysis, (1) Subordinated Certificateholders incurring a
Shortfall Amount would be required to include as current income any interest
or other income of the corresponding Subordinated Trust that was a component
of the Shortfall Amount, even though such amount was in fact paid to the
relevant preferred class of Certificateholders, (2) a loss would only be
allowed to such Subordinated Certificateholders when their right to receive
reimbursement of such Shortfall Amount became worthless (i.e., when it becomes
clear that funds will not be available from any source to reimburse such
loss) and (3) reimbursement of such Shortfall Amount prior to such a claim of
worthlessness would not be taxable income to Subordinated Certificateholders
because such amount was previously included in income. These results should
not significantly affect the inclusion of income for Subordinated
Certificateholders on the accrual method of accounting, but could accelerate
inclusion of income to Subordinated Certificateholders on the cash method of
accounting by, in effect, placing them on the accrual method.
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.
Pre-Funding
The foregoing discussion does not address the tax consequences to a
Certificateholder with respect to any Pre-Funding arrangement. Such
discussion will be set forth in the applicable Prospectus Supplement.
CERTAIN MASSACHUSETTS TAXES
The summary set forth below is based upon applicable tax statutes,
regulations and rules promulgated thereunder, government agency rulings and
court decisions published to date, each of which is subject to change.
The Pass Through Trustee is a Massachusetts trust company with its
principal corporate trust office in Boston, Massachusetts. Bingham, Dana &
Gould, counsel to the Pass Through Trustee, has advised the Corporation that,
in its opinion, under currently applicable Massachusetts laws and assuming
that the Pass Through Trustee will not hold any legal or equitable title to,
or lease, any real or tangible personal property located in the Commonwealth of
Massachusetts and that each Pass Through Trust will not be taxable as a
corporation but rather will be classified as a grantor trust under subpart E,
Part I of Subchapter J of the Code: (i) the Pass Through Trusts will not be
subject to any tax (including, without limitation, net or gross income
tangible or intangible property, net worth, capital, franchise or doing
business tax), governmental fee or similar charge imposed by the Commonwealth
of Massachusetts or any political subdivision thereof as a result of the
transactions contemplated by the Pass Through Agreement; and (ii)
Certificateholders who are not residents of, or otherwise subject to tax in or
by, the Commonwealth of Massachusetts will not be subject to any tax
(including, without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax), governmental
fee or similar charge imposed by the Commonwealth of Massachusetts or any
political subdivision thereof as a result of purchasing, holding (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. In general, should a Certificateholder or any Pass Through
Trust be subject to any state or local tax which would not be imposed if such
Pass Through Trust were administered in a different jurisdiction in the United
Sates or if the Pass Through Trustee were located in a different jurisdiction
in the United States, the Pass Through Trustee will either relocate the
administration of such Pass Through Trust to such other jurisdiction or resign
and, in the event of the Pass Through Trustee's resignation, a new Pass
Through Trustee in such other jurisdiction will be appointed.
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 April 21, 1997, Mr. Hearn owned zero shares of the
Corporation's common stock and had been granted options to purchase 41,600
shares of the Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997,
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 upon as having
been authorized by the Corporation or the
Underwriters. This Prospectus does not constitute
an 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 nor any sale made hereunder
shall, under any circumstances, create an
implication that there has not been any change in
the facts set forth in this Prospectus or in the affairs
of the 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
Diagram of Payments......................... 6
Description of the Pass Through
Certificates............................. 8
Description of the Equipment
Certificates............................. 23
Federal Income Tax Consequences............. 32
Certain Massachusetts Taxes................. 34
ERISA Considerations........................ 34
Plan of Distribution........................ 34
Legal Matters............................... 35
Experts..................................... 35
========================================================
$813,872,000
FEDEX LOGO
$813,872,000
Pass Through Certificates
____________________
P R O S P E C T U S
____________________
April ___, 1997
========================================================
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 22, 1997
PROSPECTUS
FEDEX LOGO
DEBT SECURITIES
_____________________________
Up to $813,872,000 aggregate principal amount of Federal Express
Corporation (the "Corporation") unsecured debt securities (the "Debt
Securities") (or the equivalent thereof in foreign currency) may be offered
for sale from time to time pursuant to this Prospectus and one or more
Prospectus Supplements. The Debt Securities may be offered in one or more
series in amounts, at prices and on terms to be determined at the time of
sale. The Debt Securities will be unsecured obligations of the Corporation
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Corporation.
When a particular series or issue of Debt Securities is offered (the
"Offered Debt Securities"), a supplement to this Prospectus (the "Prospectus
Supplement") will be delivered with this Prospectus setting forth with respect
to the offered securities: (i) the terms of any Offered Debt Securities
including the specific designation, aggregate principal amount, denominations,
purchase price, currency, maturity, rate (which may be fixed or variable) and
time of payment of interest (if any), redemption terms and the other terms in
connection with the offering and sale of the Offered Debt Securities; and (ii)
any initial public offering price, the net proceeds to the Corporation and the
other specific terms of the Offered Debt Securities.
Interest will be payable on the Debt Securities of each series on the
dates and at the rates per annum set forth for such Debt Securities in the
applicable Prospectus Supplement. Principal will be payable on the Debt
Securities of each series in scheduled amounts and on specified dates as set
forth in the applicable Prospectus Supplement. The Debt Securities will be
issued in registered form only and, unless otherwise specified in the
applicable Prospectus Supplement, in accordance with a book-entry system.
The Debt Securities may be sold on a negotiated or competitive bid basis
to or through underwriters or dealers or directly to other purchasers or
through agents. See "Plan of Distribution." The Prospectus Supplement
relating to each offering will set forth the names of any underwriters,
dealers or agents involved in the sale of the Debt Securities 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,
dealers or agents.
Prior to their issuance there will have been no market for the Debt
Securities 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 Debt
Securities on a national securities exchange.
This Prospectus may not be used to consummate sales of any Debt
Securities unless accompanied by the Prospectus Supplement applicable to the
Debt Securities 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 April __, 1997.
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 accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. and 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, 1996 filed August 9, 1996.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1996, November 30, 1996 and February 28,
1997 filed October 10, 1996, January 14, 1997 and April 11, 1997,
respectively.
3. The Corporation's Current Reports on Form 8-K dated June 5, 1996,
June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997
filed June 10, 1996, June 21, 1996, August 28, 1996, October 22,
1996 and April 21, 1997, 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 Rebecca M. Halvorson, Managing
Director -- Investor Relations, Federal Express Corporation, by mail at Box
727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038.
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
February February
Year Ended May 31 29 28
-------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x
- ----------
(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.
As a result of an offering of Debt Securities, the Corporation may be
more highly leveraged than currently reflected in this table.
USE OF PROCEEDS
Unless otherwise set forth in a Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of the
Corporation and used for general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
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 (defined herein) and the Debt Securities, the form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part. For the Debt Securities 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 Debt Securities of each series offered thereby and the
Indenture. This summary makes use of terms defined in and is qualified in its
entirety by reference to the Indenture.
Except as otherwise indicated below or as described in the applicable
Prospectus Supplement, the following summary will apply to the Debt Securities
and the Indenture. Additional provisions with respect to the Indenture and
the Debt Securities relating to any particular offering of Debt Securities
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 Debt Securities are to be issued under an Indenture, dated as of
July 1, 1996 (the "Indenture"), between the Corporation and The First National
Bank of Chicago as trustee (the "Trustee"). The Indenture does not limit the
aggregate amount of Debt Securities which may be issued thereunder and
provides that Debt Securities may be issued thereunder in one or more series.
The Debt Securities will be unsecured obligations of the Corporation and
will rank on a parity with all other unsecured and unsubordinated indebtedness
of the Corporation.
The Indenture does not contain any debt covenants or provisions which
would afford the holders of the Debt Securities protection in the event of a
highly leveraged transaction. Other indebtedness of the Corporation ranking
pari passu with the Debt Securities have covenants that would afford those
holders privileges in the event of a change in control of the Corporation.
Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities for the following terms of such Debt
Securities:
(1) the title of such Debt Securities and the series in which such Debt
Securities will be included;
(2) the authorized denominations and aggregate principal amount of such
Debt Securities;
(3) whether the Debt Securities are to be issuable in global or
certificated form;
(4) the date or dates on which such Debt Securities will mature;
(5) the rate or rates (which may be fixed or variable) per annum at
which such Debt Securities will bear interest, if any, and if
such rate is variable, the manner of calculation thereof and the
date from which interest will accrue;
(6) the place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities shall be payable;
(7) the dates on which such interest will be payable and the
corresponding record dates;
(8) any mandatory or optional sinking fund or purchase fund or
analogous provisions;
(9) the terms and conditions upon which such Debt Securities may be
redeemed, if any, and any redemption price;
(10) if other than the principal amount thereof, the portion of the
principal amount of such Debt Securities which shall be payable
upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 of the Indenture;
(11) provisions, if any, for the defeasance of such Debt Securities;
(12) the currency in which payments of principal of (and premium, if
any) and interest, if any, on such Debt Securities will be
payable;
(13) whether Additional Amounts are payable with respect to any Debt
Securities;
(14) any additional Events of Default or covenants applicable to such
series; and
(15) any other terms of such series (which terms shall not be
inconsistent with the Indenture). (Indenture, Section 301)
If a Prospectus Supplement specifies that a series of Debt Securities is
denominated in a currency or currency unit other than United States dollars,
such Prospectus Supplement shall also specify the denomination in which such
Debt Securities will be issued and the currency in which the principal,
premium, if any, and interest, if any, on such Debt Securities will be
payable, which may be United States dollars based upon the exchange rate for
such other currency unit existing on or about the time a payment is due.
(Indenture, Section 301)
Unless otherwise indicated in the Prospectus Supplement relating
thereto, all outstanding Debt Securities will be exchangeable and transfers
thereof will be registrable, and principal of, premium, if any, and interest,
if any, on all Debt Securities will be payable, at the corporate trust office
of the Trustee at One First National Plaza, Chicago, Illinois; provided that
payment of interest may, at the option of the Corporation, be made by check
mailed to the address of the person entitled thereto as it appears in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States. (Indenture, Sections 301, 307 and 1002)
Unless otherwise indicated in the Prospectus Supplement relating
thereto, all Debt Securities will be issued only in fully registered form
without coupons in denominations of $1,000 and any integral multiples thereof.
No service charge will be made for any registration of transfer or exchange of
any Debt Securities, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Indenture, Section 305) The Indenture provides that the Debt
Securities may be issuable in permanent global form. (Indenture, Section 203)
See "Permanent Global Securities."
The Corporation's right and the rights of its creditors, including the
Holders of any Debt Securities, to participate in the assets of any subsidiary
upon its liquidation or recapitalization would be subject to the prior claims
of such subsidiary's creditors, except to the extent that the Corporation may
itself be a creditor with recognized claims against such subsidiary. The
Indenture does not limit the amount of secured or unsecured indebtedness which
may be incurred by the Corporation or its subsidiaries.
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount.
Certain federal income tax consequences and special considerations
applicable to any such securities will be described in the applicable
Prospectus Supplement.
Book-Entry Procedures
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities will be subject to the provisions described below. Upon
issuance, each Series of Debt Securities will be represented by one or more
fully registered global certificates. Each global note will be deposited
with, or on behalf of, the Depository Trust Company (the "DTC"), and
registered in its name or in the name of CEDE & Co. ("Cede"), its nominee. No
Holder will be entitled to receive a note in certificated form, 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.
Holders that are not DTC Participants but desire to purchase, sell or
otherwise transfer ownership of, or other interests, in Debt Securities may do
so only through DTC Participants. In addition, Holders will receive all
distributions of principal and interest from the 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 Debt Securities among DTC Participants on whose behalf it acts and to
receive and transmit distributions of principal of, and interest on, the Debt
Securities. Under the book-entry system, Holders may experience some delay in
receipt of payments, since such payments will be forwarded by the 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 Holders will be the responsibility
of such DTC Participants and will be made in accordance with customary
industry practices. Accordingly, although Holders will not have possession of
the Debt Securities, 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 Holders,
because DTC can only act on behalf of DTC Participants, the ability of Holders
to pledge Debt Securities to persons or entities that are not DTC Participants
or to otherwise act with respect to such Debt Securities, may be limited due
to the lack of physical certificates for such Debt Securities.
None of the Corporation, the Trustee or any other agent of the
Corporation or the 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 Debt Securities or for supervising or reviewing any
records relating to such beneficial ownership interests. Since the only
"Holder" will be Cede, as nominee of DTC, Holders will not be recognized by
the Trustee as Holders, as such term is used in the Indenture, and Holders
will be permitted to exercise the rights of Holders only indirectly through
DTC and DTC Participants. DTC has advised the Corporation that it will take
any action permitted to be taken by a Holder under the Indenture and any
Prospectus Supplement only at the direction of one or more DTC Participants to
whose accounts with DTC the related Debt Securities are credited.
Same-Day Settlement and Payment. All payments made by the Corporation
to the Trustee under each Lease will be in immediately available funds and
will be passed through to DTC in immediately available funds.
The Debt Securities will trade in DTC's Same-Day Funds Settlement System
until maturity, and secondary market trading activity in the Debt Securities
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 Debt Securities.
Certificated Form. The Debt Securities will be issued in fully
registered, certificated form to Holders, or their nominees, rather than to
DTC or its nominee, only if DTC advises the Trustee in writing that it is no
longer willing, able or eligible to discharge properly its responsibilities as
depository with respect to the Debt Securities 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 Trustee
will notify all Holders through DTC Participants of the availability of
such certificated Debt Securities. Upon surrender by DTC of the definitive
global note representing the series of Debt Securities and receipt of
instructions for reregistration, the Trustee will reissue the Debt
Securities in certificated form to Holders or their nominees. (Indenture,
Section 305)
Debt Securities in certificated form will be freely transferable and
exchangeable at the office of the Trustee upon compliance with the
requirements set forth in the Indenture. 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. (Indenture,
Section 305)
Merger and Consolidation
The Indenture does not prevent any consolidation or merger of the
Corporation with or into any other Person, or successive consolidations or
mergers in which the Corporation or its successor or successors may be a
party, or any conveyance, transfer or lease of the property of the Corporation
as an entirety or substantially as an entirety, to any Person, unless:
(i) in case the Corporation shall consolidate with or merge into
another Corporation or convey, transfer or lease its properties
and assets as, or substantially as, an entirety to any Person,
the Corporation formed by such consolidation or into which the
Corporation is merged or the Person which acquires by
conveyance, transfer, or lease the properties and assets of the
Corporation, as, or substantially as, an entirety shall be a
Corporation organized and existing under the laws of the United
States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture
supplemental hereto executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any), interest on and any
Additional Amounts with respect to all the Securities and the
performance of every covenant of this Indenture on the part of
the Corporation to be performed or observed;
(ii) immediately after giving effect to such transaction, no Event of
Default, or event which after notice or lapse of time, or both,
would become an Event of Default, shall have occurred and be
continuing; and
(iii) the Corporation shall have delivered to the Trustee an Officers'
Certificate or an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with the Indenture and that all
conditions precedent therein provided for relating to such
transaction have been complied with. (Indenture, Section 801)
Upon compliance with such provisions by a successor corporation or Person, the
Corporation (except in the case of a lease) would be relieved of its
obligations and covenants under the Indenture and the Debt Securities.
(Indenture, Section 802)
Modification, Amendment and Waiver
Modifications and amendments of the Indenture may be made by the
Corporation and the Trustee with the consent of the Holders of a majority in
principal amount of each series of Debt Securities to be affected if less than
all series are to be affected by such modification; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
debt security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any such debt security;
(b) reduce the principal amount of, rate of interest on, or premium
payable upon the redemption of, any such debt security;
(c) change any place of payment where, or the currency in which, any
debt security or the interest or any premium thereon is payable;
(d) impair the right to institute suit for the enforcement of any
payment on or with respect to any such debt security on or after
the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date); or
(e) reduce the percentage in principal amount of outstanding Debt
Securities the consent of whose Holders is required for
modification or amendment of the Indenture, for waiver of
compliance with certain provisions of the Indenture or for waiver
of certain defaults. (Indenture Section 902)
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities
of such series waive any past default under the Indenture and its consequences,
except a default in the payment of the principal, premium, if any, or interest
on any Debt Securities or in respect of a covenant or provision which under
the Indenture cannot be modified or amended without the consent of the Holder
of each outstanding debt security affected. (Indenture, Section 513)
Events of Default
The following are "Events of Default" under the Indenture with respect
to each series of Debt Securities:
(a) default for more than 30 days in the payment of any interest on any
debt security of such series;
(b) default in the payment of principal of, or premium, if any, on, any
debt security of such series at its Maturity;
(c) default in the performance, or breach, of any other covenant of the
Corporation in the Indenture for more than 60 days after written
notice as provided in the Indenture;
(d) default in the deposit of any sinking fund payment when and as
due by the terms of a Debt Security of such series; and
(e) certain events in bankruptcy, insolvency or reorganization in
respect of the Corporation. (Indenture, Section 501)
If an Event of Default with respect to all Debt Securities of any series
occurs and is continuing, then and in every such case the Trustee or the
Holders of not less than 50% in aggregate principal amount of the outstanding
Debt Securities of such series may, by a notice in writing to the Corporation
(and to the Trustee if given by Holders), declare to be due and payable
immediately the principal amount of all Debt Securities of such series.
However, at any time after such a declaration of acceleration with respect to
the Debt Securities of such series has been made, but before the Stated
Maturity thereof, the Holders of a majority in principal amount of the
outstanding Debt Securities of such series may, subject to certain conditions,
rescind and annul such acceleration if all Events of Default with respect to
the Debt Securities of such series, other than the nonpayment of accelerated
principal, have been cured or waived as provided in the Indenture.
(Indenture, Section 502) For information as to waiver of defaults, see
"Modification and Waiver."
Subject to the duties of the Trustee, if an Event of Default with
respect to the Debt Securities of any series occurs and is continuing, the
Indenture provides that the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request or direction of
any of the Holders of the Debt Securities of such series, unless such Holders
offer to the Trustee reasonable indemnity. (Indenture, Sections 601 and 603)
Subject to such provision for indemnity, certain conditions and certain other
rights of the Trustee, the Holders of a majority in principal amount of the
outstanding Debt Securities of such series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of such series. (Indenture, Section 512)
No Holder of any debt security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder unless such Holder has previously given to the Trustee written
notice of a continuing Event of Default, and unless the Holders of at least
50% in principal amount of the outstanding Debt Securities of such series has
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee has not received from
the Holders of a majority in principal amount of the outstanding Debt
Securities of such series a direction inconsistent with such request and the
Trustee has failed to institute such proceeding within 60 days. (Indenture,
Section 507) However, the Holder of any debt security of such series will
have an absolute right to receive payment of the principal of (and premium, if
any, on) and interest on such debt security on or after the respective Stated
Maturities expressed in such debt security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment. (Indenture, Section 508)
The Indenture requires the Corporation to furnish to the Trustee
annually a statement as to the absence of certain defaults under the
Indenture. (Indenture, Section 1005) The Indenture provides that the Trustee
may withhold notice to the Holders of Debt Securities of any default (except
as to payment of principal or interest with respect to such Debt Securities)
if it considers such withholding to be in the interest of the Holders of such
Debt Securities. (Indenture, Section 602)
Defeasance and Covenant Defeasance
The Indenture provides, if such provision is made applicable to the Debt
Securities of any series, that the Corporation may elect either (A) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B)(i)
to be released from its obligations with respect to such Debt Securities under
Sections 801 (consolidation, merger and sale of assets) and 1005 (certificates
of compliance) and (ii) that Section 501(3) (as to Sections 801 and 1005),
501(5), 501(6) and 501(7) (if Section 501(7) is specified in the Prospectus
Supplement), as described in the last three clauses of the first sentence
under "Events of Default" above, shall not be deemed to be events of default
under the Indenture with respect to such series ("covenant defeasance"), upon
the deposit with the Trustee (or other qualifying trustee), in trust for such
purpose, of money, or Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money, in
an amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
In the case of defeasance, the holders of such Debt Securities are
entitled to receive payments in respect of such Debt Securities solely from
such trust. Such a trust may only be established if, among other things, the
Corporation has delivered to the Trustee an Opinion of Counsel (as specified
in the Indenture) to the effect that the holders of such Debt Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same time as
would have been the case if such defeasance or covenant defeasance had not
occurred. Such Opinion of Counsel, in the case of defeasance under clause (A)
above, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable federal income tax law occurring after the
date of the Indenture. (Indenture, Article Thirteen)
Concerning the Trustee
The Trustee acts as trustee under other indentures with respect to other
indebtedness of the Corporation which ranks pari passu with the Debt
Securities. The Corporation leases facilities financed with the proceeds of
such indebtedness and the Corporation's obligations under such leases secure
payment of such indebtedness. The Corporation also from time to time borrows
from, and maintains deposit accounts with, the Trustee.
PLAN OF DISTRIBUTION
The Debt Securities may be sold in any of the following ways: (1)
through underwriters or dealers; (2) through agents; or (3) directly to one or
more purchasers (through a specific bidding or auction process or otherwise).
The distribution of the Debt Securities 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 Debt Securities, underwriters or agents
may receive compensation from the Corporation or from purchasers of Debt
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Debt Securities 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. If a dealer is utilized
to sell the Debt Securities, the Corporation will sell such Debt Securities to
the dealer as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at any time of
resale.
Underwriters, dealers and agents that participate in the distribution of
Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them from the Corporation and any profit on the resale
of Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter, dealer or agent
will be identified, and any such compensation received from the Corporation
will be described, in the applicable Prospectus Supplement.
Offers to purchase Debt Securities 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, including the terms of any
bidding or auction process.
If so indicated in the Prospectus Supplement, the Corporation will
authorize underwriters, dealers or agents to solicit offers by certain
specified institutions to purchase Debt Securities from the Corporation at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject only to those conditions
set forth in the Prospectus Supplement and the Prospectus Supplement will set
forth the commission payable for the solicitation of such contracts.
Under agreements which may be entered into by the Corporation,
underwriters, dealers and agents who participate in the distribution of Debt
Securities may be entitled to indemnification by the Corporation against
certain liabilities, including liabilities under the Securities Act or to
contribution with respect to payments which the agents, underwriters or
dealers may be required to make in respect thereof.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation does not intend to apply for the listing of any Series of Debt
Securities on a national securities exchange. If the Debt Securities of any
Series are sold to or through underwriters, the underwriters may make a market
in such Debt Securities, as permitted by applicable laws and regulations. No
underwriter would be obligated, however, to make a market in such Debt
Securities, 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 Debt Securities of
any Series.
Certain of the underwriters, dealers 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 Prospectus Supplement relating to the
Offered Securities, the legality of the Debt Securities will be passed upon
for the Corporation by George W. Hearn, Vice President - Law of the
Corporation, and by counsel for any underwriters, dealers and agent. At April
21, 1997, Mr. Hearn owned zero shares of the Corporation's common stock and
had been granted options to purchase 41,600 shares of the Corporation's common
stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997,
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 upon as having
been authorized by the Corporation or the
Underwriters. This Prospectus does not constitute
an offer to sell, or the solicitation of an offer to buy,
the Securities 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
nor any sale made hereunder shall, under any
circumstances, create an implication that there has
not been any change in the facts set forth in this
Prospectus or in the affairs of the Corporation since
the date hereof.
TABLE OF CONTENTS
Prospectus
Page
----
Available Information....................... 3
Incorporation of Certain
Documents by Reference.................... 3
Federal Express Corporation................. 4
Ratio of Earnings to Fixed Charges.......... 4
Use of Proceeds............................. 4
Description of Debt Securities.............. 4
Plan of Distribution........................ 10
Legal Matters............................... 11
Experts..................................... 11
================================================
$813,872,000
FEDEX LOGO
$813,872,000
Debt Securities
___________________
P R O S P E C T U S
___________________
April ___, 1997
================================================
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 22, 1997
PROSPECTUS
FEDEX LOGO
COMMON STOCK
PREFERRED STOCK
_______________________________
Pursuant to this Prospectus and one or more Prospectus Supplements,
Federal Express Corporation (the "Corporation") may offer and sell from time
to time up to $813,872,000 aggregate amount, together or separately, of (i)
shares of preferred stock of the Corporation (the "Preferred Stock") or (ii)
shares of Common Stock, par value $.10 per share of the Corporation (the
"Common Stock") on terms to be determined at the time of sale. The Preferred
Stock and Common Stock are sometimes collectively called the "Securities"
herein.
When a particular issue of Securities is offered (the "Offered
Securities"), a supplement to this Prospectus (the "Prospectus Supplement")
will be delivered with this Prospectus setting forth with respect to the
Offered Securities: (i) the terms of any Preferred Stock offered (the
"Offered Preferred Stock") including the specific designations and stated
value, dividend rights and any liquidation, redemption, conversion, voting and
other rights not described in this Prospectus; (ii) the description of any
Common Stock offered (the "Offered Common Stock"); and (iii) any initial
public offering price, the net proceeds to the Corporation and the other
specific terms of the Offered Securities.
The Securities will be sold directly by the Corporation, through agents
designated from time to time or through underwriters or dealers. If any
agents of the Corporation or any underwriters are involved in the sale of the
Securities, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the Prospectus Supplement.
____________________________
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 April __, 1997.
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 accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. and 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, 1996 filed August 9, 1996.
2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1996, November 30, 1996 and February 28,
1997 filed October 10, 1996, January 14, 1997 and April 11, 1997,
respectively.
3. The Corporation's Current Reports on Form 8-K dated June 5, 1996,
June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997
filed June 10, 1996, June 21, 1996, August 28, 1996, October 22,
1996 and April 21, 1997, 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 Rebecca M. Halvorson, Managing
Director -- Investor Relations, Federal Express Corporation, by mail at Box
727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038.
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.
The U.S. domestic express market is highly competitive and sensitive to
both price and service. Competitors in this market include passenger airlines
offering package express services, regional express delivery concerns,
airfreight forwarders and other express package concerns, principally United
Parcel Service and Airborne Express.
The international express package and freight markets are also highly
competitive. Ability to compete effectively internationally depends
principally upon price, frequency and capacity of scheduled service, extent of
geographic coverage and reliability. Many of the Corporation's competitors in
the international market are government owned, controlled, or subsidized
carriers which may have greater resources, lower costs, less profit
sensitivity and more favorable operating conditions than the Corporation. The
Corporation's principal competitors in the international market are foreign
national air carriers, United States passenger airlines and all-cargo airlines
and other express package companies including United Parcel Service and DHL.
The Corporation operates in a heavily regulated environment. The
Department of Transportation exercises regulatory authority over the economic
aspects of air transportation while the Federal Aviation Administration
regulates safety aspects. The Environmental Protection Agency is authorized
to establish standards governing aircraft noise and engine emissions, and the
Corporation's communication facilities are subject to the Federal
Communication Commission Act. In addition to U. S. regulation, the
Corporation's international operations are also governed by bilateral
treaties between the United States and the countries served. For a
complete discussion of the Corporation's competitive and regulatory
environments as well as its services, operations and properties, see Item 1
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
May 31, 1996.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
February February
Year Ended May 31 29 28
-------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x
* The Corporation had zero shares of Preferred Stock outstanding for the
periods covered in this table; therefore, no Preferred Stock dividends
were paid during these periods.
- ----------
(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
Unless otherwise set forth in a Prospectus Supplement, the net proceeds
from the sale of the Securities will be added to the general funds of the
Corporation and used for general corporate purposes.
DESCRIPTION OF PREFERRED STOCK
Under its Restated Certificate of Incorporation (the "Certificate of
Incorporation"), the Corporation is authorized to adopt resolutions providing
for the issuance, in one or more series, of up to 4,000,000 shares of its
Preferred Stock, no par value, with such powers, preferences and relative
rights and qualifications, limitations or restrictions thereof as shall be
adopted by the Board of Directors and permitted by Delaware law and the
Corporation's Certificate of Incorporation. On April 21, 1997, there were
zero shares of Preferred Stock outstanding.
The description below sets forth certain general terms and provisions of
the Preferred Stock covered by this Prospectus. The specific terms of the
Offered Preferred Stock will be described in the Prospectus Supplement
relating to such Offered Preferred Stock. The following summaries of certain
provisions of the Preferred Stock do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the
Certificate of Incorporation and the resolution of the Board of Directors
authorizing a particular series of Preferred Stock (the "Series Resolution").
If so indicated in the Prospectus Supplement, the terms of the Offered
Preferred Stock may differ from the terms set forth below, except those terms
required by the Certificate of Incorporation.
General
Under the Certificate of Incorporation, each series of Preferred Stock
of the Corporation ranks prior to the Common Stock of the Corporation with
respect to both dividends and distribution of assets on liquidation,
dissolution or winding up. The Preferred Stock will, when issued, be fully
paid and non-assessable and the holders thereof will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the Offered
Preferred Stock for specific terms including:
(i) The designation of the series of Preferred Stock, which may be by
distinguishing number, letter or title;
(ii) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(iii) The dividend rate or rates of such shares, the date at which
dividends, if declared, will be payable, and whether or not
such dividends are to be cumulative and, if cumulative, the
date or dates from which dividends shall be cumulative;
(iv) The amounts payable on shares of such Preferred Stock in the
event of voluntary or involuntary liquidation, dissolution or
winding up;
(v) The redemption rights and price or prices, if any, for the
shares of such Preferred Stock;
(vi) The terms and amount of any sinking fund or analogous fund
providing for the purchase or redemption of the shares of such
Preferred Stock, if any;
(vii) The voting rights, if any, granted to the holders of the
shares of such Preferred Stock in addition to those required
by Delaware law or the Certificate of Incorporation;
(viii) Whether the shares of Preferred Stock shall be convertible
into shares of the Corporation's Common Stock or any other
class of the Corporation's capital stock, and if convertible,
the conversion price or prices, any adjustment thereof and any
other terms and conditions upon which such conversion shall be
made;
(ix) Any other rights, preferences, restrictions, limitations or
conditions relative to the shares of Preferred Stock as may be
permitted by Delaware law or the Certificate of Incorporation;
(x) Any listing of such Preferred Stock on any securities exchange;
and
(xi) A discussion of federal income tax considerations applicable to
such Preferred Stock.
Subject to the Certificate of Incorporation and to any limitations
contained in any outstanding Preferred Stock, the Corporation may issue
additional series of Preferred Stock, at any time or from time to time, with
such powers, preferences, rights and qualifications, limitations or
restrictions thereof, as the Board of Directors shall determine, all without
further action of the stockholders, including holders of then outstanding
Preferred Stock of the Corporation, if any.
Restrictions
So long as any Preferred Stock is outstanding, the Corporation cannot
(1) declare or pay a dividend upon, or make a distribution upon, the
Corporation's Common Stock (other than a dividend or distribution payable in
shares of such Common Stock); (2) purchase or redeem shares of Common Stock
without consent of a certain number of holders of the outstanding Preferred
Stock established by the Board of Directors when authorizing the issuance of
such outstanding Preferred Stock; or (3) pay any money into, or make any money
available for, a sinking fund for the purchase or redemption of any Common
Stock, unless in each instance all dividends on all outstanding shares of
Preferred Stock for all past dividend periods shall have been paid, all
dividends for the current dividend period shall have been declared or paid and
sufficient funds for the payment thereof set apart and any arrears in the
mandatory redemption of the Preferred Stock shall have been made good.
Voting Rights
Holders of the Preferred Stock will have no right to vote for the
election of directors of the Corporation or on any other matter unless a vote
of such class is required by Delaware law, the Certificate of Incorporation or
the Series Resolution.
DESCRIPTION OF COMMON STOCK
Under the Certificate of Incorporation, the Corporation is authorized to
issue up to 200,000,000 shares of its Common Stock $.10 par value per share.
On April 18, 1997, there were outstanding (a) 114,637,988 shares of Common
Stock and (b) employee stock options to purchase an aggregate of 6,450,792
shares of Common Stock (of which options to purchase an aggregate of 2,513,634
shares of Common Stock were currently exercisable).
The following description is a summary of certain provisions of the
Common Stock and does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Corporation's bylaws and
Certificate of Incorporation. The Prospectus Supplement relating to an
offering of the Offered Common Stock will describe terms relevant thereto,
including the number of shares offered, the initial offering price, market
price and dividend information.
General
Each holder of Common Stock is entitled to one vote for each share held
on all matters voted upon by the stockholders of the Corporation, including
the election of directors. The Common Stock does not have cumulative voting
rights. The election of each class of the Board of Directors is decided by
the holders of a plurality of the shares entitled to vote in person or by
proxy at a meeting for the election of directors. See "Description of
Preferred Stock-Voting Rights" for a discussion of the voting rights of any
Preferred Stock that may be issued in the future.
In the event of any liquidation, dissolution or winding up of the
Corporation, after the payment or provision for payment of the debts and other
liabilities of the Corporation and the preferential amounts to which holders
of the Corporation's Preferred Stock are entitled (if any shares of Preferred
Stock are then outstanding), the holders of Common Stock are entitled to share
equally in the remaining assets of the Corporation.
The outstanding shares of Common Stock are, and any shares of Common
Stock offered hereby upon issuance and payment therefor will be, fully paid
and non-assessable. The Common Stock has no preemptive or conversion rights
and there are no redemption or sinking fund provisions applicable thereto.
The Common Stock of the Corporation is listed on the New York Stock
Exchange (symbol "FDX").
Dividends
The Corporation's current policy is to not pay dividends on its Common
Stock, but to reinvest earnings in its business. However, if the Corporation
changes its current policy and decides to pay dividends on its Common Stock,
holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor
subject to the rights of the holders of any outstanding shares of Preferred
Stock. The holders of the Common Stock will share equally, share for share,
in such dividends.
Anti-takeover Provisions
Classification of Board of Directors. The Board of Directors of the
Corporation is divided into three classes, having staggered terms of office of
three years each. The effect of a classified board of directors may be to
make it more difficult to acquire control of the Corporation.
Change in Control. The Corporation's Certificate of Incorporation
includes provisions designed to prevent the use of certain tactics in
connection with a potential takeover of the Corporation. Article Five of the
Certificate of Incorporation requires the affirmative vote of 80% of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors to approve certain business
combinations (including certain mergers, consolidations, security issuances,
reclassifications, recapitalizations, liquidations, dissolutions, sales,
leases, exchanges, mortgages, pledges, transfers of a substantial portion of
assets) involving the Corporation or any subsidiary and the beneficial owner
of more than 10% of the voting power of the outstanding shares of capital stock
(a "Related Person"), unless either (i) such business combination is approved
by a majority of the directors who are not affiliated with the Related Person
and who were directors before the Related Person became a Related Person or
(ii) the stockholders receive a "fair price" for their holdings and other
procedural requirements are met. The Certificate of Incorporation also
requires all stockholder action be taken at a duly called meeting of such
stockholders and prohibits taking action by written consent of stockholders.
Supermajority Voting. The classified board, fair price and stockholder
consent provisions, as well as certain other provisions of the Certificate of
Incorporation, may be altered, amended or repealed only by the affirmative vote
of 80% or more of the outstanding capital stock of the Corporation entitled to
vote on such action.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York, Shareholder Services, P.O. Box 2500, Jersey City,
NJ 07303-2500.
PLAN OF DISTRIBUTION
The Securities may be sold in any of the following ways: (1) through
underwriters or dealers; (2) through agents; or (3) directly to one or more
purchasers (through a specific bidding or auction process or otherwise).
The distribution of the Securities 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 Securities, underwriters or agents may
receive compensation from the Corporation or from purchasers of Securities for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell Securities 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. If a dealer is utilized to sell the Securities, the
Corporation will sell such Securities to the dealer as principal. The dealer
may then resell such Securities to the public at varying prices to be
determined by such dealer at any time of resale.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Corporation and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions,
under the Securities Act. Any such underwriter, dealer or agent will be
identified, and any such compensation received from the Corporation will be
described, in the applicable Prospectus Supplement.
Offers to purchase Securities 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, including the terms of any
bidding or auction process.
If so indicated in the Prospectus Supplement, the Corporation will
authorize underwriters, dealers or agents to solicit offers by certain
specified institutions to purchase Securities from the Corporation at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject only to those conditions
set forth in the Prospectus Supplement and the Prospectus Supplement will set
forth the commission payable for the solicitation of such contracts.
Under agreements which may be entered into by the Corporation,
underwriters, dealers and agents who participate in the distribution of
Securities may be entitled to indemnification by the Corporation against
certain liabilities, including liabilities under the Securities Act or to
contribution with respect to payments which the agents, underwriters or
dealers may be required to make in respect thereof.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation does not intend to apply for the listing of any Series of
Preferred Stock on a national securities exchange. If the Preferred Stock is
sold to or through underwriters, the underwriters may make a market in such
stock, as permitted by applicable laws and regulations. No underwriter would
be obligated, however, to make a market in such stock, 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 Preferred Stock.
Certain of the underwriters, dealers 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 Prospectus Supplement relating to the
Offered Securities, the legality of the Securities will be passed upon for the
Corporation by George W. Hearn, Vice President - Law of the Corporation, and
by counsel for any underwriters, dealers and agent. At April 21, 1997, Mr.
Hearn owned zero shares of the Corporation's common stock and had been granted
options to purchase 41,600 shares of the Corporation's common stock. Of the
options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997,
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 upon as having
been authorized by the Corporation or the
Underwriters. This Prospectus does not constitute
an offer to sell, or the solicitation of an offer to buy,
the Securities 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
nor any sale made hereunder shall, under any
circumstances, create an implication that there has
not been any change in the facts set forth in this
Prospectus or in the affairs of the Corporation since
the date hereof.
TABLE OF CONTENTS
Prospectus
Page
----
Available Information....................... 3
Incorporation of Certain
Documents by Reference.................. 3
Federal Express Corporation................. 4
Ratio of Earnings to Fixed Charges.......... 4
Use of Proceeds............................. 5
Description of Preferred Stock.............. 5
Description of Common Stock................. 6
Plan of Distribution........................ 8
Legal Matters............................... 9
Experts..................................... 9
===========================================================
$813,872,000
FEDEX LOGO
$813,872,000
Preferred Stock
Common Stock
____________________
P R O S P E C T U S
____________________
April ___, 1997
===========================================================
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:
Printing and Engraving........................................... 25,000
Fees of Transfer Agent and Registrar............................. 10,000
Attorneys' Fees and Expenses..................................... 500,000
Trustees' Fees................................................... 20,000
Accounting Fees and Expenses..................................... 20,000
Blue Sky Fees and Expenses....................................... 5,000
Rating Agency Fees............................................... 125,000
New York Stock Exchange Listing Fee.............................. 25,000
Miscellaneous.................................................... 5,000
--------
Total $735,000
========
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), 1(b), 1(c), 1(d) and
1(e) 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, as amended.
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+
1(c) Form of Underwriting Agreement relating to Debt Securities+
1(d) Form of Underwriting Agreement relating to Preferred Stock+
1(e) Form of Underwriting Agreement relating to Common Stock+
4(a)(1) Pass Through Trust Agreement, dated as of June 1, 1996 between
Federal Express Corporation and the Pass Through Trustee for
an offering of Pass Through Certificates+
4(a)(2) Form of Pass Through Certificate (included in Exhibit
4(a)(1))
4(a)(3) Form of Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee for an offering of
Pass Through Certificates
4(a)(4) Form of Pass Through Certificate (included in Exhibit
4(a)(3))
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)(1) 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(c)(2) Form of Trust Indenture and Security Agreement (Leased Aircraft
Indenture - Prefunding) between the Owner Trustee and the
Indenture Trustee, relating to Equipment Certificates
(Leased Aircraft Certificates) in connection with an
offering of Pass Through Certificates*+
4(d) 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 (Filed as Exhibit 4(d)(1) to
Registrant's Registration Statement on Form S-3, Commission
File No. 33-56569, and incorporated herein by reference.)*
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, as Lessee, the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee,
relating to Equipment Certificates in connection with an
offering of Pass Through Certificates (Leased Aircraft
Certificates - Prefunding)*+
4(e)(3) 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 (Filed as Exhibit 4(e)(2) to Registrant's
Registration Statement on Form S-3, Commission File No. 33-
56569, and incorporated herein by reference.)*
4(f)(1) 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(f)(2) Form of Trust Agreement between the Owner Participant and the
Owner Trustee relating to Equipment Certificates (Leased
Aircraft Certificates - Prefunding) in connection with an
offering of Pass Through Certificates.*+
4(g)(1) 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(g)(2) Form of Lease Agreement between the Owner Trustee, as the
Lessor, and Federal Express Corporation, as Lessee, relating to
Equipment Certificates (Leased Aircraft
Certificates-Prefunding) in connection with an offering of
Pass Through Certificates.*+
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.)
4(i) Form of Indenture dated as of July 1, 1996 between the
Registrant and The First National Bank of Chicago, as Trustee+
4(j) Form of Debt Security (included in Exhibit 4(i))
4(k) The description of the securities contained in the Registrant's
Registration Statement on Form 8-A filed with the Commission
on December 15, 1978 under Section 12 of the Exchange Act,
as amended, including any amendment or report filed for the
purpose of updating such description.+
4(l) Certain provisions of Registrant's Articles of
Incorporation relating to the Common Stock and defining the
rights of security holders (Filed as Exhibit 3.1 to
Registrant's 1993 Annual Report on Form 10-K, Commission
File No. 1-7806, 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) Opinion of Bingham, Dana & Gould, counsel for the Pass
Through Trustee+
5(c) Opinion of Ray, Quinney & Nebeker, counsel for the Owner
Trustee+
5(d)(1) Opinion of George W. Hearn, Vice Federal Express Corporation,
relating to Equipment Trust Certificates and Pass Through
Certificates+
5(d)(2) Opinion of George W. Hearn, Vice President - Law of
Federal Express Corporation, relating to Debt Securities,
Common Stock and Preferred Stock+
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 Bingham, Dana & Gould, special counsel for the
Pass Through Trustee (included under the caption "Certain
Massachusetts 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 FY97 Third Quarterly Report on
Form 10-Q, Commission File No. 1-7806, and incorporated
herein by reference.)
15 Letters of Arthur Andersen LLP, independent public
accountants (Filed as Exhibits 15.1 to Registrant's FY97
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) Consent of Bingham, Dana & Gould, counsel for the Pass
Through Trustee (included in Exhibit 5(b))
23(c) Consent of Ray, Quinney & Nebeker, counsel for the Owner
Trustee (included in Exhibit 5(c))
23(d) Consent of George W. Hearn (included in Exhibits 5(d)(1)
and 5(d)(2))
23(e) 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 State Street Bank and Trust
Company, 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 The First National Bank of
Chicago, as Trustee+
- ----------
* 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. 333-07691 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Memphis,
State of Tennessee, on this 22nd day of April 1997.
FEDERAL EXPRESS CORPORATION
(Registrant)
By: /s/ MICHAEL W. HILLARD
----------------------
Michael W. Hillard
Vice President and Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement No. 333-07691 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 April 22, 1997
--------------------- and Chief Financial Officer
Alan B. Graf, Jr. (Principal Financial Officer)
/s/ MICHAEL W. HILLARD Vice President and Controller April 22, 1997
---------------------- (Principal Accounting Officer)
Michael W. Hillard
/s/ ROBERT H. ALLEN Director
-------------------
Robert H. Allen
/s/ HOWARD H. BAKER, JR.* Director
-------------------------
Howard H. Baker, Jr.
/s/ ROBERT L. COX* Director
-------------------
Robert L. Cox
/s/ RALPH D. DENUNZIO* Director
-----------------------
Ralph D. DeNunzio
-------------------- Director
Judith L. Estrin
/s/ PHILIP GREER* Director
-----------------
Philip Greer
/s/ J. R. HYDE, III* Director
-------------------
J. R. Hyde, III
--------------------- Director
Charles T. Manatt
/s/ GEORGE J. MITCHELL* Director
-----------------------
George J. Mitchell
/s/ JACKSON W. SMART, JR.* Director
--------------------------
Jackson W. Smart, Jr.
/s/ JOSHUA I. SMITH* Director
--------------------
Joshua I. Smith
----------------- Director
Paul S. Walsh
/s/ PETER S. WILLMOTT* Director
----------------------
Peter S. Willmott
*By: /s/ ALAN B. GRAF, JR. April 22, 1997
---------------------
Alan B. Graf, Jr.
Attorney-in-Fact
EXHIBIT INDEX
Exhibits Exhibit Descriptions
- -------- --------------------
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+
1(c) Form of Underwriting Agreement relating to Debt Securities+
1(d) Form of Underwriting Agreement relating to Preferred Stock+
1(e) Form of Underwriting Agreement relating to Common Stock+
4(a)(1) Pass Through Trust Agreement, dated as of June 1, 1996 between
Federal Express Corporation and the Pass Through Trustee for
an offering of Pass Through Certificates+
4(a)(2) Form of Pass Through Certificate (included in Exhibit
4(a)(1))
4(a)(3) Form of Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee for an offering of
Pass Through Certificates
4(a)(4) Form of Pass Through Certificate (included in Exhibit
4(a)(3))
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)(1) 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(c)(2) Form of Trust Indenture and Security Agreement (Leased Aircraft
Indenture - Prefunding) between the Owner Trustee and the
Indenture Trustee, relating to Equipment Certificates
(Leased Aircraft Certificates) in connection with an
offering of Pass Through Certificates*+
4(d) 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 (Filed as Exhibit 4(d)(1) to
Registrant's Registration Statement on Form S-3, Commission
File No. 33-56569, and incorporated herein by reference.)*
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, as Lessee, the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee,
relating to Equipment Certificates in connection with an
offering of Pass Through Certificates (Leased Aircraft
Certificates - Prefunding)*+
4(e)(3) 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 (Filed as Exhibit 4(e)(2) to Registrant's
Registration Statement on Form S-3, Commission File No.
33-56569, and incorporated herein by reference.)*
4(f)(1) 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(f)(2) Form of Trust Agreement between the Owner Participant and the
Owner Trustee relating to Equipment Certificates (Leased
Aircraft Certificates - Prefunding) in connection with an
offering of Pass Through Certificates.*+
4(g)(1) 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(g)(2) Form of Lease Agreement between the Owner Trustee, as the
Lessor, and Federal Express Corporation, as Lessee, relating
to Equipment Certificates (Leased Aircraft Certificates-
Prefunding) in connection with an offering of Pass Through
Certificates.*+
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.)
4(i) Form of Indenture dated as of July 1, 1996 between the
Registrant and The First National Bank of Chicago, as Trustee+
4(j) Form of Debt Security (included in Exhibit 4(i))
4(k) The description of the securities contained in the Registrant's
Registration Statement on Form 8-A filed with the Commission
on December 15, 1978 under Section 12 of the Exchange Act,
as amended, including any amendment or report filed for the
purpose of updating such description.+
4(l) Certain provisions of Registrant's Articles of
Incorporation relating to the Common Stock and defining the
rights of security holders (Filed as Exhibit 3.1 to
Registrant's 1993 Annual Report on Form 10-K, Commission
File No. 1-7806, 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) Opinion of Bingham, Dana & Gould, counsel for the Pass
Through Trustee+
5(c) Opinion of Ray, Quinney & Nebeker, counsel for the Owner
Trustee+
5(d)(1) Opinion of George W. Hearn, Vice President - Law of
Federal Express Corporation, relating to Equipment Trust
Certificates and Pass Through Certificates+
5(d)(2) Opinion of George W. Hearn, Vice President - Law of
Federal Express Corporation, relating to Debt Securities,
Common Stock and Preferred Stock+
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 Bingham, Dana & Gould, special counsel for the
Pass Through Trustee (included under the caption "Certain
Massachusetts 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 FY97 Third Quarterly Report on
Form 10-Q, Commission File No. 1-7806, and incorporated
herein by reference.)
15 Letters of Arthur Andersen LLP, independent public
accountants (Filed as Exhibits 15.1 to Registrant's FY97
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) Consent of Bingham, Dana & Gould, counsel for the Pass
Through Trustee (included in Exhibit 5(b))
23(c) Consent of Ray, Quinney & Nebeker, counsel for the Owner
Trustee (included in Exhibit 5(c))
23(d) Consent of George W. Hearn (included in Exhibits 5(d)(1)
and 5(d)(2))
23(e) 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 State Street Bank and Trust
Company, 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 The First National Bank of
Chicago, as Trustee+
- ----------
* 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 4(a)(3)
PASS THROUGH TRUST AGREEMENT
Dated as of __________, ____
between
______________________________________,
as Pass Through Trustee
and
FEDERAL EXPRESS CORPORATION
CROSS REFERENCE SHEET
Between
Provisions of the Trust Indenture Act of 1939, as amended,
and the Pass Through Trust Agreement:
Section of
Section of the Act the Agreement
- ------------------ -------------
310(a)(1) and (2)...................................................10.02
310(a)(3)...........................................................10.05
310(a)(4)........................................................Art. VII
310(a)(5)...........................................................10.02
310(b)(i)-(iii)..............................................10.01, 10.03
310(b)(remainder).......................................................*
310(c).......................................................Inapplicable
311(a)..................................................................*
311(b)..............................................................10.06
311(c).......................................................Inapplicable
312(a).........................................................2.12, 4.01
312(b)..................................................................*
312(c)...............................................................4.02
313(a)...............................................................4.04
313(b)(1)...............................................................*
313(b)(2)...............................................................*
313(c)...............................................................4.04
313(d)..................................................................*
314(a)...............................................................4.03
314(b).......................................................Inapplicable
314(c)(1) and (2)...................................................13.07
314(c)(3)....................................................Inapplicable
314(d)(1)...............................................................*
314(d)(2)...............................................................*
314(d)(3)...............................................................*
314(e)..............................................................13.07
314(f).......................................................Inapplicable
315(a), (c) and (d).....................................................*
315(b)...............................................................7.11
315(e)..................................................................*
316(a)(1)......................................................7.09, 7.10
316(a)(2)...........................................................11.01
316(a)(last sentence)................................................6.04
316(b)...............................................................7.08
316(c)............................................................6.01(b)
317(a).........................................................7.03, 7.05
317(b)...............................................................3.04
318(a)..............................................................13.08
_____________
*Intentionally deleted.
TABLE OF CONTENTS
Page
----
PARTIES................................................................... 1
RECITALS.................................................................. 1
ARTICLE I
DEFINITIONS
ARTICLE II
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF EQUIPMENT CERTIFICATES
SECTION 2.01. Amount Unlimited; Issuable in Series; Series Supplements.... 11
SECTION 2.02. Acquisition of Equipment Certificates....................... 14
SECTION 2.03. Initial Certificateholders as Grantors...................... 16
SECTION 2.04. Limitation of Powers. ...................................... 16
SECTION 2.05. Execution of Pass Through Certificates. .................... 16
SECTION 2.06. Certificate of Authentication. ............................. 17
SECTION 2.07. Form and Denomination of Pass Through Certificates. ........ 17
SECTION 2.08. Registration, Transfer and Exchange. ....................... 17
SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through
Certificates................................................ 18
SECTION 2.10. Cancellation of Pass Through Certificates; Destruction
Thereof..................................................... 19
SECTION 2.11. Temporary Pass Through Certificates......................... 20
SECTION 2.12. Pass Through Certificates Issuable in the Form of a
Registered Global Certificate............................... 20
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. Covenants of the Company. .................................. 22
SECTION 3.02. Offices for Payments; Registrar............................. 23
SECTION 3.03. Representations and Warranties of the Pass Through
Trustee..................................................... 24
SECTION 3.04. Paying Agents. ............................................. 25
SECTION 3.05. No Representations or Warranties as to Documents............ 25
SECTION 3.06. Payments from Trust Property Only........................... 26
SECTION 3.07. Limitation of the Company's Liability. ..................... 26
ARTICLE IV
CERTIFICATEHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE PASS THROUGH TRUSTEE
SECTION 4.01. Certificateholder Lists; Ownership of Pass Through
Certificates. .............................................. 26
SECTION 4.02. Disclosure of Certificateholder Lists. ..................... 27
SECTION 4.03. Reports by the Company. .................................... 27
SECTION 4.04. Reports by the Pass Through Trustee. ....................... 27
ARTICLE V
RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY
SECTION 5.01. Certificate Account and Special Payments Account............ 28
SECTION 5.02. Distributions from Certificate Account and Special Payments
Account..................................................... 28
SECTION 5.03. Statements to Certificateholders. .......................... 30
SECTION 5.04. Investment of Special Payment Moneys........................ 30
SECTION 5.05. Withholding Taxes. ......................................... 31
ARTICLE VI
CONCERNING THE CERTIFICATEHOLDERS
SECTION 6.01. Evidence of Action Taken by Certificateholders. ............ 31
SECTION 6.02. Proof of Execution of Instruments and of Holding of
Certificates. .............................................. 32
SECTION 6.03. Certificateholders to Be Treated as Owners. ................ 32
SECTION 6.04. Pass Through Certificates Owned by the Company and Related
Owner Trustees Deemed Not Outstanding. ..................... 32
SECTION 6.05. Right of Revocation of Action Taken......................... 33
SECTION 6.06. ERISA....................................................... 34
ARTICLE VII
REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS
SECTION 7.01. Events of Default. ......................................... 34
SECTION 7.02. Incidents of Sale of Equipment Certificates. ............... 36
SECTION 7.03. Pass Through Trustee May Prove Debt. ....................... 37
SECTION 7.04. Remedies Cumulative......................................... 37
SECTION 7.05. Suits for Enforcement....................................... 38
SECTION 7.06. Discontinuance of Proceedings. ............................. 38
SECTION 7.07. Limitations on Suits by Certificateholders. ................ 38
SECTION 7.08. Unconditional Right of Certificateholders to Receive
Principal, Interest and Premium, and to Institute Certain
Suits. ..................................................... 39
SECTION 7.09. Control by Certificateholders............................... 39
SECTION 7.10. Waiver of Past Events of Default............................ 40
SECTION 7.11. Notice of Pass Through Defaults. ........................... 40
ARTICLE VIII
CONCERNING THE PASS THROUGH TRUSTEE
SECTION 8.01. Acceptance by Pass Through Trustee.......................... 41
SECTION 8.02. Pass Through Trustee's Liens. .............................. 41
SECTION 8.03. Certain Rights of the Pass Through Trustee. ................ 41
SECTION 8.04. Pass Through Trustee Not Responsible for Recitals........... 43
SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through
Certificates; Collections. ................................ 43
SECTION 8.06. Moneys Held by Pass Through Trustee......................... 43
SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's
Certificate................................................. 43
SECTION 8.08. Compensation................................................ 44
ARTICLE IX
INDEMNIFICATION OF
PASS THROUGH TRUSTEE BY THE COMPANY
ARTICLE X
SUCCESSOR TRUSTEES
SECTION 10.01. Resignation and Removal of Pass Through Trustee;
Appointment of Successor................................... 45
SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee... 47
SECTION 10.03. Acceptance of Appointment by Successor Trustee............. 47
SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business
of Pass Through Trustee. .................................. 48
SECTION 10.05. Appointment of Separate Pass Through Trustees. ............ 49
SECTION 10.06. Preferential Claims. ...................................... 51
ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO THIS
PASS THROUGH AGREEMENT AND OTHER DOCUMENTS
SECTION 11.01. Supplemental Agreements Without Consent of
Certificateholders......................................... 51
SECTION 11.02. Supplemental Agreements With Consent of
Certificateholders......................................... 53
SECTION 11.03. Effect of Supplemental Agreements.......................... 55
SECTION 11.04. Documents to Be Given to Trustee........................... 55
SECTION 11.05. Notation on Pass Through Certificates in Respect of
Supplemental Agreements.................................... 55
SECTION 11.06. Trust Indenture Act........................................ 55
SECTION 11.07. Revocation and Effect of Consents.......................... 55
SECTION 11.08. Amendments, Waivers, etc., of Related Indenture
Documents.................................................. 55
ARTICLE XII
TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS
SECTION 12.01. Termination of Pass Through Trusts......................... 56
SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for
Payment of Pass Through Certificates....................... 57
SECTION 12.03. Repayment of Moneys Held by Paying Agent................... 57
SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying
Agent Unclaimed for Two Years and Eleven Months............ 57
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Capacity in Which Acting................................... 57
SECTION 13.02. No Legal Title to Trust Property in Certificateholders..... 57
SECTION 13.03. Certificates Nonassessable and Fully Paid.................. 58
SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the
Pass Through Trustee and the Certificateholders............ 58
SECTION 13.05. Limitation on Rights of Certificateholders................. 58
SECTION 13.06. Notices.................................................... 58
SECTION 13.07. Officer's Certificate and Opinion of Counsel;
Statements to Be Contained Therein......................... 59
SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the
Trust Indenture Act........................................ 60
SECTION 13.09. Severability............................................... 60
SECTION 13.10. No Oral Modifications or Continuing Waivers................ 61
SECTION 13.11. Successors and Assigns..................................... 61
SECTION 13.12. Headings. ................................................. 61
SECTION 13.13. Normal Commercial Relations. .............................. 61
SECTION 13.14. Governing Law; Counterpart Form. .......................... 61
SECTION 13.15. Distributions Due on Days Other than Business Days......... 61
SECTION 13.16. Registration of Equipment Certificates in Name of
Subordination Agent........................................ 61
Exhibit A Form of Pass Through Certificate
Exhibit B Form of Series Supplement
PASS THROUGH TRUST AGREEMENT
PASS THROUGH TRUST AGREEMENT dated as of __________, ____,
between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Company"), and ___________________________________, a ___________________, as
Pass Through Trustee (together with any successor hereunder or under any Pass
Through Trust as herein provided, the "Pass Through Trustee").
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, from time to time the Company will enter into a Series
Supplement with the Pass Through Trustee named therein in accordance with
this Pass Through Agreement pursuant to which the Pass Through Trustee will
declare the creation of a separate Pass Through Trust for the benefit of
the Certificateholders of the Series of Pass Through Certificates to be
issued pursuant to such Pass Through Trust, and the initial
Certificateholders of such Series, as the grantors of such Pass Through
Trust, by their respective acceptances of such Pass Through Certificates,
will join in the creation of such Pass Through Trust;
WHEREAS, the Pass Through Certificates of each Series will
evidence fractional undivided interests in the Pass Through Trust pursuant
to which they will be issued, and will have no rights, benefits or interest
in respect of any other separate Pass Through Trust or the Trust Property
held in any such other Pass Through Trust subject, however, to the
provisions of any Intercreditor Agreement to which one or more Pass Through
Trusts may be a party;
WHEREAS, for each Pass Through Trust, the Pass Through Trustee
will purchase one or more issues of Equipment Certificates of the same
interest rate and ranking in respect of priority of payment as, and final
maturity dates not later than the final scheduled Regular Distribution Date
of, the Series of Pass Through Certificates to be issued in respect of such
Pass Through Trust and will hold such Equipment Certificates in trust as
Trust Property for the benefit of the Certificateholders of such Series;
WHEREAS, to facilitate the sale of Equipment Certificates to, and
the purchase of Equipment Certificates by, the Pass Through Trustee on
behalf of each such Pass Through Trust, the Company has duly authorized the
execution and delivery of this Pass Through Agreement and each Series
Supplement as the "issuer," as such term is defined in and solely for
purposes of the Securities Act, of the Pass Through Certificates to be
issued in respect of each Pass Through Trust and as the "obligor," as such
term is defined in and solely for purposes of the Trust Indenture Act, with
respect to all such Pass Through Certificates and is undertaking to perform
certain administrative duties hereunder and to pay the fees and expenses of
the Pass Through Trustee; WHEREAS, this Pass Through Agreement, as amended
or supplemented from time to time, is subject to the provisions of the
Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the
parties hereto as follows:
ARTICLE I
DEFINITIONS
The following terms (except as otherwise expressly provided or
unless the context otherwise clearly requires) for all purposes of this
Pass Through Agreement have the respective meanings specified in this
Article I, as amended or supplemented by the provisions of the Series
Supplement for a particular Series. All other terms used in this Pass
Through Agreement that are defined in the Trust Indenture Act or the
definitions of which in the Securities Act are referred to in the Trust
Indenture Act (except as herein otherwise expressly provided or unless the
context otherwise clearly requires), have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act.
All accounting terms used and not expressly defined herein have
the meanings given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" means
the accounting principles that are generally accepted at the date or time
of any computation or otherwise at the date hereof.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Pass Through Agreement as a whole and not to
any particular Article, Section or other subdivision. References to
designated "Articles," "Sections," "subsections" and other subdivisions of
this Pass Through Agreement are to the designated Articles, Sections,
subsections and other subdivisions of this Pass Through Agreement. The
terms defined in this Article include the plural as well as the singular.
"Affiliate," has for any Person, the meaning specified in Rule
0-2 under the Trust Indenture Act.
"Business Day" means, for any Series, any day other than
Saturday, Sunday or other day on which banking institutions in the States
of _____________, New York or Tennessee, or any other state in which the
Pass Through Trustee or any Related Indenture Trustee or Related Owner
Trustee for the Pass Through Trust for such Series maintains an office for
the receipt or disbursement of funds for the transactions contemplated
herein or in any Indenture Documents for the Equipment Certificates that
constitute Trust Property of such Pass Through Trust, are authorized or
required by law to close.
"Certificate Account" means, for any Pass Through Trust, the
account or accounts created and maintained for such Pass Through Trust
pursuant to Section 5.01(a) hereof and the related Series Supplement.
"Certificateholder" means, for any Series, the Person who is
the registered holder of any Pass Through Certificate as evidenced on the
Register for such Series.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission of
the United States, or if at any time after the execution and delivery of
this Pass Through Agreement such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Company" means Federal Express Corporation, a Delaware
corporation, and its permitted successors and assigns hereunder.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of any Intercreditor Agreement.
"Corporate Trust Office" means the corporate trust office of
the Pass Through Trustee in the city in which the Pass Through Trustee's
corporate trust business shall be administered and which the Pass Through
Trustee shall have specified by notice in writing to the Company and the
Certificateholders of each Series.
"Cut-off Date for Pass Through Trust" means, for any Pass
Through Trust, the date specified as such in the related Series Supplement,
provided that in no event shall such Cut-off Date for Pass Through Trust be
later than __ days after the creation of such Pass Through Trust.
"Delivery Date" means, for any Pass Through Trust, the date
specified in the related Series Supplement for the purchase of the related
Equipment Certificates, which date may be delayed for any such Equipment
Certificates as provided in Section 2.02 hereof.
"Delayed Delivery Notice" means, for any Pass Through Trust, a
certificate signed by a Responsible Officer of the Company (i) requesting
that the Pass Through Trustee temporarily delay purchase of any related
Equipment Certificates to a date later than the applicable Issuance Date,
(ii) stating the amount of the purchase price of each such Equipment
Certificate and the aggregate purchase price of all such Equipment
Certificates, (iii) stating the reasons for such delay and (iv) with
respect to any Participation Agreement for such delayed Equipment
Certificates, either (1) setting or resetting the Delivery Date (which
shall be on or prior to the applicable Cut-off Date for Pass Through
Trust), or (2) indicating that such Delivery Date will be set by subsequent
written notice not less than one Business Day prior to such new Delivery
Date (which shall be on or prior to the applicable Cut-off Date for Pass
Through Trust).
"Delayed ECs" means, for any Pass Through Trust, any Equipment
Certificates that are the subject of a Delayed Delivery Notice.
"Deposit Trust" means a separate trust created pursuant to a
Deposit Trust Agreement.
"Deposit Trust Account" means, for any Deposit Trust, the
deposit account established and maintained for such Deposit Trust pursuant
to the related Deposit Trust Agreement.
"Deposit Trust Agreement" means an agreement in form and
substance reasonably satisfactory to the Company and the Pass Through
Trustee for the purposes described in Section 2.02 hereof, between the
Company, as depositor, the Pass Through Trustee and the Deposit Trustee.
"Deposit Trust Funds" means, for any Delayed ECs, an amount
equal to the purchase price of such Delayed ECs.
"Deposit Trustee" means, for any Deposit Trust, the Person,
acceptable to the Pass Through Trustee, defined as such in the related
Deposit Trust Agreement.
"Depositary" means, for any Series, the depository of the
Registered Global Certificate, if any, representing the Pass Through
Certificates of such Series and any successor to such depository appointed
by the Company pursuant hereto. Such depository initially shall be The
Depository Trust Company, a New York corporation, or any successor thereto
registered under the Exchange Act or other applicable statute or
regulation.
"Distribution Date" means, for any Series, any Regular
Distribution Date or Special Distribution Date or both for such Series.
"Dollars" and "$" mean lawful currency of the United States of
America.
"Equipment Certificate" means, for any Pass Through Trust, any
of the Equipment Trust Certificates or Equipment Purchase Certificates,
issued pursuant to an Indenture and described in, or on a schedule attached
to, the Series Supplement for such Pass Through Trust.
"Equipment Purchase Certificate" means, for any Pass Through
Trust, any "Equipment Purchase Certificate," as such term is defined in the
related Indenture, issued by the Company pursuant to an Indenture and
described in, or on a schedule attached to, the Series Supplement for such
Pass Through Trust, which is to be held by the Pass Through Trustee as part
of the Trust Property of such Pass Through Trust.
"Equipment Trust Certificate" means, for any Pass Through
Trust, any "Equipment Trust Certificate," as such term is defined in the
related Indenture, issued by an Owner Trustee pursuant to such Indenture
and described in, or on a schedule attached to, the Series Supplement for
such Pass Through Trust, which is to be held by the Pass Through Trustee as
part of the Trust Property of such Pass Through Trust.
"Event of Default" has the meaning specified in Section
7.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fractional Undivided Interest" means, for any Pass Through
Certificate, the fractional undivided interest in the related Pass Through
Trust that is evidenced thereby.
"Government Obligations" means direct obligations of the United
States of America which are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture" means (i) for any Equipment Trust Certificate, the
trust indenture and security agreement among the Indenture Trustee, the
Owner Trustee and, if applicable, the Company pursuant to which such
Equipment Trust Certificate is issued and (ii) for any Equipment Purchase
Certificate, the trust indenture and security agreement between the
Indenture Trustee and the Company pursuant to which such Equipment Purchase
Certificate is issued, in each case as such agreement may be modified,
supplemented or amended from time to time in accordance with the related
Indenture Documents.
"Indenture Default" means, for any Indenture, any event or
condition defined as a "Default" under such Indenture.
"Indenture Documents" means (i) for any Equipment Trust
Certificate, the related Indenture, the related Trust Agreement and the
related Lease, in each case as defined in such Indenture, and the related
Participation Agreement and (ii) for any Equipment Purchase Certificate,
the related Indenture, the related Indenture Addendum, as defined in such
Indenture, and the related Participation Agreement.
"Indenture Event of Default" means, for any Indenture, any
event or condition defined as an "Indenture Event of Default" in such
Indenture.
"Indenture Trustee" means, for any Equipment Certificate, the
Person defined as such in the related Indenture.
"Initial Regular Distribution Date" means, for any Pass Through
Trust, the first Regular Distribution Date on which a Scheduled Payment is
to be made following the Issuance Date for such Pass Through Trust.
"Intercreditor Agreement" means any agreement by and among one
or more Pass Through Trusts, one or more Liquidity Providers and a
Subordination Agent providing for the distribution of payments made in
respect of Equipment Certificates held by such Pass Through Trusts.
"Issuance Date" means, for any Pass Through Trust, the date of
the issuance of the related Pass Through Certificates.
"Lease" means, for any Equipment Trust Certificate, the
agreement between the Company, as lessee, and an Owner Trustee, as lessor,
that is defined as the "Lease" in the related Indenture.
"Letter of Representations" means, for any Series, a letter
from the Company and the Pass Through Trustee to, and accepted by, the
Depositary in form and substance satisfactory to the Company and the Pass
Through Trustee for the purposes of the related Series Supplement, as such
letter may be modified or supplemented, or any successor letter thereto.
"Lien" means any mortgage, pledge, lien, charge, disposition of
title, encumbrance, lease or security interest.
"Liquidity Facility" means, with respect to the Pass Through
Certificates of any Series, any revolving credit agreement or similar
facility or letter of credit relating to the Pass Through Certificates of
such series between a Liquidity Provider and a Subordination Agent, as
amended, replaced, supplemented or otherwise modified from time to time in
accordance with its terms and the terms of any Intercreditor Agreement.
"Liquidity Provider" means, with respect to the Pass Through
Certificates of any Series, a bank or other financial institution that
agrees to provide Liquidity Facilities with respect to the Pass Through
Certificates of such Series for the benefit of the Certificateholders.
"Majority in Interest of Certificateholders" means, for any
Series at any time, Pass Through Certificates of such Series then
Outstanding (or the proxy therefor) representing in the aggregate not less
than a majority of the aggregate Fractional Undivided Interests of the Pass
Through Certificates then Outstanding under the related Pass Through Trust.
"Officer's Certificate" means a certificate signed by a
Responsible Officer of the Company, any Indenture Trustee or any Owner
Trustee, as the case may be, delivered to the Pass Through Trustee. Each
such certificate shall include the statements provided for in Section 13.07
hereof.
"Opinion of Counsel" means a written opinion of legal counsel, who
in the case of counsel (a) for the Company may be (i) an attorney employed
by the Company who is generally empowered to deliver such written opinions,
or (ii) other counsel designated by the Company and reasonably satisfactory
to the Pass Through Trustee and (b) for any Owner Trustee or Indenture
Trustee, an attorney selected by such Person and reasonably satisfactory to
the Pass Through Trustee.
"Outstanding" means, when used with respect to Pass Through
Certificates of any Series, as of the date of determination and subject to
the provisions of Section 6.04 hereof, all Pass Through Certificates
theretofore authenticated and delivered for such Series, with the exception
of the following:
(i) Pass Through Certificates theretofore cancelled by the Pass
Through Trustee or delivered to the Pass Through Trustee for
cancellation pursuant to Section 2.10 hereof;
(ii) All Pass Through Certificates of such Series if money in
the amount required to make the final distribution thereon in
accordance with Section 12.01 hereof has been theretofore deposited
with the Pass Through Trustee in trust for the Certificateholders of
such Series pending such final distribution; and
(iii) Pass Through Certificates in exchange for or in lieu of
which other Pass Through Certificates have been authenticated and
delivered pursuant to Article II hereof.
"Overdue Scheduled Payment" means, for any Pass Through
Trust, any Scheduled Payment that is not received within seven Business
Days after the Regular Distribution Date applicable to such Scheduled
Payment.
"Owner Participant" means, for any Equipment Trust
Certificate, the Person defined as such in the related Indenture.
"Owner Trustee" means, for any Equipment Trust
Certificate, the Person defined as such in the related Indenture.
"Participation Agreement" means (i) for any Equipment
Trust Certificate, the agreement among the Company, the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and, if
applicable, each Original Loan Participant (as defined in such
Participation Agreement), that is defined as the "Participation Agreement"
in the related Indenture and pursuant to which the Pass Through Trustee
agrees to purchase such Equipment Trust Certificate upon the issuance
thereof by such Owner Trustee and (ii) for any Equipment Purchase
Certificate, the agreement among the Company, the Indenture Trustee and the
Pass Through Trustee that is defined as the "Transfer Agreement" in the
related Indenture and pursuant to which the Pass Through Trustee agrees to
purchase such Equipment Purchase Certificate from the Banks (as defined in
such Participation Agreement).
"Pass Through Agreement," "this Pass Through Agreement" and
other like words mean this Pass Through Trust Agreement as the same may be
modified, supplemented or amended from time to time in accordance with the
provisions hereof, but does not include, unless otherwise specified, any
Series Supplement.
"Pass Through Certificate" means, for any Series, any of
the certificates executed, authenticated and delivered for such Series by
the Pass Through Trustee, in accordance with this Pass Through Agreement
and pursuant to the related Series Supplement.
"Pass Through Default" means, for any Pass Through Trust,
an Event of Default or an event or condition that, with the giving of
notice or the lapse of time or both, would become an Event of Default.
"Pass Through Trust" means a separate trust created in
accordance with this Pass Through Agreement by a Series Supplement
incorporating the provisions hereof, as such provisions may be amended or
supplemented thereby, the estate of which consists of the related Trust
Property.
"Pass Through Trustee" means the institution executing
this Pass Through Agreement as Pass Through Trustee, or its successor in
interest, and any successor or other trustee appointed as provided herein;
provided that if the same institution is not acting as the Pass Through
Trustee in respect of all Series, the phrase "the Pass Through Trustee"
shall, unless the context otherwise requires, mean, as to any Series, the
institution named in the applicable Series Supplement as Pass Through
Trustee in respect of such Series, or its successor in interest and any
successor or other trustee appointed as provided herein.
"Paying Agent" has the meaning set forth in Section 3.04
hereof.
"Permitted Investments" means (a) direct obligations of
the United States of America or obligations fully guaranteed by the United
States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's
Ratings Group and Moody's Investors Service, Inc., respectively or, if such
ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by
such rating organization; (c) overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers;
and (d) overnight repurchase agreements with respect to the securities
described in clause (a) above entered into with an office of a bank or
trust company which is located in the United States of America of any bank
or trust company which is organized under the laws of the United States or
any state thereof and has capital, surplus and undivided profits
aggregating at least $500 million.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, nonincorporated
organization or government or any agency or political subdivision thereof.
"Pool Balance" means, for any Pass Through Trust, as of
any date of determination the aggregate unpaid principal amount of the
Equipment Certificates that constitute Trust Property of such Pass Through
Trust on such date plus the amount of the principal payments on such
Equipment Certificates held by the Pass Through Trustee and not yet
distributed plus the amount of any moneys transferred to the Company and
deposited in the related Deposit Trust Account (other than earnings thereon
and without giving effect to any losses on investments thereof). The Pool
Balance as of any Regular Distribution Date or Special Distribution Date
shall be computed after giving effect to the payment of principal, if any,
on such Equipment Certificates and the distribution thereof being made on
that date.
"Pool Factor" means, unless otherwise provided in the
Series Supplement, for any Pass Through Trust, as of any date of
determination the quotient (rounded to the seventh decimal place) computed
by dividing (i) the Pool Balance by (ii) the aggregate original amount of
the Pass Through Certificates of the related Series. The Pool Factor as of
any Regular Distribution Date or Special Distribution Date shall be
computed after giving effect to the payment of principal, if any, on such
Equipment Certificates and the distribution thereof being made on that
date.
"Record Date," for any Series, means, (i) for any Regular
Distribution Date, the date specified in the related Series Supplement as
the Record Date for such Regular Distribution Date and (ii) for any Special
Distribution Date, the 15th day preceding such Special Distribution Date,
in any event, whether or not such date is a Business Day.
"Register" has the meaning set forth in Section 3.02
hereof.
"Registered Global Certificate" means, for any Series,
each Pass Through Certificate, if any, issued to the Depositary in
accordance with Article II hereof and bearing the legend prescribed in
Section 2.12(a) hereof.
"Registrar" has the meaning set forth in Section 3.02
hereof.
"Regular Distribution Date" means, for any Pass Through
Trust, any date specified in the related Series Supplement for the
distribution of any Scheduled Payment from such Pass Through Trust to the
related Certificateholders.
"Related Indenture Trustee" means, for any Pass Through
Trust, any Indenture Trustee under an Indenture relating to any Equipment
Certificate that constitutes Trust Property thereof, and "Related Indenture
Trustees" means all such Indenture Trustees for all such Equipment
Certificates constituting Trust Property thereof.
"Related Owner Participant" means, for any Pass Through
Trust, any Owner Participant under a Trust Agreement relating to any
Equipment Trust Certificate that constitutes Trust Property, and "Related
Owner Participants" means all such Owner Participants for all such
Equipment Trust Certificates constituting Trust Property thereof.
"Related Owner Trustee" means, for any Pass Through
Trust, any Owner Trustee under a Trust Agreement relating to any Equipment
Trust Certificate that constitutes Trust Property, and "Related Owner
Trustees" means all such Owner Trustees for all such Equipment Trust
Certificates constituting Trust Property thereof.
"Responsible Officer" means the president or any vice
president; or, in the case of the Pass Through Trustee, an officer in its
Corporate Trust Office.
"Scheduled Payment" means, for any Pass Through Trust,
any scheduled payment of principal of (whether by installment or redemption
or otherwise) and interest on any Equipment Certificate that constitutes
Trust Property thereof to be made in the amounts and on the date set forth
for such payment in such Equipment Certificate, but does not include any
Overdue Scheduled Payment.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series" means a separate series of Pass Through
Certificates issued pursuant to this Pass Through Agreement and a Series
Supplement.
"Series Supplement" means an agreement executed and
delivered by the Company and the Pass Through Trustee in accordance with
this Pass Through Agreement, incorporating the provisions hereof, as
amended or supplemented thereby, and creating a separate Pass Through Trust
for the benefit of the Certificateholders of the Series of Pass Through
Certificates to be issued under such Pass Through Trust.
"Special Distribution Date" means, for any Pass Through
Trust, any date specified in the related Series Supplement for the
distribution of any Special Payment from such Pass Through Trust to the
related Certificateholders.
"Special Payment" means, for any Pass Through Trust, any
payment (including any Overdue Scheduled Payment) other than a Scheduled
Payment on any Equipment Certificate that constitutes Trust Property
thereof, any proceeds from the sale of such Equipment Certificate pursuant
to Article VII hereof or any payment by the Company pursuant to the last
two paragraphs of Section 2.02(b) hereof.
"Special Payments Account" means, for any Pass Through
Trust, the account or accounts created and maintained for such Pass Through
Trust pursuant to Section 5.01(b) hereof and the related Series Supplement.
"Specified Investments" has, for any Deposit Trust, the
meaning set forth for such term in the related Deposit Trust Agreement.
"Subordination Agent" shall have the meaning specified
therefor in any Intercreditor Agreement.
"Triggering Event" shall have the meaning specified
therefor in any Intercreditor Agreement.
"Trust Agreement" means, for any Equipment Trust
Certificate, the agreement between an Owner Trustee and an Owner
Participant that is defined as the "Trust Agreement" in the related
Indenture.
"Trust Indenture Act" means (except as otherwise provided
in Section 11.06) the Trust Indenture Act of 1939, as amended, as in force
at the date as of which this Pass Through Agreement was first qualified
under such Act.
"Trust Property" means, for any Pass Through Trust, (i)
all money, instruments, including the related Equipment Certificates, and
other property held as the property of such Pass Through Trust, including
all distributions thereon and proceeds thereof and (ii) all rights of the
Pass Through Trust and the Pass Through Trustee, on behalf of the Pass
Through Trust, under any Intercreditor Agreement or any Liquidity Facility,
including, without limitation, all rights to receive certain payments
thereunder, and all monies paid to the Pass Through Trustee on behalf of
the Pass Through Trust pursuant to any Intercreditor Agreement or any
Liquidity Facility.
ARTICLE II
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF EQUIPMENT CERTIFICATES
SECTION 2.01. Amount Unlimited; Issuable in Series; Series
Supplements. (a) The aggregate amount of Pass Through Certificates that
may be authenticated and delivered in accordance with this Pass Through
Agreement is unlimited.
The Pass Through Certificates may be issued from time to time
in one or more Series, each Series relating to a separate Pass Through
Trust, and shall be designated generally as the "Pass Through
Certificates," with further designations added or incorporated in the title
for the Pass Through Certificates of any Series as specified in the related
Series Supplement. Each Pass Through Certificate shall bear upon its face
the designation so selected for the Series to which it belongs. All Pass
Through Certificates of the same Series shall be substantially identical
except as to denomination and as may otherwise be provided in the related
Series Supplement.
The Pass Through Certificates of each Series will evidence
fractional undivided interests in the separate Pass Through Trust formed by
the related Series Supplement, and, except as may be contained in any
Intercreditor Agreement, will have no rights, benefits or interest in
respect of any other separate Pass Through Trust or the Trust Property held
in such other Pass Through Trust. All Pass Through Certificates of the
same Series shall be in all respects equally and ratably entitled to the
benefits of the related Pass Through Trust without preference, priority, or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Pass
Through Agreement and the related Series Supplement.
(b) The following matters shall be established for the Pass
Through Certificates of each Series in a Series Supplement executed and
delivered by the Company and the Pass Through Trustee:
(1) the formation of the Pass Through Trust in which the
Pass Through Certificates of such Series evidence fractional
undivided interests and its designation (which designation shall
distinguish such Pass Through Trust from each other Pass Through
Trust);
(2) the specific title of the Pass Through Certificates of
such Series (which title shall distinguish the Pass Through
Certificates of the Series from each other Series);
(3) subject to Section 2.02(a) hereof, any limit upon the
aggregate amount of the Pass Through Certificates of such Series
that may be authenticated and delivered under this Pass Through
Agreement;
(4) the related Cut-off Date for Pass Through Trust;
(5) the related Regular Distribution Dates;
(6) the related Special Distribution Dates;
(7) if other than as provided in Section 3.02 hereof, the
Registrar or the Paying Agent for such Series, including any Co-
Registrar or additional Paying Agent;
(8) if other than as provided in Section 2.07 hereof, the
denominations in which the Pass Through Certificates of such
Series are issuable;
(9) the specific form of the Pass Through Certificates of
such Series and whether or not the Pass Through Certificates of
such Series are to be issued as one or more Registered Global
Certificates and if the Pass Through Certificates are to be
issued as one or more Registered Global Certificates, the
Depositary for the Registered Global Certificates and the Letter
of Representations;
(10) a description of the Equipment Certificates to be
acquired by and held in the related Pass Through Trust and of the
related Indenture Documents;
(11) provisions with respect to the terms for which the
definitions set forth in Article I hereof permit or require
further specification in the related Series Supplement;
(12) whether the Pass Through Certificates are eligible for
purchase by ERISA Plans (as defined in Section 6.06 hereof) and,
if applicable, any restrictions on purchases of Pass Through
Certificates by ERISA Plans;
(13) the acceptance of appointment by the institution named
to act as Pass Through Trustee with respect to such Series if
different from the institution executing this Pass Through
Agreement or its successor;
(14) whether such series will be subject to an
Intercreditor Agreement and, if so, the specific designation of
such Intercreditor Agreement;
(15) any other terms of the Pass Through Certificates of
such Series (which terms shall not be inconsistent with the
provisions of the Trust Indenture Act as in effect at the time of
the execution and delivery of such Series Supplement or adversely
affect the interest of the Certificateholders of any Series
outstanding at the time), including any terms that may be
required or advisable under United States laws or regulations or
advisable in connection with the marketing of the Series;
(16) a description of:
(a) the Equipment Certificates to be purchased by such Pass
Through Trust, including the period or periods within
which, the price or prices at which such Certificates may
or must be repaid in whole or in part, by the Company
or, with respect to leased aircraft certificates, the
Related Owner Trustee,
(b) the payment priority of such Equipment Certificates in
relation to any other Equipment Certificates issued with
respect to the related Aircraft,
(c) any additional security or liquidity enhancements
therefor,
(d) any intercreditor issues between or among the holders
of Equipment Certificates having different priorities issued
by the same Owner Trustee, and
(e) other specific terms of the Equipment Certificates
during any pre-funding period;
(17) a description of any cross-default or
cross-collateralization provisions in the related Indenture; and
(18) a description of any subordination provisions among the
holders of Pass Through Certificates, including any cross-
subordination provisions among the holders of Pass Through
Certificates in separate Pass Through Trusts.
(c) At any time and from time to time after the execution and
delivery of this Pass Through Agreement, the Company and the Pass Through
Trustee may execute and deliver one or more Series Supplements, each
forming a separate Pass Through Trust and establishing the terms of the
Pass Through Certificates of the related Series, and pursuant to which the
Pass Through Certificates of such Series shall be executed, authenticated
and delivered by the Pass Through Trustee to the Person specified by the
Company upon request of the Company and upon satisfaction of any conditions
precedent set forth in the related Series Supplement on the Issuance Date
for such Series.
SECTION 2.02. Acquisition of Equipment Certificates. (a)
Pass Through Certificates of a Series executed, authenticated and delivered
by the Pass Through Trustee upon request of the Company in accordance with
Section 2.01(c) hereof shall equal the aggregate principal amount of the
Equipment Certificates to be purchased by the Pass Through Trustee pursuant
to the related Participation Agreements, and evidence the entire ownership
of the related Pass Through Trust. The Pass Through Trustee shall issue
and sell such Pass Through Certificates, in authorized denominations and in
such Fractional Undivided Interests, so as to result in the receipt of
consideration in an amount equal to the aggregate principal amount of such
Equipment Certificates and, concurrently therewith, the Pass Through
Trustee shall purchase, pursuant to the terms and conditions of the
Participation Agreements, the Equipment Certificates (except Delayed ECs,
if any) at a purchase price equal to the amount of such consideration so
received. Except as provided in Sections 2.08 and 2.09 hereof, the Pass
Through Trustee shall not execute, authenticate or deliver Pass Through
Certificates of such Series in excess of the aggregate amount determined in
accordance with this subsection (a). The provisions of this subsection (a)
are subject to the provisions of subsection (b) below.
(b) Unless otherwise specified in the Series Supplement, if,
on or prior to an Issuance Date, the Company delivers to the Pass Through
Trustee a Delayed Delivery Notice relating to one or more Delayed ECs, then
(i) the Pass Through Trustee shall postpone the purchase of the specified
Delayed ECs, (ii) the Company, the Pass Through Trustee and the Deposit
Trustee shall form a Deposit Trust, (iii) the Pass Through Trustee shall
transfer to the Company the Deposit Trust Funds relating to such Delayed
ECs and (iv) the Company shall deposit such Deposit Trust Funds into the
Deposit Trust Account for such Deposit Trust. The Deposit Trust Funds so
deposited shall be invested pursuant to the related Deposit Trust Agreement
by the Deposit Trustee at the direction and risk of, and for the benefit
of, the Company in Specified Investments. The Company agrees that
withdrawals shall be made from any Deposit Trust Account only as provided
in the related Deposit Trust Agreement.
Upon notice from the Company on one or more occasions that any
Delayed ECs are available for purchase and upon the satisfaction of the
closing conditions specified in the applicable Participation Agreements and
the related Series Supplement on or prior to the related Cut-off Date for
Pass Through Trust, the Company shall cause the related Deposit Trust Funds
to be withdrawn from the related Deposit Trust Account and paid to the Pass
Through Trustee, free and clear of any Lien under the Deposit Trust
Agreement, and the Pass Through Trustee shall purchase the applicable
Delayed ECs with such Deposit Trust Funds. The purchase price for such
Delayed ECs shall equal the principal amount of such Delayed ECs.
On the Initial Regular Distribution Date for any Pass Through
Trust for which Delayed ECs are purchased pursuant to this subsection, the
Company shall pay, in immediately available funds, to the Pass Through
Trustee an amount equal to the interest that would have accrued on any
Delayed ECs purchased after the related Issuance Date as if such Delayed
ECs had been purchased on such Issuance Date, from such Issuance Date to,
but not including, the date of the purchase of such Delayed ECs for such
Pass Through Trust.
If the Company notifies the Pass Through Trustee prior to any
Cut-off Date for Pass Through Trust that any related Delayed ECs will not
be issued on or prior to such Cut-off Date for Pass Through Trust for any
reason, on the next Special Distribution Date for such Pass Through Trust
occurring more than 20 days following the date of such notice (i) the
Company shall (A) pay to the Pass Through Trustee for deposit in the
related Special Payments Account, in immediately available funds, an amount
equal to the interest that would have accrued on the Delayed ECs designated
in such notice at a rate equal to the interest rate applicable to the
related Series from the related Issuance Date to, but not including, such
Special Distribution Date and (B) cause an amount equal to the amount of
Deposit Trust Funds that would have been used to purchase such Delayed ECs
to be withdrawn from the related Deposit Trust Account and paid to the Pass
Through Trustee, free and clear of any Lien under the Deposit Trust
Agreement, and (ii) the Pass Through Trustee shall deposit in the related
Special Payments Account, upon receipt from the Deposit Trustee pursuant to
the related Deposit Trust Agreement, the amount received pursuant to clause
(i)(B) above, and the amount paid by the Company pursuant to clause (i)(A)
above, and such amounts shall be distributed as a Special Payment in
accordance with the provisions hereof.
If, on the Cut-off Date for Pass Through Trust for any Pass
Through Trust, an amount equal to less than all of the Deposit Trust Funds
(other than Deposit Trust Funds referred to in the immediately preceding
paragraph) has been used to purchase related Delayed ECs, on the next
Special Distribution Date for such Pass Through Trust occurring more than
20 days following such Cut-off Date for Pass Through Trust (i) the Company
shall (A) pay to the Pass Through Trustee for deposit in the related
Special Payments Account, in immediately available funds, an amount equal
to the interest that would have accrued on such Delayed ECs contemplated to
be purchased with such unused Deposit Trust Funds (other than any Deposit
Trust Funds referred to in the immediately preceding paragraph) but not so
purchased at a rate equal to the interest rate applicable to the related
Series from the related Issuance Date to, but not including, such Special
Distribution Date and (B) cause such unused Deposit Trust Funds to be
withdrawn from the related Deposit Trust Account and paid to the Pass
Through Trustee, free and clear of any Lien under the Deposit Trust
Agreement, and (ii) the Pass Through Trustee shall deposit in such Special
Payments Account, upon receipt from the Deposit Trustee pursuant to the
related Deposit Trust Agreement, such unused Deposit Trust Funds received
pursuant to clause (i)(B) above, and the amount paid by the Company
pursuant to clause (i)(A) above, and such amounts shall be distributed as a
Special Payment in accordance with the provisions hereof.
SECTION 2.03. Initial Certificateholders as Grantors. By its
acceptance of any Pass Through Certificate of any Series issued to it under
the related Pass Through Trust, each initial Certificateholder of such
Series as grantor of such Pass Through Trust shall join in the creation and
declaration of such Pass Through Trust.
SECTION 2.04. Limitation of Powers. Each Pass Through Trust
shall be constituted solely for the purpose of making the investment in the
Equipment Certificates provided for in the related Series Supplement and,
except as set forth herein or in such Series Supplement, the Pass Through
Trustee shall not be authorized or empowered to acquire any other
investments or engage in any other activities and, in particular, the Pass
Through Trustee shall not be authorized or empowered to do anything that
would cause such Pass Through Trust to fail to qualify as a "grantor trust"
for federal income tax purposes (including as subject to this restriction,
acquiring any Aircraft (as defined in the respective related Indentures) by
bidding such Equipment Certificates or otherwise, or taking any action with
respect to any such Aircraft once acquired).
SECTION 2.05. Execution of Pass Through Certificates. The
Pass Through Certificates of each Series shall be signed on behalf of the
Pass Through Trustee by an authorized officer of the Pass Through Trustee.
Such signatures may be the manual or facsimile signatures of such officer
and minor errors or defects in any reproduction of any such signature shall
not affect the validity or enforceability of any Pass Through Certificate
which has been duly authenticated and delivered by the Pass Through
Trustee.
If any officer of the Pass Through Trustee who signs any of the
Pass Through Certificates subsequently ceases to be such officer before the
Pass Through Certificate so signed is authenticated and delivered or
disposed of by the Pass Through Trustee, such Pass Through Certificate
nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Pass Through Certificate had not ceased to be
such officer of the Pass Through Trustee; and any Pass Through Certificate
may be signed on behalf of the Pass Through Trustee by such person or
persons as, at the actual date of the execution of such Pass Through
Certificate, are the proper officers of the Pass Through Trustee, although
at the date of the execution and delivery of the related Series Supplement
any such person was not such officer.
SECTION 2.06. Certificate of Authentication. The Pass Through
Trustee shall duly authenticate and deliver Pass Through Certificates for
each Series in authorized denominations equaling the aggregate principal
amount of the Equipment Certificates to be purchased for the related Pass
Through Trust by the Pass Through Trustee pursuant to the related
Participation Agreements, and evidencing the entire ownership of the
related Pass Through Trust. Only such Pass Through Certificates of such
Series as shall bear thereon a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Pass Through Trustee by
manual or facsimile signature of one of its authorized officers, shall be
entitled to the benefits of the related Pass Through Trust or be valid or
obligatory for any purpose. Such certificate by the Pass Through Trustee
upon any Pass Through Certificate for such Series executed by the Pass
Through Trustee shall be conclusive evidence that the Pass Through
Certificate so authenticated has been duly authenticated and delivered
hereunder and that the Certificateholder, as evidenced on the Register for
such Series, is entitled to the benefits of the related Pass Through Trust.
SECTION 2.07. Form and Denomination of Pass Through
Certificates. The Pass Through Certificates of each Series shall be
substantially in the form set forth in Exhibit A hereto. The Pass Through
Certificates shall be issuable as registered securities without coupons and
shall be numbered, lettered, or otherwise distinguished in such manner or
in accordance with such plans as set forth in the related Series
Supplement. The Pass Through Certificates of each Series shall be issued
in minimum denominations of $1,000 and integral multiples thereof and shall
be dated the date of their authentication.
The Pass Through Certificates of any Series may be issued with
appropriate insertions, omissions, substitutions and variations, and may
have imprinted or otherwise reproduced thereon such legend, not
inconsistent with the provisions of this Pass Through Agreement or the
related Series Supplement, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of the
Depositary or any securities market in which such Pass Through Certificates
are admitted to trading, or to conform to general usage.
SECTION 2.08. Registration, Transfer and Exchange. The Pass
Through Trustee will keep at each office or agency to be maintained for any
Series for the purpose as provided in Section 3.02 hereof a Register in
which, subject to such reasonable regulations as it may prescribe, it will
register, and will register the transfer of, Pass Through Certificates of
the related Series as provided in this Article II. Such Register shall be
in written form in the English language.
Upon due presentation for registration of transfer of any Pass
Through Certificate of the related Series at any such office or agency, the
Pass Through Trustee shall execute, authenticate and deliver in the name of
the transferee or transferees a new Pass Through Certificate of such Series
in authorized denominations and for a like aggregate Fractional Undivided
Interest.
Subject to the provisions of Section 2.12 hereof, any Pass
Through Certificate or Pass Through Certificates may be exchanged for a
Pass Through Certificate or Pass Through Certificates of the same Series in
other authorized denominations and for a like aggregate Fractional
Undivided Interest. Pass Through Certificates to be exchanged shall be
surrendered at any office or agency to be maintained by the Pass Through
Trustee for the related Series for the purpose as provided in Section 3.02
hereof, and the Pass Through Trustee shall execute, authenticate and
deliver in exchange therefor the Pass Through Certificate or Pass Through
Certificates which the Certificateholder making the exchange shall be
entitled to receive, bearing numbers not contemporaneously or previously
outstanding.
All Pass Through Certificates presented for registration of
transfer, exchange, redemption or payment shall (if so required by the Pass
Through Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Pass
Through Trustee duly executed by, the Certificateholder or such Person's
attorney duly authorized in writing.
The Pass Through Trustee may require payment from the
Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any exchange or
registration of transfer of Pass Through Certificates. No service charge
to the Certificateholder shall be made for any such transaction.
All Pass Through Certificates issued upon any transfer or
exchange of Pass Through Certificates shall evidence ownership in the same
Pass Through Trust and be entitled to the same benefits under this Pass
Through Agreement and the applicable Series Supplement, as the Pass Through
Certificates surrendered upon such transfer or exchange.
Resales or other transfers of Pass Through Certificates
represented by a Registered Global Certificate will be conducted in
accordance with the provisions of this Pass Through Agreement, including
without limitation Section 6.06 hereof, and the rules and procedures of the
Depositary applicable to U.S. corporate pass through certificates and
without notice to, or action by, the Pass Through Trustee.
Neither the Company nor 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 of a Registered
Global Certificate or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen
Pass Through Certificates. If any Pass Through Certificate becomes
mutilated, defaced or is apparently destroyed, lost or stolen, the Pass
Through Trustee in its discretion may execute, authenticate and deliver a
new Pass Through Certificate of like Fractional Undivided Interest in the
related Pass Through Trust, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Pass Through Certificate, or in lieu of and in substitution for the
Pass Through Certificate so apparently destroyed, lost or stolen. In every
case the applicant for a substitute Pass Through Certificate shall furnish
to the Pass Through Trustee and any agent of the Pass Through Trustee such
security or indemnity as may be required by them to indemnify and defend
and to save each of them harmless from any such substitution and, in every
case of destruction, loss or theft, evidence to their satisfaction of the
apparent destruction, loss or theft of such Pass Through Certificate and of
the ownership thereof.
Upon the issuance of any substitute Pass Through Certificate,
the Pass Through Trustee may require payment from the Certificateholder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including
the reasonable fees and expenses of the Pass Through Trustee) connected
therewith. If any Pass Through Certificate of a Pass Through Trust for
which a notice of termination has been or is about to be given pursuant to
Section 12.01 hereof becomes mutilated or defaced or is apparently
destroyed, lost or stolen, the Pass Through Trustee may, instead of issuing
a substitute Pass Through Certificate, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated or
defaced Pass Through Certificate), if the applicant for such payment
furnishes to the Pass Through Trustee and any agent of the Pass Through
Trustee such security or indemnity as any of them may require to save each
of them harmless from all risks, however remote, resulting from such
payment and, in every case of apparent destruction, loss or theft, the
applicant shall also furnish to the Pass Through Trustee and any agent of
the Pass Through Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Pass Through Certificate and of the
ownership thereof.
Every substitute Pass Through Certificate issued pursuant to
the provisions of this Section 2.09 by virtue of the fact that any Pass
Through Certificate is apparently destroyed, lost or stolen will constitute
conclusive evidence of the Fractional Undivided Interest in the applicable
Pass Through Trust evidenced by the Pass Through Certificate that it
replaces, whether or not the apparently destroyed, lost or stolen Pass
Through Certificate may be enforceable at any time by anyone and will be
entitled to all the benefits of (but will be subject to all the limitations
of rights set forth in) the applicable Pass Through Trust equally and
proportionately with any and all other Pass Through Certificates duly
authenticated and delivered therefor. All Pass Through Certificates will
be held and owned upon the express condition that, to the extent permitted
by law, the foregoing provisions are exclusive with respect to the
replacement or payment of mutilated, defaced, or apparently destroyed, lost
or stolen Pass Through Certificates and will preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.10. Cancellation of Pass Through Certificates;
Destruction Thereof. All Pass Through Certificates surrendered for
payment, redemption, registration of transfer or exchange, if surrendered
to any agent of the Pass Through Trustee, shall be delivered to the Pass
Through Trustee for cancellation or, if surrendered to the Pass Through
Trustee, shall be cancelled by it; and no Pass Through Certificates shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Pass Through Agreement or the applicable Series
Supplement. The Pass Through Trustee shall destroy cancelled Pass Through
Certificates held by it.
SECTION 2.11. Temporary Pass Through Certificates. Pending
the preparation of definitive Pass Through Certificates of any Series, the
Pass Through Trustee may execute, authenticate and deliver temporary Pass
Through Certificates for such Series (produced in a form satisfactory to
the executing officer of the Pass Through Trustee, as evidenced by such
officer's execution thereof). Such temporary Pass Through Certificates
shall be issuable as registered Pass Through Certificates without coupons,
of any authorized denomination, and substantially in the form of the
definitive Pass Through Certificates of such Series but with such
omissions, insertions and variations as may be appropriate for temporary
Pass Through Certificates, all as may be determined by the executing
officer of the Pass Through Trustee, as evidenced by such officer's
execution thereof.
Temporary Pass Through Certificates may contain such reference
to any provisions of this Pass Through Agreement or the applicable Series
Supplement as may be appropriate. Every such temporary Pass Through
Certificate shall be executed and authenticated by the Pass Through Trustee
upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Pass Through Certificates of such Series.
Without unreasonable delay the Company shall furnish definitive Pass
Through Certificates for such Series and thereupon temporary Pass Through
Certificates shall be surrendered in exchange therefor without charge at
any office or agency to be maintained by the Pass Through Trustee for the
purpose pursuant to Section 3.02 hereof, and the Pass Through Trustee shall
execute, authenticate and deliver in exchange for such temporary Pass
Through Certificates such definitive Pass Through Certificates evidencing a
like aggregate Fractional Undivided Interest in the applicable Pass Through
Trust in authorized denominations. Until so exchanged, temporary Pass
Through Certificates shall be entitled to the same benefits under the
applicable Pass Through Trust and this Pass Through Agreement as definitive
Pass Through Certificates of the applicable Series.
SECTION 2.12. Pass Through Certificates Issuable in the Form
of a Registered Global Certificate. For any Series, at the sole option of
the Company as set forth in the related Series Supplement, this Section
2.12 shall apply to such Series or may be amended with respect to any
Series. To the extent that the provisions of this Section 2.12 conflict
with any other provisions of this Pass Through Agreement, the provisions of
this Section 2.12 shall control.
(a) If the Company shall establish pursuant to Section
2.01(b)(9) hereof that the Pass Through Certificates of a particular Series
are to be issued in whole in the form of a Registered Global Certificate,
then the Pass Through Trustee shall, in accordance with this Article II,
execute, authenticate and deliver, one or more Registered Global
Certificates which (i) shall represent, and shall be denominated in an
amount equal to, the aggregate Fractional Undivided Interests of all of the
Pass Through Certificates in the related Pass Through Trust, (ii) shall be
registered in the name of the Depositary or its nominee, (iii) shall be
delivered by the Pass Through Trustee to the Depositary or pursuant to the
Depositary's instruction, and (iv) shall bear a legend substantially to the
following effect: "Unless this Registered Global Certificate is presented
by an authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Pass Through Trustee or its agent for
registration of transfer, exchange or payment, and any Registered Global
Certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein."
No Person acquiring a beneficial interest in a Pass Through
Certificate will be entitled to receive a definitive Pass Through
Certificate representing such Person's interest in the Pass Through Trust,
except as provided in subsection (d) below.
(b) Notwithstanding any other provision of this Section 2.12
or of Section 2.08 hereof, the Registered Global Certificate for any Series
may be transferred, in whole but not in part and in the manner provided in
Section 2.08 hereof, by the Depositary to a nominee of such Depositary or
by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor
Depositary selected or approved by the Company upon notice to the Pass
Through Trustee or to a nominee of such successor Depositary.
(c) The Depositary shall be an organization registered as a
clearing agency under the Exchange Act and any other applicable statute or
regulation.
(d) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Series or if at
any time the Depositary for such Series shall no longer be eligible under
subsection (c) above, and a successor Depositary is not appointed by the
Company within 90 days after the Company receives such notice or becomes
aware of such condition, as the case may be, this Section 2.12 shall no
longer be applicable to the Pass Through Certificates of such Series and
the Pass Through Trustee will execute, authenticate and deliver Pass
Through Certificates of such Series in definitive registered form without
coupons, in authorized denominations, and in an aggregate Fractional
Undivided Interest in the related Pass Through Trust equal to the
Fractional Undivided Interest in the related Pass Through Trust of the
Registered Global Certificate then outstanding in exchange for such
Registered Global Certificate.
The Company may at any time and in its sole discretion
determine that the Pass Through Certificates of any Series shall no longer
be represented by a Registered Global Certificate and that the provisions
of this Section 2.12 shall no longer apply to such Pass Through
Certificates. In such event the Pass Through Trustee, upon receipt of an
Officer's Certificate evidencing such determination by the Company, will
notify the Depositary of the availability of such Pass Through Certificates
in definitive form and will execute, authenticate and deliver, Pass Through
Certificates of such Series in definitive registered form without coupons,
in authorized denominations and in an aggregate Fractional Undivided
Interest in the related Pass Through Trust equal to the Fractional
Undivided Interest in the related Pass Through Trust of the Registered
Global Certificate then outstanding in exchange for such Registered Global
Certificate. Upon the exchange of the Registered Global Certificate for
such Pass Through Certificates in definitive registered form, such
Registered Global Certificate shall be cancelled by the Pass Through
Trustee. Such Pass Through Certificates in definitive registered form
issued in exchange for the Registered Global Certificate pursuant to this
subsection (d) shall be registered in such names and in such authorized
denominations as the Depositary shall instruct the Pass Through Trustee.
The Pass Through Trustee shall deliver such Pass Through Certificates to
the Persons in whose names such Pass Through Certificates are so
registered. Upon the issuance of Pass Through Certificates in definitive
registered form without coupons, the Pass Through Trustee shall recognize
the Person in whose name such definitive Pass Through Certificates are
registered in the Register from time to time as Certificateholders
hereunder.
(e) As long as the Pass Through Certificates of a Series are
represented by a Registered Global Certificate, all distributions for such
Series shall be made to the holder of such Registered Global Certificate as
the Certificateholder of such Series, or to such Persons as such holder may
designate, by wire transfer of immediately available funds on the date such
distributions are due, and the Company shall or shall cause the Pass
Through Trustee to provide to the Depositary any notices referred to in the
related Letter of Representations in accordance with such Letter of
Representations.
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. Covenants of the Company. (a) The Company will
preserve and maintain all of its rights, privileges and franchises
necessary in the normal conduct of its business; provided that the Company
shall not be required to preserve any right, privilege or franchise if the
Company shall reasonably determine that the loss thereof will not
materially adversely affect the Company's ability to perform its
obligations hereunder or under any Series Supplement.
(b) The Company shall not (i) consolidate with or merge into
any other corporation under circumstances in which the Company is not the
surviving corporation or (ii) convey, transfer or lease all or
substantially all of its assets as an entirety to any Person, unless the
corporation formed by such consolidation or into which the Company is
merged or the Person which acquired by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall be a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall execute and
deliver to the Pass Through Trustee an agreement reasonably satisfactory in
form and substance to the Pass Through Trustee containing an effective
assumption by such successor corporation of the due and punctual
performance and observance of each covenant and condition to be performed
or observed by the Company hereunder and under each Series Supplement.
(c) Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all the assets of the Company as an
entirety in accordance with this Section 3.01, the successor corporation
formed by such consolidation or the Person into which the Company is merged
or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the
Company hereunder and under each Series Supplement with the same effect as
if such successor corporation or such Person, as the case may be, had been
named as the Company herein and therein. No such conveyance, transfer or
lease of substantially all of the assets of the Company as an entirety
shall have the effect of releasing the Company or any successor corporation
which shall theretofore have become such in the manner prescribed in this
Section 3.01 from its liability hereunder or under any Series Supplement.
(d) The Pass Through Trustee shall receive an Opinion of
Counsel of the Company as conclusive evidence that any consolidation,
merger, sale, lease or conveyance, and any assumption complies with the
provisions of this Section 3.01 and the Pass Through Trustee shall be
entitled to rely upon the same for all purposes hereof.
SECTION 3.02. Offices for Payments; Registrar. So long as
any Pass Through Certificates of a Series remain outstanding, the Pass
Through Trustee will maintain the following for such Series: (a) an office
or agency where such Pass Through Certificates may be presented for payment
and (b) a facility or agency in New York, New York where such Pass Through
Certificates may be presented or surrendered for registration of transfer
and for exchange and for redemption as provided in this Pass Through
Agreement (the "Registrar"). Written notice of the location of each such
other office or agency and of any change of location thereof shall be given
by the Pass Through Trustee to the Company, any Owner Trustees, the
Indenture Trustees and the Certificateholders of such Series. In the event
that no such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations and demands
may be made and notices may be served at the Corporate Trust Office of the
Pass Through Trustee. The Registrar shall keep a Register with respect to
the Pass Through Certificates of each Series and their transfer and
exchange. The Pass Through Trustee may appoint one or more co-registrars
("Co-Registrars") for any Series and may terminate any such appointment at
any time upon written notice. The term "Registrar" includes any Co-Registrar.
Any Registrar shall be a bank or trust company organized and
doing business under the laws of the United States or any state, with a
combined capital and surplus of at least $100,000,000, or a direct or
indirect subsidiary of such an entity, or a member of a bank holding
company group, having a combined capital and surplus of at least
$100,000,000 and such subsidiary or member itself having a capital and
surplus of at least $10,000,000.
The Pass Through Trustee shall initially act as Registrar and
shall initially serve as an office where Pass Through Certificates can be
presented for payment.
SECTION 3.03. Representations and Warranties of the Pass
Through Trustee. (a) The Pass Through Trustee, in its individual capacity
(except with respect to clause (iv) below), represents, warrants and agrees
that:
(i) it is a validly existing national banking association or a
bank or trust company organized or chartered under the laws of a
State of the United States of America and duly organized under the
laws of the United States of America or such State, as the case may
be, holding a valid certificate to do business as a national banking
association or a bank or trust company under the State of the United
States of America where it is organized or chartered, as the case may
be, with banking and trust powers and has the corporate power and
authority to enter into and perform its obligations under this Pass
Through Agreement and any Intercreditor Agreement;
(ii) each of this Pass Through Agreement and any Intercreditor
Agreement has been duly authorized by all necessary corporate action
on its part, and neither the execution and delivery hereof or thereof
nor its performance of any of the terms and provisions hereof or
thereof will violate any federal law or the law of the State of the
United States of America where it is located or regulation relating
to its banking or trust powers or any judgment or order applicable to
or binding on the Pass Through Trustee and will not contravene or
result in any breach of, or constitute any default under its charter
or by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) the execution, delivery and performance by the Pass
Through Trustee of this Pass Through Agreement or any Intercreditor
Agreement will not require the authorization, consent, or approval
of, the giving of notice to, the filing or registration with, or the
taking of any other action in respect of, any governmental authority
or agency of the United States of America or the State of the United
States of America where it is located regulating the banking and
corporate trust activities of the Pass Through Trustee other than (i)
the registration of the Pass Through Certificates under the
Securities Act and under the securities laws of any state in which
the Pass Through Certificates may be offered for sale if the laws of
such state require such action and (ii) the qualification of the Pass
Through Agreement under the Trust Indenture Act pursuant to an order
of the Securities and Exchange Commission;
(iv) each of this Pass Through Agreement and any Intercreditor
Agreement has been duly executed and delivered by it and, assuming
that such documents are the legal, valid and binding obligation of
the other parties thereto, is the legal, valid and binding obligation
of the Pass Through Trustee, enforceable against the Pass Through
Trustee in accordance with its terms except as may be limited by
bankruptcy, insolvency, moratorium, reorganization, receivership,
fraudulent conveyance or similar laws or equitable principles of
general application to or affecting the enforcement of creditors'
rights and remedies generally from time to time in effect, regardless
of whether such enforceability is considered in a proceeding in
equity or at law; and
(v) each Series Supplement executed by such Pass Through
Trustee will be, upon the date of execution and delivery of such
Series Supplement, executed and delivered by one of its officers duly
authorized to execute and deliver such Series Supplement on its
behalf.
(b) The representations and warranties set forth in subsection
(a) above shall be deemed to be made by the applicable Pass Through Trustee
on each Issuance Date, except as otherwise provided in the applicable
Series Supplement.
SECTION 3.04. Paying Agents. Whenever the Pass Through
Trustee in its sole discretion shall appoint a paying agent (the "Paying
Agent") for any Pass Through Trust, it will cause the Paying Agent to
execute and deliver an instrument in which the Paying Agent shall agree
with the Pass Through Trustee, subject to the provisions of this Section
3.04,
(a) that it will hold all sums received by it as such agent for
distribution to the Certificateholders of the related Series (whether
such sums have been paid to it by the Pass Through Trustee or the
Related Owner Trustee or Indenture Trustee) in trust for the benefit
of the Certificateholders of the related Series or of the Pass Through
Trustee, and
(b) that it will notify the Pass Through Trustee if the
principal of or interest or premium on the Equipment Certificates that
constitute Trust Property of such Pass Through Trust is not paid when
the same is due and payable.
Anything in this Section 3.04 to the contrary notwithstanding,
the agreements to hold sums in trust as provided in this Section 3.04 are
subject to the provisions of Sections 12.03 and 12.04 hereof.
SECTION 3.05. No Representations or Warranties as to
Documents. The Pass Through Trustee neither makes nor shall be deemed to
have made any representation or warranty as to the validity, legality or
enforceability of any Series Supplement, any related Pass Through
Certificates, any Intercreditor Agreement or any related Indenture
Documents or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of the Pass Through
Trustee made in its individual capacity under this Pass Through Agreement,
in any Series Supplement or in any related Participation Agreement.
SECTION 3.06. Payments from Trust Property Only. For any Pass
Through Trust, all payments or distributions to be made to
Certificateholders of any Series under the related Series Supplement by the
Pass Through Trustee under such Pass Through Trust shall be made only from
the income and the proceeds from the related Trust Property and only to the
extent that the Pass Through Trustee shall have sufficient income or
proceeds from such Trust Property to enable the Pass Through Trustee to
make distributions of the amounts due in respect of the Pass Through
Certificates thereunder.
Each Certificateholder of such Series by its acceptance of a
related Pass Through Certificate agrees that it will look solely to the
income and proceeds from the related Trust Property to the extent available
for distribution to it as provided herein and in the related Series
Supplement and that the Pass Through Trustee is not personally liable to
such Certificateholder for any amounts payable under such Pass Through
Trust except as expressly provided herein.
SECTION 3.07. Limitation of the Company's Liability. The
Company is a party to this Pass Through Agreement solely for purposes of
meeting the requirements of the Trust Indenture Act, and therefore shall
not be liable hereunder, except as otherwise expressly provided herein, or
under the terms of any Series Supplement or any Pass Through Certificates,
except as otherwise expressly provided therein.
ARTICLE IV
CERTIFICATEHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE PASS THROUGH TRUSTEE
SECTION 4.01. Certificateholder Lists; Ownership of Pass Through
Certificates. (a) For each Series, the Pass Through Trustee shall
preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of the Certificateholders
of such Series. If the Pass Through Trustee is not the Registrar for such
Series, the Company shall cause the Registrar to furnish to the Pass
Through Trustee semi-annually not more than 15 days after each Record Date,
as of such Record Date, or at such other times as the Pass Through Trustee
may request in writing, a list, in such form and as of such date as the
Pass Through Trustee may reasonably require, containing all the information
in the possession or control of the Registrar as to the names and addresses
of the Certificateholders of such Series and the amounts of the Pass
Through Certificates held by such Certificateholders.
(b) For each Series, ownership of the Pass Through Certificates
shall be proved by the Register for such Series kept by the Registrar.
SECTION 4.02. Disclosure of Certificateholder Lists. Each and
every Certificateholder, by receiving and holding such Pass Through
Certificate, agrees with the Company and the Pass Through Trustee that
neither the Company, the Pass Through Trustee, the Pass Through Trustee in
its individual capacity nor any agent of any of the foregoing shall be held
accountable by reason of the disclosure of any such information as to the
names and addresses of any Certificateholders in accordance with the
provisions of Section 312 of the Trust Indenture Act, regardless of the
source from which such information was derived, and that the Pass Through
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 4.03. Reports by the Company. The Company covenants:
(a) to file with the Pass Through Trustee, within 30 days after the
Company is required to file the same with the Commission, copies of the
reports and documents, which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(b) to file with the Pass Through Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with
respect to compliance by the Company with the conditions and covenants
provided for in this Pass Through Agreement as may be required from time to
time by such rules and regulations;
(c) to transmit to the Certificateholders of each Series in the manner
and to the extent required by Section 313(c) of the Trust Indenture Act,
within 30 days after the filing thereof with the Pass Through Trustee, such
summaries of any information, documents and reports required to be filed by
the Company pursuant to subsections (a) and (b) of this Section 4.03 as may
be required by rules and regulations prescribed from time to time by the
Commission; and
(d) furnish to the Pass Through Trustee, on or before each March 15, a
brief certificate from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to his or her
knowledge of the Company's compliance with all conditions and covenants
under this Pass Through Agreement and each Series Supplement. For purposes
of this subsection (d), such compliance shall be determined without regard
to any period of grace or requirement of notice provided under this Pass
Through Agreement or any Series Supplement.
SECTION 4.04. Reports by the Pass Through Trustee. For each Series, on
or before each May 15, the Pass Through Trustee in respect of such Series
shall transmit, in the manner and to the extent required by Section 313(c)
of the Trust Indenture Act, any report required by Section 313(b) of the
Trust Indenture Act to be transmitted by the Pass Through Trustee to the
related Certificateholders.
ARTICLE V
RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY
SECTION 5.01. Certificate Account and Special Payments Account.
(a) The Pass Through Trustee shall establish and maintain for each Pass
Through Trust, on behalf of the related Certificateholders of each Series,
a Certificate Account as one or more non-interest bearing accounts. In
each case, the Pass Through Trustee shall hold such Certificate Account in
trust for the benefit of such Certificateholders, respectively, and shall
make or permit withdrawals therefrom only as provided in this Pass Through
Agreement, the related Series Supplement or any Intercreditor Agreement.
Upon receipt of any Scheduled Payment, the Pass Through Trustee shall
immediately deposit such Scheduled Payment in the applicable Certificate
Account.
(b) The Pass Through Trustee shall establish and maintain, as
and when required, for each Pass Through Trust, on behalf of the related
Certificateholders of each Series, a Special Payments Account as one or
more accounts, which shall be non-interest bearing except as provided in
Section 5.04 hereof. In each case, the Pass Through Trustee shall hold
such Special Payments Account in trust for the benefit of such
Certificateholders, respectively, and shall make or permit withdrawals
therefrom only as provided in this Pass Through Agreement, the related
Series Supplement or any Intercreditor Agreement. Upon receipt of any
Special Payment, the Pass Through Trustee shall immediately deposit such
Special Payment in the applicable Special Payments Account.
(c) The Pass Through Trustee shall present any Equipment
Certificate to the applicable Related Indenture Trustee on the date of its
stated final maturity, or on such earlier date as such Equipment
Certificate is to be redeemed or purchased in whole pursuant to the
relevant Indenture.
SECTION 5.02. Distributions from Certificate Account and
Special Payments Account. (a) Subject to any Intercreditor Agreement, for
each Pass Through Trust, on each related Regular Distribution Date, or as
soon thereafter as the Pass Through Trustee has confirmed receipt of any
Scheduled Payment due on the related Equipment Certificates on such Regular
Distribution Date, the Pass Through Trustee shall distribute out of the
applicable Certificate Account the entire amount deposited therein pursuant
to Section 5.01(a) hereof by paying to each Certificateholder of the
related Series of record at the close of business on the Record Date for
such Regular Distribution Date (except as provided in Section 12.01 hereof
concerning the final distribution), at the address for such
Certificateholder appearing in the related Register, such
Certificateholder's pro rata share (based on the aggregate Fractional
Undivided Interest in the related Pass Through Trust held by such
Certificateholder) of the aggregate amount in the applicable Certificate
Account.
(b) Subject to any Intercreditor Agreement, for each Pass
Through Trust, on each related Special Distribution Date, or as soon
thereafter as the Pass Through Trustee has confirmed receipt of any Special
Payment due on the related Equipment Certificates or realized upon the sale
of any such Equipment Certificates, the Pass Through Trustee shall
distribute out of the applicable Special Payments Account the entire amount
of such Special Payment deposited therein pursuant to Section 5.01(b)
hereof by paying to each Certificateholder of the related Series of record
at the close of business on the Record Date for such Special Distribution
Date (except as provided in Section 12.01 hereof concerning the final
distribution), at the address for such Certificateholder appearing in the
related Register, such Certificateholder's pro rata share (based on the
aggregate Fractional Undivided Interest in the related Pass Through Trust
held by such Certificateholder) of the aggregate amount in the applicable
Special Payments Account on account of such Special Payment.
(c) For each Pass Through Trust, the Pass Through Trustee
shall at the expense of the Company notify each Certificateholder of the
related Series by mail at its address as it appears in the related Register
of each related Special Payment for such Series. If the related Equipment
Certificates are to be redeemed or purchased in whole prior to their
respective maturities, or if a Special Payment is to be made pursuant to
either of the last two paragraphs of Section 2.02(b) hereof, such notice
shall be mailed not less than 20 days prior to the date any such Special
Payment is scheduled to be distributed. For any other Special Payment,
such notice shall be mailed as soon as practicable after the Pass Through
Trustee has received funds for such Special Payment. Such notices of
Special Payments shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 12.01 hereof);
(ii) the amount of the Special Payment for each $1,000 face amount
Pass Through Certificate and the amount thereof constituting principal,
premium, if any, and interest on the related Equipment Certificates;
(iii) the reason for the Special Payment; and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date for such Series, the total amount to be received on
such date for each $1,000 face amount Pass Through Certificate.
If the amount of premium, if any, payable upon the redemption or purchase
in whole of an Equipment Certificate has not been calculated at the time
that the Pass Through Trustee mails the notice of the related Special
Payment, it shall be sufficient if the notice sets forth the other amounts
to be distributed and states that any premium received will also be
distributed.
If, for any Pass Through Trust, any cancelable redemption of
the related Equipment Certificates is cancelled, the Pass Through Trustee,
as soon as possible after learning thereof, shall notify by mail each
Certificateholder of the related Series at its address as it appears on the
related Register.
(d) For each Pass Through Trust, any Scheduled Payment or
Special Payment to be distributed pursuant to this Article V shall be
payable at the Corporate Trust Office of the Pass Through Trustee or at any
office or agency maintained for such purpose for the related Series
pursuant to Section 3.02 hereof, provided that any Scheduled Payment or
Special Payment may be payable at the option of the Pass Through Trustee or
its Paying Agent for the related Series by mailing checks for such
Scheduled Payment or Special Payment payable to or upon the written order
of the related Certificateholders entitled thereto as they appear on the
related Register.
SECTION 5.03. Statements to Certificateholders. (a) On each
Regular Distribution Date and Special Distribution Date, the Pass Through
Trustee shall mail to Certificateholders of the related Series a statement,
giving effect to such distribution to be made on such Regular Distribution
Date or Special Distribution Date, as the case may be, setting forth the
following information (as to (i) and (ii) below, for each $1,000 face
amount Pass Through Certificate):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any, on the related Equipment
Certificates;
(ii) the amount of such distribution allocable to interest on the
related Equipment Certificates; and
(iii) the Pool Balance and the Pool Factor of the related Pass
Through Trust.
(b) For each Series, within a reasonable period of time after
the end of each calendar year but not later than the latest date permitted
by law, the Pass Through Trustee shall furnish to each Person who at any
time during such calendar year was a Certificateholder of such Series a
statement containing the sum of the amounts determined pursuant to clauses
(a)(i) and (a)(ii) of this Section 5.03 for the related Pass Through Trust
for such calendar year or, in the event such Person was a Certificateholder
of such Series during a portion of such calendar year, for the applicable
portion of such year.
SECTION 5.04. Investment of Special Payment Moneys. Any money
received by the Pass Through Trustee pursuant to Section 5.01(b) hereof
representing a Special Payment that is not to be promptly distributed
shall, to the extent practicable, be invested by the Pass Through Trustee
in Permitted Investments selected by the Company pending distribution of
such Special Payment pursuant to Section 5.02 hereof. Any investment made
pursuant to this Section 5.04 shall be in such Permitted Investments having
maturities not later than the date that such moneys are required to be used
to make the payment required under Section 5.02 hereof on the applicable
Special Distribution Date and the Pass Through Trustee shall hold any such
Permitted Investments until maturity. The proceeds upon maturity of any
Permitted Investment shall not be reinvested pending distribution. The
Pass Through Trustee shall have no liability with respect to any investment
made pursuant to this Section 5.04, other than by reason of the willful
misconduct or negligence of the Pass Through Trustee. All income and
earnings from such investments shall be distributed on such Special
Distribution Date as part of such Special Payment.
SECTION 5.05. Withholding Taxes. The Pass Through Trustee
shall withhold any taxes required to be withheld on payments to any
Certificateholder of any Series, except to the extent that such
Certificateholder has furnished evidence reasonably satisfactory to the
Pass Through Trustee of any exemption from withholding claimed by such
Certificateholder, and under no circumstances shall the failure of any such
Certificateholder to receive any amounts so withheld constitute an Event of
Default. The Pass Through Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any taxes or similar charges are
required to be withheld with respect to any amounts payable in respect of
the Pass Through Certificates of such Series, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on
behalf of the Certificateholders of such Series, that it will file any
necessary withholding tax returns or statements when due, and that, as
promptly as possible after the payment thereof, it will deliver to each
such Certificateholder appropriate documentation showing the payment
thereof, together with such additional documentary evidence as any such
Certificateholder of such Series may reasonably request from time to time.
The Pass Through Trustee agrees to file any other information reports as it
may be required to file under law.
Notwithstanding any provision to the contrary herein, if the
Company is required to pay any withholding tax or any interest or penalty
thereon, or to indemnify an Owner Participant or Owner Trustee pursuant to
Section 8.01(c) of any related Participation Agreement with respect to the
Pass Through Trustee's failure to withhold with respect to any
Certificateholder, the Pass Through Trustee shall be entitled to retain any
payments otherwise distributable to such Certificateholder that was subject
to such withholding until such amounts shall have been recovered in full by
the Pass Through Trustee.
ARTICLE VI
CONCERNING THE CERTIFICATEHOLDERS
SECTION 6.01. Evidence of Action Taken by Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Pass Through Agreement to be given or
taken by Certificateholders of any Series may be embodied in and evidenced
by one or more substantially similar instruments signed by such
Certificateholders in person or by an agent duly appointed in writing, and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the Pass
Through Trustee. Proof of execution of any instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Pass
Through Agreement and (subject to Sections 8.02 and 8.03 hereof) conclusive
in favor of the Pass Through Trustee, if made in the manner provided in
this Article VI.
(b) For the purpose of determining the Certificateholders of
any Series entitled to vote or consent to any direction, waiver or other
action of such Certificateholders under Section 7.10 or 7.11 hereof, the
Company may set a record date for such vote or consent by specifying such
record date in an Officer's Certificate delivered to the Pass Through
Trustee. Notwithstanding Section 316(c) of the Trust Indenture Act, such
record date shall be a date not more than 15 days prior to the first
solicitation of such vote or consent.
SECTION 6.02. Proof of Execution of Instruments and of Holding
of Certificates. Subject to Sections 8.02 and 8.03 hereof, the execution
of any instrument by a Certificateholder or his or her agent or proxy may
be proved in accordance with such reasonable rules and regulations as may
be prescribed by the Pass Through Trustee. The holding of Pass Through
Certificates shall be proved by the Register or by a certificate of the
Registrar.
SECTION 6.03. Certificateholders to Be Treated as Owners.
Prior to due presentment for registration of transfer of any Pass Through
Certificate, each related Indenture Trustee, the Pass Through Trustee, any
agent of any such related Indenture Trustee or the Pass Through Trustee,
the Paying Agent, if any, the Registrar and the Company may deem and treat
the Person in whose name such Pass Through Certificate shall be registered
upon the Register as the absolute owner of such Pass Through Certificate
(whether or not such Pass Through Certificate shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment on account of the principal payable with
respect to and, subject to the provisions of this Pass Through Agreement,
interest payable with respect to such Pass Through Certificate and for all
other purposes; and neither any such related Indenture Trustee nor the Pass
Through Trustee (nor any agent of any such related Indenture Trustee or the
Pass Through Trustee) nor the Paying Agent, if any, nor the Registrar nor
the Company shall be affected by any notice to the contrary. All such
payments so made to any such Person, or upon such Person's order, shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy
and discharge the liability for moneys payable upon any such Pass Through
Certificate.
SECTION 6.04. Pass Through Certificates Owned by the Company
and Related Owner Trustees Deemed Not Outstanding. In determining whether
the Certificateholders of the requisite aggregate Fractional Undivided
Interest of Pass Through Certificates of any Series have concurred in any
direction, consent or waiver under this Pass Through Agreement, Pass
Through Certificates of such Series that are owned by the Company, any
Related Owner Trustee or Related Owner Participant or any obligor on such
Pass Through Certificates or by any Affiliate of the Company, any such
Related Owner Trustee or Related Owner Participant or any obligor on such
Pass Through Certificates shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination; provided that for
the purpose of determining whether the Pass Through Trustee shall be
protected in relying on any such direction, consent or waiver, only if a
Responsible Officer of the Pass Through Trustee has actual knowledge that
certain Pass Through Certificates are so owned shall such Pass Through
Certificates be so disregarded; and provided further that if all Pass
Through Certificates of such Series that would be deemed Outstanding in the
absence of the foregoing provision are owned by the Company, any Related
Owner Trustee or Related Owner Participant or any obligor on such Pass
Through Certificates or by any Affiliate of the Company, any such Related
Owner Trustee or Related Owner Participant or any obligor on such Pass
Through Certificates, then such Pass Through Certificates shall be deemed
Outstanding for the purpose of any such determination. Pass Through
Certificates so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Pass
Through Trustee the pledgee's right so to act with respect to such Pass
Through Certificates and that the pledgee is not the Company, any Related
Owner Trustee or Related Owner Participant or any obligor upon the Pass
Through Certificates or any Affiliate of the Company, any Related Owner
Trustee or Related Owner Participant or any obligor on such Pass Through
Certificates. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Pass
Through Trustee in accordance with such advice.
For any Series, upon request of the Pass Through Trustee, the
Company, the Related Owner Trustees and the Related Owner Participants
promptly shall furnish to the Pass Through Trustee an Officer's Certificate
listing and identifying all Pass Through Certificates of such Series, if
any, known by the Company or any such Related Owner Trustee or Related
Owner Participant to be owned or held by or for the account of any of the
above-described persons; and the Pass Through Trustee shall be entitled to
accept such Officer's Certificate as conclusive evidence of the facts set
forth therein and of the fact that all Pass Through Certificates of such
Series not listed therein are Outstanding for the purpose of any such
determination. For the purpose of determining whether Pass Through
Certificates of a Series are Outstanding as described in this Section 6.04,
an "obligor" on such Pass Through Certificates shall include any obligor or
any Affiliate of any such obligor on any Equipment Certificates that
constitute Trust Property of the related Pass Through Trust.
SECTION 6.05. Right of Revocation of Action Taken. For any
Series, at any time prior to (but not after) the evidencing to the Pass
Through Trustee, as provided in Section 6.01 hereof, of any action taken by
the related Certificateholders of the percentage in aggregate of Fractional
Undivided Interests in the related Pass Through Trust specified in this
Pass Through Agreement in connection with such action, any
Certificateholder of a Pass Through Certificate of such Series, the serial
number of which is shown by the evidence to be included among the
outstanding serial numbers of the Pass Through Certificates of such Series,
the Certificateholders of which have consented to such action, may, by
filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article VI, revoke such action so far as
concerns such Pass Through Certificate. Except as aforesaid, any such
action taken shall be conclusive and binding upon such Certificateholder
for such Pass Through Certificate and upon all future Certificateholders
and owners of such Pass Through Certificate and of any Pass Through
Certificates issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Pass
Through Certificate or otherwise. Any action taken by such
Certificateholders of the percentage in aggregate of Fractional Undivided
Interests in the related Pass Through Trust specified in this Pass Through
Agreement in connection with such action shall be conclusively binding upon
the Pass Through Trustee and all the Certificateholders of such Series.
SECTION 6.06. ERISA. Unless otherwise specified in the
applicable Series Supplement, no employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or individual retirement account or plan subject to Section 4975
of the Code (hereinafter collectively referred to as an "ERISA Plan"), may
acquire or hold any of the Pass Through Certificates. If the Pass Through
Certificates are not described in the applicable Series Supplement as being
eligible for purchase by ERISA Plans, the purchase by any person of any
Pass Through Certificate constitutes a representation by such person to the
Company, the Related Owner Participants, the Related Owner Trustees, the
Related Indenture Trustees and the Pass Through Trustee that such person is
not an ERISA Plan and that such person is not acquiring, and has not
acquired, such Pass Through Certificate with assets of an ERISA Plan.
ARTICLE VII
REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS
SECTION 7.01. Events of Default. (a) Exercise of Remedies. If,
for any Pass Through Trust, an Indenture Event of Default under an
Indenture relating to any Equipment Certificate that constitutes Trust
Property of such Pass Through Trust (an "Event of Default") shall occur and
be continuing, then, subject to the provisions of any Intercreditor
Agreement, the Pass Through Trustee may vote all of the Equipment
Certificates under such Indenture held by such Pass Through Trust, and upon
the direction of the Majority In Interest of Certificateholders of the
related Series, the Pass Through Trustee shall vote a corresponding
majority of such Equipment Certificates in favor of directing the
applicable Related Indenture Trustee to declare the unpaid principal of
such Equipment Certificates then outstanding, together with interest
accrued but unpaid thereon and all other amounts due under such Equipment
Certificates and the related Indenture, to be due and payable under, and in
accordance with the provisions of, such Indenture. In addition, if such
Event of Default shall have occurred and be continuing, subject to the
provisions of any Intercreditor Agreement, the Pass Through Trustee may in
accordance with such related Indenture vote such Equipment Certificates to
direct the applicable Related Indenture Trustee regarding the exercise of
remedies provided in such Indenture.
If, for any Pass Through Trust, an Event of Default shall have
occurred and be continuing, subject to the provisions of any Intercreditor
Agreement, the Pass Through Trustee may, and upon the direction of the
Majority In Interest of Certificateholders of the related Series shall, by
such officer or agent as it may appoint, sell, convey, transfer and deliver
any Equipment Certificates held in such Pass Through Trust that are subject
to the corresponding Indenture Event of Default, without recourse to or
warranty by the Pass Through Trustee or any Certificateholder of such
Series, to any Person. In any such case, the Pass Through Trustee shall
sell, assign, contract to sell or otherwise dispose of and deliver any such
Equipment Certificates in one or more parcels at public or private sale or
sales, at any location or locations at the option of the Pass Through
Trustee, all upon such terms and conditions as it may reasonably deem
advisable and at such prices as it may reasonably deem advisable, for cash.
If the Pass Through Trustee so decides or is required to sell
or otherwise dispose of any Equipment Certificates pursuant to this Section
7.01, the Pass Through Trustee shall take such of the actions described
above as it may reasonably deem most effective to complete the sale or
other disposition of such Equipment Certificates, so as to provide for the
payment in full of all amounts due on such Equipment Certificates with
respect to the related Series. Notwithstanding the foregoing, any action
taken by the Pass Through Trustee under this Section 7.01 shall not, in the
reasonable judgment of the Pass Through Trustee, be adverse to the best
interests of the Certificateholders of such Series.
If an Intercreditor Agreement is applicable and the Pass
Through Trustee is the Controlling Party thereunder, the Pass Through
Trustee upon the occurrence of an Indenture Event of Default may direct the
exercise of remedies in connection therewith.
(b) Purchase Rights of Certificateholders. If an
Intercreditor Agreement is applicable, by acceptance of its Pass Through
Certificate, each Certificateholder agrees that at any time after the
occurrence and during the continuation of a Triggering Event, each
Certificateholder of Pass Through Certificates of a Series will have
certain rights, the exercise of which will be specified in the applicable
Series Supplement, to purchase the class of Pass Through Certificates with
senior to the Pass Through Certificates held by the purchasing
Certificateholder. The purchase price with respect to the Pass Through
Certificates of any series shall be equal to the Pool Balance of the Pass
Through Certificates of such series, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Certificateholders
under this Agreement, any Intercreditor Agreement or any other Indenture
Document or on or in respect of the Pass Through Certificate of such
Series; provided, however, that no such purchase of Pass Through
Certificates of such Series shall be effective unless the purchaser shall
certify to the Pass Through Trustee that contemporaneously with such
purchase, such purchaser is purchasing, pursuant to the terms of this
Agreement and the other Agreements, if any, relating to Pass Through
Certificates of a series that are subject to the same Intercreditor
Agreement (such other Agreements, the "Other Agreements"), the Pass Through
Certificates of each such series that is senior to the Pass Through
Certificates held by such purchaser. Each payment of the purchase price of
the Pass Through Certificates of any Series shall be made to an account or
accounts designated by the Pass Through Trustee and each such purchase
shall be subject to the terms of this Section. Each Certificateholder of
any Series agrees by its acceptance of Pass Through Certificates of such
Series that it will, upon payment from any such Certificateholders of Pass
Through Certificates with a lower seniority of the purchase price specified
herein, forthwith sell, assign, transfer and convey to the purchaser
thereof (without recourse, representation or warranty of any kind except
for its own acts), all of the right, title, interest and obligation of such
Certificateholder in this Agreement, any Intercreditor Agreement, the
Liquidity Facility, the Indenture Documents and all Pass Through
Certificates of such Series held by such Certificateholder (excluding all
right, title and interest under any of the foregoing to the extent such
right, title or interest is with respect to an obligation not then due and
payable as respects any action or inaction or state of affairs occurring
prior to such sale) and the purchaser shall assume all of such
Certificateholder's obligations under this Agreement, any Intercreditor
Agreement, the Liquidity Facility and the Indenture Documents. The Pass
Through Certificates of such Series will be deemed to be purchased on the
date of payment of the purchase price is made notwithstanding the failure
of the Certificateholders to delivery any Pass Through Certificates of such
Series and, upon such a purchase, (i) the only rights of the
Certificateholders will be to deliver the Pass Through Certificates to the
purchaser and receive the purchase price for such Pass Through Certificates
of such series and (ii) if the purchaser shall so request, such
Certificateholder will comply with all of the provisions of Section 2.08
hereof to enable new Pass Through Certificates of such Series to be issued
to the purchaser in such denominations as it shall request. All charges
and expenses in connection with the issuance of any such new Pass Through
Certificates shall be borne by the purchaser thereof.
SECTION 7.02. Incidents of Sale of Equipment Certificates.
Upon any sale of all or any part of the Equipment Certificates held in any
Pass Through Trust made either under the power of sale given under this
Pass Through Agreement or the related Series Supplement or otherwise for
the enforcement of this Pass Through Agreement and the related Series
Supplement, the following shall be applicable:
(1) Certificateholders and Pass Through Trustee May Purchase
Equipment Certificates. Any Certificateholder of the related Series,
the Pass Through Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of such Equipment
Certificates, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Equipment Certificates in its or
their own absolute right without further accountability.
(2) Receipt of Pass Through Trustee Shall Discharge Purchaser.
The receipt of the Pass Through Trustee or of the officer making such
sale shall be a sufficient discharge to any purchaser for his or her
purchase money, and, after paying such purchase money and receiving
such receipt, such purchaser or its personal representative or
assigns shall not be obliged to see to the application of such
purchase money, or be in any way answerable for any loss,
misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Pass Through Trustee upon any sale made either under
the power of sale given by this Pass Through Agreement or the related
Series Supplement or otherwise for the enforcement of the related
Pass Through Trust, shall be deposited and distributed as a Special
Payment as provided in Article V hereof.
SECTION 7.03. Pass Through Trustee May Prove Debt. If any
amount payable under any Equipment Certificate held by any Pass Through
Trust is not paid when due and payable, the Pass Through Trustee, in its
own name and as trustee of an express trust, as holder of such Equipment
Certificate shall be, to the extent permitted by and in accordance with the
terms of the related Indenture Documents and any Intercreditor Agreement,
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree, and may enforce
any such judgment or final decree against the applicable Owner Trustee, in
the case of an Equipment Trust Certificate, or the Company, in the case of
an Equipment Purchase Certificate, or other obligor upon such Equipment
Certificate and collect in the manner provided by law out of the property
of such Owner Trustee, or the Company or such other obligor upon such
Equipment Certificate, as the case may be, wherever situated, the moneys
adjudged or decreed to be payable.
All rights of action and of asserting claims under this Pass
Through Agreement, or under any of the Pass Through Certificates, may be
prosecuted and enforced by the Pass Through Trustee without the possession
of any of such Pass Through Certificates or the production thereof in any
trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Pass Through Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of
the Pass Through Trustee, each predecessor Pass Through Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the
Certificateholders of the related Series.
In any proceedings brought by the Pass Through Trustee (and
also any proceedings involving the interpretation of any provision of this
Pass Through Agreement, any Series Supplement or any Intercreditor
Agreement to which the Pass Through Trustee shall be a party) the Pass
Through Trustee shall be held to represent all the Certificateholders of
the related Series, and it shall not be necessary to make any such
Certificateholders parties to any such proceedings.
SECTION 7.04. Remedies Cumulative. Each and every right,
power and remedy given to the Pass Through Trustee or to any of the
Certificateholders of any Series specifically or otherwise under any Pass
Through Trust shall be cumulative and shall be in addition to every other
right, power and remedy specifically given thereunder or now or hereafter
existing at law, in equity or by statute, and each and every right, power
and remedy whether specifically given thereunder or otherwise existing may
be exercised from time to time and as often and in such order as may be
deemed expedient by the Pass Through Trustee or the Certificateholders of
the related Series, and the exercise or the beginning of the exercise of
any power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy.
No delay or omission by the Pass Through Trustee or of any such
Certificateholder in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the applicable Owner
Trustee, if any, or the Company, as the case may be, or to be an
acquiescence therein.
SECTION 7.05. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Pass
Through Trustee may in its discretion and subject to its rights of
appropriate indemnification under Sections 7.07 and 8.03 and Article IX
hereof, to the extent permitted by and in accordance with any Intercreditor
Agreement and the Indenture Documents, proceed to protect and enforce its
rights and rights of the Certificateholders of the related Series by such
appropriate judicial proceedings as the Pass Through Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or
in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement under the related Pass Through
Trust or in aid of the exercise of any power granted thereunder or to
enforce any other legal or equitable right vested in the Pass Through
Trustee or the Certificateholders under such Pass Through Trust or by law;
provided that any sale of any portion of the related Trust Property shall
be done in accordance with Section 7.02 hereof.
SECTION 7.06. Discontinuance of Proceedings. If the Pass
Through Trustee or any Certificateholder of any Series institutes any
proceeding to enforce any right, power or remedy under the related Pass
Through Trust, and such proceeding is discontinued or abandoned for any
reason or is determined adversely to the Pass Through Trustee or such
Certificateholder, then and in every such case the applicable Owner
Trustee, if any, and the applicable Indenture Trustee, the Pass Through
Trustee, the Certificateholders of such Series and the Company shall,
subject to any determination in such proceeding, be restored to their
former positions and rights under such Pass Through Trust with respect to
the Trust Property and all rights, remedies and powers of the Pass Through
Trustee and such Certificateholders shall continue as if no such proceeding
had been instituted.
SECTION 7.07. Limitations on Suits by Certificateholders. No
Certificateholder of any Series shall have any right by virtue or by
availing of any provision of the related Pass Through Trust to institute
any action or proceeding at law or in equity or in bankruptcy or otherwise
upon or under or with respect to such Pass Through Trust, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy thereunder, unless such Certificateholder
previously has notified the Pass Through Trustee in writing of an Event of
Default under such Pass Through Trust and of the continuance thereof, as
provided herein, and the Certificateholders of the related Pass Through
Certificates then Outstanding (or the proxy therefor) representing in the
aggregate not less than 50% of the Fractional Undivided Interests of Pass
Through Certificates then Outstanding under such Pass Through Trust have
requested in writing that the Pass Through Trustee institute such action or
proceedings in its own name as trustee under such Pass Through Trust and
have offered to the Pass Through Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Pass Through Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute any such action or proceedings and no direction inconsistent with
such written request has been given to the Pass Through Trustee pursuant to
Section 7.10 hereof; it being understood and intended, and being expressly
covenanted by such Certificateholder with every other Certificateholder of
such Series and the Pass Through Trustee, that no one or more
Certificateholders of such Series shall have any right in any manner
whatever to affect, disturb or prejudice the rights of any other
Certificateholder of such Series or to obtain or seek to obtain priority
over or preference to any other Certificateholder of such Series or to
enforce any right under the related Pass Through Trust, except in the
manner provided therein and for the equal, ratable and common benefit of
all Certificateholders of such Series. For the protection and enforcement
of the provisions of this Section 7.07, each and every Certificateholder of
the related Series and the Pass Through Trustee shall be entitled to such
relief as can be given either at law or in equity.
SECTION 7.08. Unconditional Right of Certificateholders to
Receive Principal, Interest and Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Pass Through Agreement, any
Series Supplement or any Pass Through Certificate issued pursuant to such
Series Supplement, but subject to any Intercreditor Agreement, the right of
any Certificateholder of the related Series to receive distributions on
such Pass Through Certificate of Scheduled Payments or Special Payments
pursuant to Article V hereof on or after the respective due dates set forth
in such Series Supplement, or, subject to Section 7.07 hereof, to institute
suit for the enforcement of any such distribution on or after such
respective dates as provided herein or therein, shall not be impaired or
affected without the consent of such Certificateholder. The purchase by
any Certificateholder of any Pass Through Certificate constitutes the
consent of such Certificateholder to the retention by the Pass Through
Trustee of certain amounts otherwise distributable to such
Certificateholder in accordance with Section 5.05 hereof.
SECTION 7.09. Control by Certificateholders. Subject to any
Intercreditor Agreement, a Majority In Interest of Certificateholders of
any Series has the right with respect to the related Pass Through Trust to
direct the Pass Through Trustee as to the time, method, and place of
conducting any proceeding for any remedy available to the Pass Through
Trustee with respect to such Pass Through Trust or pursuant to the terms of
any Intercreditor Agreement, or exercising any trust or power conferred on
the Pass Through Trustee under this Agreement or any Intercreditor
Agreement, including any right of the Pass Through Trustee as Controlling
Party under any Intercreditor Agreement or as holder of the Equipment
Certificates; provided that such direction is not otherwise than in
accordance with law and the provisions of such Pass Through Trust and the
Pass Through Trustee has received, to the extent provided in Sections 7.07
and 8.03 and Article IX hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Pass Through Trustee; and provided further that the Pass Through Trustee
has the right to decline to follow any such direction if the Pass Through
Trustee, being advised by counsel, determines that the action or proceeding
so directed may not lawfully be taken or if the Pass Through Trustee in
good faith by its board of directors, the executive committee, or a trust
committee of directors or Responsible Officers of the Pass Through Trustee
determines that the action or proceedings so directed would involve the
Pass Through Trustee in personal liability or if the Pass Through Trustee
in good faith so determines that the actions or forebearances specified in
or pursuant to such direction would be unduly prejudicial to the interests
of the Certificateholders of such Series not joining in the giving of said
direction, it being understood that the Pass Through Trustee shall have no
duty to ascertain whether or not such actions or forebearances are unduly
prejudicial to such Certificateholders.
Nothing in this Pass Through Agreement or any Series Supplement
shall impair the right of the Pass Through Trustee in its discretion to
take any action deemed proper by the Pass Through Trustee with respect to
the related Pass Through Trust and which is not inconsistent with such
direction by Certificateholders of the related Series.
SECTION 7.10. Waiver of Past Events of Default. Subject to
any Intercreditor Agreement, the Majority in Interest of Certificateholders
of any Series (i) may on behalf of all of the Certificateholders waive any
past Event of Default under the related Pass Through Trust or the related
Series Supplement and its consequences or (ii) if the Pass Through Trustee
is the Controlling Party, may direct the Pass Through Trustee to instruct
the applicable Indenture Trustee to waive, any past Indenture Default under
any Indenture and its consequences, and thereby annul any direction given
by such Certificateholders or the Pass Through Trustee to such Indenture
Trustee with respect thereto. Upon such waiver such Event of Default will
cease to exist and any Event of Default arising therefrom will be deemed to
have been cured for every purpose of such Pass Through Trust, but no such
waiver will extend to any subsequent or other Event of Default thereunder
or impair any right consequent thereon; provided that any such waiver will
be effective to waive any such past Event of Default and its consequences
as described above 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; and provided
further that in the absence of written instructions from all
Certificateholders of any Series (or the proxy therefor), the Pass Through
Trustee shall not waive any Event of Default (i) consisting of the failure
to pay any principal of, or premium (if any), or interest on, or other
amounts due under, any Equipment Certificate held by the related Pass
Through Trust and the consequent failure to distribute any related
Scheduled Payment or Special Payment pursuant to Article V hereof on or
after the respective due date therefor set forth in the related Series
Supplement or (ii) in respect of a covenant or provision under any Pass
Through Trust that, under Article XI hereof or the related Series
Supplement, cannot be modified or amended without the consent of each
Certificateholder of the related Series (or the proxy therefor).
SECTION 7.11. Notice of Pass Through Defaults. The Pass
Through Trustee shall, in the manner and to the extent required by Section
313(c) of the Trust Indenture Act, notify the Certificateholders of any
Series of all Pass Through Defaults under the related Pass Through Trust
known to the Pass Through Trustee, unless such Pass Through Defaults have
been cured before the giving of such notice; provided that under no
circumstances shall the Pass Through Trustee give such notice until the
earlier of the time at which such Pass Through Default becomes an Event of
Default or the expiration of a period of 60 days from the occurrence of
such Pass Through Default; and provided further that, except in the case of
the failure to pay any principal of or interest on or any other amount due
under any of the Equipment Certificates held by any Pass Through Trust and
the consequent failure to distribute any related Scheduled Payment or
Special Payment pursuant to Article V hereof on or after the respective due
date therefor set forth in the related Series Supplement, the Pass Through
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of
directors or trustees or Responsible Officers of the Pass Through Trustee
in good faith determines that the withholding of such notice is in the
interests of the Certificateholders of the related Series.
ARTICLE VIII
CONCERNING THE PASS THROUGH TRUSTEE
SECTION 8.01. Acceptance by Pass Through Trustee. The Pass
Through Trustee, upon the execution and delivery of a Series Supplement
creating a Pass Through Trust and providing for the issuance of a Series of
Pass Through Certificates, shall acknowledge its acceptance of all right,
title and interest in and to the Equipment Certificates to be acquired as
Trust Property of such Pass Through Trust pursuant to the applicable
Participation Agreements and Section 2.02 hereof, and shall declare that
the Pass Through Trustee holds and will hold such right, title, and
interest, together with all other property constituting the Trust Property
of such Pass Through Trust, for the benefit of all then present and future
Certificateholders of such Series, upon the trusts set forth in such Pass
Through Trust.
SECTION 8.02. Pass Through Trustee's Liens. The Pass Through
Trustee agrees that it will, in its individual capacity and at its own cost
and expense (without any right of indemnity in respect of any such cost or
expense under Article IX hereof) promptly take such action as may be
necessary to duly discharge all Liens on any part of the Trust Property of
any Pass Through Trust that result from claims (i) against it in its
individual capacity not related to the administration of such Trust
Property or any other transaction pursuant to this Pass Through Agreement
or the related Series Supplement, or (ii) against it as Pass Through
Trustee hereunder or in its individual capacity which arise out of the
negligence or willful misconduct of the Pass Through Trustee as such
negligence or willful misconduct shall be determined by a final decision of
a court of competent jurisdiction.
SECTION 8.03. Certain Rights of the Pass Through Trustee.
Subject to the Trust Indenture Act:
(a) the Pass Through Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture, note,
coupon, security or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request of any Related Indenture Trustee or Related
Owner Trustee in connection with any Pass Through Trust shall be
sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof is specifically prescribed herein) upon
which the Pass Through Trustee may rely to prove or establish a
matter set forth therein;
(c) whenever in the administration of this Agreement or any
Intercreditor Agreement the Pass Through Trustee may consult with
counsel and any advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted to be taken by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Pass Through Trustee shall not be obligated to exercise
any of the trusts or powers vested in it under any Pass Through Trust
or any Intercreditor Agreement at the request, order or direction of
the Certificateholders of the related Series in accordance with the
provisions thereof, unless such Certificateholders have offered to
the Pass Through Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred therein or
thereby;
(e) the Pass Through Trustee shall not be liable for any action
taken or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it under any Pass Through Trust, under this Agreement or under any
Intercreditor Agreement;
(f) prior to the occurrence of an Event of Default under any
Pass Through Trust and after the curing or waiving of all Events of
Default thereunder, the Pass Through Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond,
debenture, note, security, or other paper or document unless
requested in writing to do so by the Majority in Interest of
Certificateholders of the related Series; provided that if the
payment within a reasonable time to the Pass Through Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Pass Through
Trustee, not reasonably assured to the Pass Through Trustee by the
security afforded to it by the terms of such Pass Through Trust, the
Pass Through Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Pass Through
Trustee or any predecessor trustee, and shall be repaid by the
Company upon demand;
(g) the Pass Through Trustee may execute any of the trusts or
powers under any Pass Through Trust or any Intercreditor Agreement or
perform any duties hereunder or thereunder either directly or by or
through agents or attorneys not regularly in its employ and the Pass
Through Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed by it
with due care under this Agreement or any Intercreditor Agreement;
and
(h) the Pass Through Trustee shall not be required to expend or
risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers under any Pass Through Trust, if the Pass Through
Trustee has determined in good faith that the repayment of such funds
or adequate indemnity against such liability is not reasonably
assured to it.
SECTION 8.04. Pass Through Trustee Not Responsible for Recitals.
The Pass Through Trustee assumes no responsibility for the correctness of
the recitals contained herein or in any Pass Through Certificates, except
for the execution and authentication of such Pass Through Certificates by
the Pass Through Trustee in accordance with Sections 2.05 and 2.06 hereof,
respectively.
SECTION 8.05. Pass Through Trustee and Agents May Hold Pass
Through Certificates; Collections. The Pass Through Trustee and any agent
of the Pass Through Trustee, in its individual or any other capacity, may
become the owner or pledgee of Pass Through Certificates with the same
rights it would have if it were not the Pass Through Trustee or such agent
and, subject to the applicable provisions of the Trust Indenture Act, may
otherwise deal with the Company, any Related Indenture Trustee or Related
Owner Trustee and receive, collect, hold and retain collections therefrom
with the same rights it would have if it were not the Pass Through Trustee
or such agent.
SECTION 8.06. Moneys Held by Pass Through Trustee. Subject to
Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through
Trustee shall, until used or applied as provided herein, be held in trust
for the purposes for which they were received, but need not be segregated
from other funds except to the extent required by mandatory provisions of
law. Subject to Section 5.04 hereof, neither the Pass Through Trustee nor
any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
SECTION 8.07. Right of Pass Through Trustee to Rely on
Officer's Certificate. Subject to Section 8.03 hereof, whenever in the
administration of any Pass Through Trust the Pass Through Trustee shall
deem it necessary or desirable that a matter be proved or established prior
to taking or suffering or omitting any action thereunder, such matter
(unless other evidence in respect thereof is specifically prescribed
herein) may, in the absence of bad faith on the part of the Pass Through
Trustee, be deemed to be conclusively proved and established by an
Officer's Certificate delivered to the Pass Through Trustee by the Company,
any Related Indenture Trustee or any Related Owner Trustee, as the case may
be, and such certificate, in the absence of bad faith on the part of the
Pass Through Trustee, shall be full warrant to the Pass Through Trustee for
any action taken, suffered or omitted by it under the provisions of this
Pass Through Agreement upon the faith thereof.
SECTION 8.08. Compensation. The Company agrees to pay, and
the Pass Through Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and
expenses and disbursements of its counsel, agents and other persons not
regularly in its employ) incurred in connection with its services rendered
hereunder or in any way relating to or arising out of the administration of
any Pass Through Trust or the related Trust Property, except any such
advance, expense or disbursement attributable to the Pass Through Trustee's
negligence, willful misconduct or bad faith or incurred as a result of the
breach of its representation, warranty or covenant set forth in Sections
3.03(iv) and 8.02 hereof, and shall have a priority claim on such Trust
Property for the payment of such compensation, advances, expenses and
disbursements to the extent that such compensation, advances, expenses and
disbursements shall not be paid by the Company.
In addition, the Pass Through Trustee shall be entitled to
reimbursement from, and shall have a priority claim on, all property and
funds held or collected by the Pass Through Trustee with respect to any
Series or the related Pass Through Trust in its capacity as Pass Through
Trustee for any tax incurred without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the acceptance
or administration of such Pass Through Trust (other than any tax
attributable to the Pass Through Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting the
imposition of any such tax. If the Pass Through Trustee reimburses itself
from the Trust Property of such Pass Through Trust for any such tax it
shall within 20 days mail a brief report setting forth the circumstances
thereof to all Certificateholders of the related Series as their names and
addresses appear in the related Register.
ARTICLE IX
INDEMNIFICATION OF
PASS THROUGH TRUSTEE BY THE COMPANY
The Company hereby agrees to assume liability for, and does hereby
indemnify, save and keep harmless the Pass Through Trustee, in its
individual capacity, and its successors, assigns, agents and servants, with
respect to the claims of the Pass Through Trustee for payment or
reimbursement under Section 8.08 hereof and from and against any and all
liabilities, losses, damages, penalties, taxes (excluding any taxes payable
by the Pass Through Trustee on or measured by any compensation received by
the Pass Through Trustee for its services under this Pass Through
Agreement), claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever which
may be imposed on, or incurred by, the Pass Through Trustee in its
individual capacity in any way relating to or arising out of this Pass
Through Agreement, or any Series Supplement or the enforcement of any of
the terms of any thereof, or in any way relating to or arising out of the
administration of any Pass Through Trust or the related Trust Property or
the action or inaction of the Pass Through Trustee hereunder, except only
(i) in the case of negligence, willful misconduct or bad faith of the Pass
Through Trustee in the performance of its duties hereunder or under any
Series Supplement, (ii) as may result from the inaccuracy of any
representation or warranty of the Pass Through Trustee herein or in any
Participation Agreement or (iii) as otherwise provided in Section 8.02
hereof.
The Pass Through Trustee in its individual capacity shall be
entitled to indemnification, from the related Trust Property, for any
liability, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Article IX to the extent
not reimbursed by the Company or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same
the Pass Through Trustee shall have a prior Lien on such Trust Property.
The indemnities contained in this Article IX shall survive the termination
of this Pass Through Agreement or any Pass Through Trust and the
resignation or removal of the Pass Through Trustee hereunder or thereunder.
ARTICLE X
SUCCESSOR TRUSTEES
SECTION 10.01. Resignation and Removal of Pass Through Trustee;
Appointment of Successor. (a) The Pass Through Trustee may resign at any
time as trustee of any Pass Through Trust without cause by giving at least
45 days prior written notice to the Company, the Related Indenture Trustees
and the Related Owner Trustees, if any, such resignation to be effective
upon the acceptance of the trusteeship by a successor Pass Through Trustee.
In addition, a Majority in Interest of Certificateholders of any Series or
the Company may at any time remove the related Pass Through Trustee without
cause by an instrument in writing delivered to the Company (in the case of
removal by a Majority in Interest of Certificateholders of any Series), the
Related Owner Trustees, if any, the Related Indenture Trustees and the Pass
Through Trustee, and the Pass Through Trustee shall promptly notify each
Certificateholder of such Series of such removal in writing, such removal
to be effective upon the acceptance of the trusteeship by a successor Pass
Through Trustee.
In the case of the resignation or removal of the Pass Through
Trustee, the Company or a Majority in Interest of Certificateholders of the
related Series may appoint a successor Pass Through Trustee by an
instrument signed by the Company or such Certificateholders, as the case
may be.
If a successor Pass Through Trustee shall not have been appointed
within 90 days after such notice of resignation or removal, the Pass
Through Trustee, the Company or any Certificateholder of the related Series
may apply to any court of competent jurisdiction to appoint a successor
Pass Through Trustee to act until such time, if any, as a successor shall
have been appointed as provided above. The successor Pass Through Trustee
so appointed by such court shall immediately and without further act be
superseded by any successor Pass Through Trustee appointed by the Company
or a Majority in Interest of Certificateholders as provided above within
one year from the date of the appointment by such court.
(b) If at any time any of the following occurs with respect to
any Pass Through Trust:
(i) the Pass Through Trustee fails to comply with the
requirements of Section 310(G) of the Trust Indenture Act after
written request for such compliance by any Certificateholder of
the related Series who has been a bona fide Certificateholder
of such Series for at least six months;
(ii) the Pass Through Trustee ceases to be eligible in
accordance with the provisions of Section 10.02 hereof to act
as trustee for such Pass Through Trust and fails to resign
after written request for such resignation by the Company or by
any such bona fide Certificateholder; or
(iii) the Pass Through Trustee becomes incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a
receiver or liquidator of the Pass Through Trustee or of its
property shall be appointed, or any public officer takes charge
or control of the Pass Through Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Company may remove the Pass Through Trustee and appoint a successor
trustee by written instrument, one copy of which instrument shall be
delivered to the Pass Through Trustee so removed and one copy to the
successor trustee, or, subject to the provisions of Section 315(e) of the
Trust Indenture Act, any Certificateholder of the related Series who has
been a bona fide Certificateholder of such Series for at least six months
may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Pass Through Trustee
and the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Pass Through Trustee and appoint a successor trustee, which removal and
appointment shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 10.03 hereof. The successor Pass
Through Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Pass Through Trustee appointed
by the Company or the Certificateholders of the related Series as provided
in subsection (a) above within one year from the date of appointment by
such court.
SECTION 10.02. Persons Eligible for Appointment as Pass Through
Trustee. Each Pass Through Trust shall at all times have a Pass Through
Trustee which shall be a Person eligible to act as trustee under Section
310(a) of the Trust Indenture Act and shall be a corporation organized and
doing business under the laws of the United States of America or of any
State or the District of Columbia having a combined capital and surplus of
at least $100,000,000, or a direct or indirect subsidiary of such a
corporation, or a member of a bank holding company group, having a combined
capital and surplus of at least $100,000,000 and such subsidiary or member
itself having a capital and surplus of at least $10,000,000, which
corporate trustee shall be a citizen of the United States of America as
defined under Title 49 of the United States Code, as amended, and which is
authorized under such laws to exercise corporate trust powers and is
subject to supervision of examination by federal, State or District of
Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section
10.02, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent
report of condition so published.
If at any time the Pass Through Trustee ceases to be eligible
in accordance with the provisions of this Section 10.02 to act as trustee
for any Pass Through Trust, the Pass Through Trustee shall resign
immediately as Pass Through Trustee for such Pass Through Trust in the
manner and with the effect specified in Section 10.01 hereof.
SECTION 10.03. Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 10.01 hereof for any
Pass Through Trust shall execute and deliver to the Company and to its
predecessor trustee an instrument accepting such appointment with respect
to such Pass Through Trust, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all
rights, powers, duties and obligations of its predecessor with respect to
such Pass Through Trust, as if such successor trustee was originally named
as trustee of such Pass Through Trust.
Notwithstanding the foregoing, on the written request of the
Company or the successor trustee, the trustee ceasing to act shall, upon
payment of its charges then unpaid and subject to Section 12.04 hereof, pay
over to the successor trustee all moneys at the time held by it with
respect to such Pass Through Trust and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. Upon request of any such successor trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by such trustee
with respect to such Pass Through Trust to secure any amounts then due it
pursuant to the provisions of Article IX hereof.
If a successor trustee is appointed with respect to one or more
(but not all) of the Pass Through Trusts created pursuant to this Pass
Through Agreement, the predecessor trustee and each successor trustee with
respect to such Pass Through Trusts shall execute and deliver a
supplemental agreement hereto which shall be sufficient with respect to
each such Pass Through Trust to effect the removal of any predecessor
trustee retiring and to vest the successor trustee with all rights, powers,
duties and obligations of its predecessor under each such Pass Through
Trust as to which the predecessor Pass Through Trustee is retiring, as if
such successor trustee was originally named as Pass Through Trustee
hereunder or under the applicable Series Supplement, and shall add to or
change any of the provisions of this Pass Through Agreement and the
applicable Series Supplement as shall be necessary to provide for or
facilitate the administration of such Pass Through Trust hereunder by more
than one Pass Through Trustee.
An institution satisfying the criteria specified in Section
10.02 hereof may be appointed, including pursuant to the relevant Series
Supplement, as the Pass Through Trustee in respect of any Series issued or
proposed to be issued if such institution shall execute and deliver to the
Company with respect to the relevant Pass Through Trust an instrument
(which may be the relevant Series Supplement) accepting such appointment
and shall thereupon become vested with all the rights, powers, trusts and
duties of the Pass Through Trustee in respect of such Pass Through Trust.
It is understood that except as provided in Section 10.05
hereof nothing herein or in any supplemental agreement or Series Supplement
shall constitute any Pass Through Trustee a co-trustee of any Pass Through
Trustee and that each Pass Through Trustee may be the Pass Through Trustee
of one or more separate Pass Through Trusts.
No institution shall accept appointment as a Pass Through
Trustee as provided in this Section 10.03 unless at the time of such
acceptance such institution shall be eligible under the provisions of
Article X hereof to act as trustee of the relevant Pass Through Trust.
Upon acceptance of appointment by a successor trustee as
provided in this Section 10.03, the successor trustee shall notify the
Certificateholders of the related Series of such appointment by first-class
mail at their last addresses as they shall appear in the Register, and
shall mail a copy of such notice to the Company, the Related Indenture
Trustees and the Related Owner Trustees, if any. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 10.01 hereof.
SECTION 10.04. Merger, Conversion, Consolidation or Succession
to Business of Pass Through Trustee. Any corporation into which the Pass
Through Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Pass Through Trustee is a party, or any
corporation succeeding to the corporate trust business of the Pass Through
Trustee, shall be the successor to the Pass Through Trustee hereunder,
provided that, anything herein to the contrary notwithstanding, such
corporation shall be eligible under the provisions of Section 10.02 hereof
to act as trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
If, with respect to any Pass Through Trusts at the time of such
succession to the Pass Through Trustee, any of the Pass Through
Certificates of the related Series have been authenticated but not
delivered, such successor may adopt the certificate of authentication of
any such predecessor Pass Through Trustee and deliver such Pass Through
Certificates so authenticated; and, if at that time any of such Pass
Through Certificates have not been authenticated, such successor may
authenticate such Pass Through Certificates either in the name of any of
its predecessor or in its own name as the successor Pass Through Trustee;
and in all such cases such certificate of authentication shall have the
full force of the certificate of authentication of the Pass Through Trustee
set forth in Section 2.01 hereof; provided that the right to adopt the
certificate of authentication of any predecessor Pass Through Trustee or to
authenticate Pass Through Certificates in the name of any predecessor Pass
Through Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 10.05. Appointment of Separate Pass Through Trustees.
(a) At any time or times, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust Property of
any Pass Through Trust may at the time be located or in which any action of
the Pass Through Trustee may be required to be performed or taken, the Pass
Through Trustee, by an instrument in writing signed by it, may appoint one
or more individuals or corporations to act as separate trustee or separate
trustees or co-trustee, acting jointly with the Pass Through Trustee, of
all or any part of such Trust Property, to the full extent that local law
makes it necessary for such separate trustee or separate trustees or co-
trustee, acting jointly with the Pass Through Trustee, to act.
(b) The Pass Through Trustee and, at the request of the Pass
Through Trustee, the Company, shall execute, acknowledge and deliver all
such instruments as may be required by the legal requirements of any
jurisdiction or by any such separate trustee or separate trustees or co-
trustee for the purpose of more fully confirming such title, rights or
duties to such separate trustee or separate trustees or co-trustee. Upon
the acceptance in writing of such appointment by any such separate trustee
or separate trustees or co-trustee, it, he, she or they shall be vested
with such title to such Trust Property or any part thereof, and with such
rights, powers, duties and obligations, as shall be specified in the
instrument of appointment, and such rights, powers, duties and obligations
shall be conferred or imposed upon and exercised or performed by the Pass
Through Trustee, or the Pass Through Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Pass Through Trustee
subject to all the terms of this Pass Through Agreement, except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed the Pass Through Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
separate trustee or separate trustees or co-trustee, as the case may be.
Any separate trustee or separate trustees or co-trustee may, at
any time by an instrument in writing, constitute the Pass Through Trustee
its, her or his attorney-in-fact and agent with full power and authority to
do all acts and things and to exercise all discretion on its, her or his
behalf and in its, her or his name. In case any such separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, the
title to any Trust Property and all assets, property, rights, powers,
duties and obligations and duties of such separate trustee or co-trustee
shall, so far as permitted by law, vest in and be exercised by the Pass
Through Trustee, without the appointment of a successor to such separate
trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Pass Through Agreement which are
for the benefit of the Pass Through Trustee (including without limitation
Article IX hereof) shall extend to and apply to each separate trustee or
co-trustee appointed pursuant to the foregoing provisions of this Section
10.06.
(d) For any Pass Through Trust, every additional trustee and
separate trustee hereunder shall, to the extent permitted by law, be
appointed and act and the Pass Through Trustee shall act, subject to the
following provisions and conditions:
(i) all powers, duties, obligations and rights conferred
upon the Pass Through Trustee in respect of the receipt,
custody, investment and payment of moneys shall be exercised
solely by the Pass Through Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Pass Through Trustee shall be
conferred or imposed and exercised or performed by the Pass
Through Trustee and such additional trustee or trustees and
separate trustee or trustees jointly except to the extent that
under any law of any jurisdiction in which any particular act
or acts are to be performed, the Pass Through Trustee shall be
incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations
(including the holding of title to the Trust Property in any
such jurisdiction) shall be exercised and performed by such
additional trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or exercisable by, any
such additional trustee or separate trustee shall be exercised
hereunder by such additional trustee or separate trustee except
jointly with, or with the consent of, the Pass Through Trustee;
and
(iv) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.
If at any time the Pass Through Trustee shall deem it no longer necessary
or prudent in order to conform to any such law, the Pass Through Trustee
shall execute and deliver all instruments and agreements necessary or
proper to remove any additional trustee or separate trustee.
(e) Any request, approval or consent in writing by the Pass
Through Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the
case may be, to take such action as may be so requested, approved or
consented to.
(f) Notwithstanding any other provision of this Section 10.06,
the powers of any additional trustee or separate trustee shall not exceed
those of the Pass Through Trustee hereunder.
SECTION 10.06. Preferential Claims. Reference is made to
Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4)
and (6) of such Act:
(a) "cash transaction" means any transaction in which full payment
for goods or securities sold is made within seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by
the Company for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables or proceeds
arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the
Company arising from the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation.
ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO THIS
PASS THROUGH AGREEMENT AND OTHER DOCUMENTS
SECTION 11.01. Supplemental Agreements Without Consent of
Certificateholders. The Company and the Pass Through Trustee may enter
into an agreement or agreements supplemental hereto or to any applicable
Intercreditor Agreement or Liquidity Facility for one or more of the
following purposes:
(a) to provide for the formation of any Pass Through Trust, the
issuance of the related Series and the other matters contemplated by
Section 2.01(b) hereof;
(b) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of
the Company herein and in each Series Supplement;
(c) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as the Pass Through Trustee shall
consider to be for the protection of the Certificateholders of any
Series;
(d) to surrender any right or power conferred upon the Company
herein or in any Series Supplement;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any Series Supplement, any Intercreditor Agreement
or any Liquidity Facility that may be defective or inconsistent with any
other provision contained herein or in such Series Supplement,
Intercreditor Agreement or Liquidity Facility; or to modify any other
provision in regard to matters or questions arising under this Pass
Through Agreement or under any Series Supplement, any Intercreditor
Agreement and any Liquidity Facility as the Company may deem necessary
or desirable and that will not adversely affect the interests of the
related Certificateholders;
(f) to correct or amplify the description of any property at any
time that constitutes Trust Property or better to assure, convey and
confirm unto the Pass Through Trustee any such property to be included
in any such Trust Property;
(g) to evidence and provide for the acceptance and appointment
under this Pass Through Agreement by the Pass Through Trustee or a
successor trustee with respect to one or more Pass Through Trusts and
to add to or change any of the provisions hereof as may be necessary
to provide for or facilitate the administration of one or more Pass
Through Trusts by more than one trustee, pursuant to the requirements
of Section 10.03 hereof;
(h) to modify, eliminate or add to the provisions of this Pass
Through Agreement or any Series Supplement to the extent necessary to
continue the qualification of this Pass Through Agreement or such Series
Supplement (including any supplemental agreement) under the Trust
Indenture Act, or under any similar federal statute enacted after the
date hereof, and to add to this Pass Through Agreement or any Series
Supplement such other provisions as may be expressly permitted by the
Trust Indenture Act, excluding, however, the provisions referred to in
Section 316(a)(2) of the Trust Indenture Act as in effect on the date
hereof or any corresponding provision in any similar federal statute
enacted after the date hereof;
(i) to make any other amendments or modifications to this Pass
Through Agreement, provided such amendments or modifications shall only
apply to one or more Series to be issued after the date of such amendment
or modification; or
(j) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the
Certificateholders of any Series;
provided that no such supplemental agreement shall cause any Pass Through
Trust to become taxable as an association within the meaning of Treasury
Regulation Section 301.7701-4.
The Pass Through Trustee is hereby authorized to join in the
execution of any such supplemental agreement, to make any further
appropriate agreements and stipulations that may be contained therein and
to accept the conveyance, transfer, assignment, mortgage or pledge of any
property thereunder, but the Pass Through Trustee shall not be obligated to
enter into any such supplemental agreement that adversely affects the Pass
Through Trustee's own rights, duties or immunities under this Pass Through
Agreement, any Series Supplement or otherwise, whether in its official or
individual capacity.
Any supplemental agreement contemplated by this Section 11.01
may be executed without the consent of the Certificateholders of the
Outstanding Pass Through Certificates of any Series, notwithstanding any of
the provisions of Section 11.02 hereof.
SECTION 11.02. Supplemental Agreements With Consent of
Certificate-holders. With the consent (evidenced as provided in Article
VI) of the Majority in Interest of Certificateholders of any Series, the
Company and the Pass Through Trustee may, from time to time and at any
time, enter into an agreement or agreements supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Pass Through Agreement or of the
related Series Supplement, any Intercreditor Agreement or any Liquidity
Facility or of modifying in any manner the rights of the related
Certificateholders; provided, that no such supplemental agreement shall
cause any Pass Through Trust to become taxable as an association within the
meaning of Treasury Regulation Section 301.7701-4; and provided further
that, without the consent of each Certificateholder of such Series (or the
proxy therefor), no such amendment of or supplement to this Pass Through
Agreement or such related Series Supplement, or modification of the terms
of, or consent under, any thereof, shall:
(a) modify any of the provisions of Section 7.10 or this Section
11.02,
(b) reduce the amount or extend the time of payment of any amount
owing or payable on the related Equipment Certificates or
distributions to be made on any related Pass Through Certificate
pursuant to Article V, or alter the currency in which any amount
payable under any such Pass Through Certificate is to be paid, or
impair the right of any related Pass Through Certificateholder to
commence legal proceedings to enforce a right to receive payment
hereunder,
(c) reduce, modify or amend any indemnities in favor of any
Certificateholder (except as consented to by each such Certificateholder
adversely affected thereby (or the proxy therefor)), or
(d) create or permit the creation of any Lien on the related Trust
Property or any part thereof, or deprive any related
Certificateholder of the benefit of the related Pass Through Trust
with respect to the related Trust Property, whether by disposition of
such Trust Property or otherwise, except as provided in Section 7.02
or in connection with the exercise of remedies under Article VII.
(e) waive, amend or modify the priority of distributions of any
Intercreditor Agreement in a manner adverse to the Certificateholder.
Upon the request of the Company and upon the filing with the
Pass Through Trustee of evidence of the consent of the applicable
Certificateholders required under this Section 11.02 and other documents,
if any, required by Section 6.01, the Pass Through Trustee shall join with
the Company in the execution of such supplemental agreement unless such
supplemental agreement affects the Pass Through Trustee's own rights,
duties or immunities under this Pass Through Agreement or the related
Series Supplement or otherwise, in which case the Pass Through Trustee may
in its discretion, but shall not be obligated to, enter into such
supplemental agreement.
It shall not be necessary for the consent of the
Certificateholders of any Series under this Section 11.02 to approve the
particular form of any proposed supplemental agreement, but it shall be
sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Pass
Through Trustee of any supplemental agreement relating to any Pass Through
Trust pursuant to the provisions of this Section 11.02, the Pass Through
Trustee shall mail a notice thereof by first-class mail to the related
Certificateholders at their addresses as they shall appear on the related
Register, setting forth in general terms the substance of such supplemental
agreement. Any failure of the Pass Through Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental agreement.
SECTION 11.03. Effect of Supplemental Agreements. Upon the
execution of any supplemental agreement pursuant to the provisions hereof
and of any applicable Series Supplement, this Pass Through Agreement and
such Series Supplement shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities hereunder and under the related Pass
Through Trust of the Pass Through Trustee, the Company and the related
Certificateholders shall thereafter be determined, exercised and enforced
hereunder and thereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
agreement shall be and be deemed to be part of the terms and conditions of
this Pass Through Agreement and such Pass Through Trust for any and all
purposes.
SECTION 11.04. Documents to Be Given to Trustee. The Pass
Through Trustee, subject to the provisions of Sections 8.02 and 8.03
hereof, may receive an Opinion of Counsel as conclusive evidence that any
such supplemental agreement complies with the applicable provisions of this
Pass Through Agreement and any applicable Series Supplement.
SECTION 11.05. Notation on Pass Through Certificates in
Respect of Supplemental Agreements. Pass Through Certificates of any
Series authenticated and delivered after the execution of any supplemental
agreement relating to such Series pursuant to the provisions of this
Article XI may bear a notation in form approved by the Pass Through Trustee
as to any matter provided for by such supplemental agreement. If the
Company or the Pass Through Trustee shall so determine, new Pass Through
Certificates for such Series so modified as to conform, in the opinion of
the Company and the Pass Through Trustee, to any modification of this Pass
Through Agreement contained in any such supplemental agreement may be
provided by the Company, executed and authenticated by the Pass Through
Trustee and delivered in exchange for the Outstanding Pass Through
Certificates of such Series.
SECTION 11.06. Trust Indenture Act. Any supplemental
agreement executed pursuant to the terms of this Article XI shall on the
date of the execution thereof conform to the provisions of the Trust
Indenture Act as in force on such date.
SECTION 11.07. Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a
Certificateholder is a continuing consent by such Certificateholder and
every subsequent Certificateholder of the related Pass Through Certificate,
even if notation of the consent is not made on such Pass Through
Certificate. However, any such Certificateholder or subsequent
Certificateholder may revoke the consent as to his or her Pass Through
Certificate if the Pass Through Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every
Certificateholder affected by such amendment or waiver.
SECTION 11.08. Amendments, Waivers, etc., of Related Indenture
Documents. If the Pass Through Trustee, as holder of any Equipment
Certificate in trust for the benefit of the Certificateholders of any
Series or as Controlling Party, receives a request for a consent to any
modification, amendment or supplement to any related Indenture or other
related Indenture Document or to give any consent, waiver, authorization or
approval under such related Indenture or such other related Indenture
Documents, the Pass Through Trustee shall forthwith notify each
Certificateholder of such Series, as shown on the related Register as of
such date, of such request. Such notice shall request instructions from
such Certificateholders with respect to such request. Subject to Section
7.10 hereof, the Pass Through Trustee shall, as the holder of such
Equipment Certificate, consent or vote with respect thereto in the same
proportion as so instructed by the respective Certificateholders of the
related Pass Through Certificates. Notwithstanding the foregoing, but
subject to Section 7.09 hereof and any Intercreditor Agreement, if an Event
of Default shall have occurred and be continuing, the Pass Through Trustee
may, in its own discretion and at its own direction, consent and notify the
Related Indenture Trustee of such consent to any modification, amendment,
supplement or waiver under any related Indenture Document.
ARTICLE XII
TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS
SECTION 12.01. Termination of Pass Through Trusts. For any Pass
Through Trust created by this Pass Through Agreement as supplemented by a
related Series Supplement, such Pass Through Trust and the respective
obligations and responsibilities of the Company and the Pass Through
Trustee under such Pass Through Trust shall terminate upon the distribution
to all Certificateholders of the related Series and the Pass Through
Trustee of all amounts required to be distributed to them pursuant to this
Pass Through Agreement and the related Series Supplement and the
disposition of all property held as part of the Trust Property of such Pass
Through Trust; provided that in no event shall such Pass Through Trust
continue beyond the final expiration date determined as provided in such
Series Supplement.
Notice of termination of any Pass Through Trust, specifying the
applicable Distribution Date upon which the Certificateholders of the
related Series may surrender their Pass Through Certificates to the Pass
Through Trustee for payment of the final distribution and cancellation
thereof, shall be mailed promptly by the Pass Through Trustee to such
Certificateholders not earlier than the 60th day and not later than the
20th day next preceding such final distribution specifying (i) the
Distribution Date upon which such final distribution will be made and that
such distribution will be made only upon presentation and surrender of the
related Pass Through Certificates at the office or agency of the Pass
Through Trustee specified therein, (ii) the amount of any such final
distribution, and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable. The Pass Through Trustee shall notify
the related Registrar at the time such Certificateholders are notified of
such final distribution. Upon presentation and surrender of the Pass
Through Certificates of such Series, the Pass Through Trustee shall
distribute all amounts distributable on such Pass Through Certificates on
such Distribution Date pursuant to Section 5.02 hereof.
SECTION 12.02. Application by Pass Through Trustee of Funds
Deposited for Payment of Pass Through Certificates. Subject to Section
12.04 hereof, all moneys deposited with the Pass Through Trustee for
payment pursuant to Section 12.01 hereof shall be held in trust and applied
by it to the prompt payment, either directly or through any Paying Agent,
to the Certificateholders of the particular Pass Through Certificates for
the payment or redemption of which such moneys have been deposited with the
Pass Through Trustee, of all sums due and to become due thereon; but such
money need not be segregated from other funds except to the extent required
by law.
In the event that all of the Certificateholders of such Series
shall not surrender their Certificates for cancellation within six months
after the date specified in the above-mentioned written notice, the Pass
Through Trustee shall give a second written notice to the remaining
Certificateholders of such Series to surrender their Certificates for
cancellation and to receive the final distribution with respect thereto.
SECTION 12.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of any Pass Through Trust,
all moneys then held by any Paying Agent for such Pass Through Trust shall,
upon demand of the Pass Through Trustee, be repaid to it and thereupon such
Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee
and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys
deposited with or paid to the Pass Through Trustee or any Paying Agent to
be distributed on any Pass Through Certificate and not applied but
remaining unclaimed for two years and eleven months after the date upon
which such amount has become due and payable, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property law, be paid to the applicable Related Indenture
Trustees by the Pass Through Trustee or such Paying Agent and the
applicable Certificateholder shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to such Related Indenture Trustees for any payment
which such Certificateholder may be entitled to collect, and all liability
of the Pass Through Trustee, or any Paying Agent with respect to such
moneys shall thereupon cease.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Capacity in Which Acting. The Pass Through
Trustee acts hereunder and under any Pass Through Trust not in its
individual capacity but solely as trustee except as expressly provided
herein or in the related Series Supplement.
SECTION 13.02. No Legal Title to Trust Property in
Certificateholders. No Certificateholder of any Series shall have legal
title to any part of the Trust Property of the related Pass Through Trust.
No transfer, by operation of law or otherwise, of any Pass Through
Certificate or other right, title and interest of any Certificateholder in
and to such Trust Property or under the related Pass Through Trust shall
operate to terminate such Pass Through Trust or entitle such
Certificateholder or any successor or transferee of such Certificateholder
to an accounting or to the transfer to it of legal title to any part of
such Trust Property.
SECTION 13.03. Certificates Nonassessable and Fully Paid. No
Certificateholder of any Series shall be personally liable for obligations
of the related Pass Through Trust, the Fractional Undivided Interests
represented by the Pass Through Certificates of such Series shall be
nonassessable for any losses or expenses of such Pass Through Trust or for
any reason whatsoever, and upon authentication of such Pass Through
Certificates by the Pass Through Trustee pursuant to Section 3.02 hereof,
such Pass Through Certificates will be and shall be deemed fully paid. No
Certificateholder of such Series shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the operation
and management of the related Trust Property, the related Pass Through
Trust, or the obligations of the parties hereto, nor shall anything set
forth herein, in the related Series Supplement or in the related Pass
Through Certificates be construed so as to constitute the
Certificateholders of such Series from time to time as partners or members
of an association.
SECTION 13.04. Pass Through Agreement for the Benefit of the
Company, the Pass Through Trustee and the Certificateholders. Nothing in
this Pass Through Agreement, in any Series Supplement or in any Pass
Through Certificate, whether express or implied, shall be construed to give
to any person other than the Company, the Pass Through Trustee, as trustee
and in its individual capacity, and the Certificateholders of the
respective related Series any legal or equitable right, remedy or claim
under or in respect of this Pass Through Agreement, any Pass Through Trust
or any such Pass Through Certificate.
SECTION 13.05. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder of any Series shall not
operate to terminate this Pass Through Agreement or the related Pass
Through Trust, nor entitle such Certificateholder's legal representatives
or heirs to claim an accounting or to take any action or commence any
proceeding in any court for a partition or winding up of such Pass Through
Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them. No Certificateholder of any Series shall be
entitled to revoke the related Pass Through Trust.
SECTION 13.06. Notices. Unless otherwise expressly specified
or permitted by the terms hereof or the applicable Series Supplement with
respect to any Pass Through Trust, all notices, requests, demands,
authorizations, directions, consents, waivers or documents provided or
permitted by this Pass Through Agreement or such Series Supplement to be
made, given, furnished or filed with respect to such Pass Through Trust
shall be in writing, mailed by certified mail, postage prepaid, or by
confirmed facsimile, and (i) if to ______________________, as Pass Through
Trustee, at its office at __________________________________,
________________, (fax (___) ___-____), Attention:
___________________________ or (ii) if to the Company, addressed to it at
its office at 2007 Corporate Avenue, Memphis, Tennessee 38132 (fax (901)
395-4758), Attention: Vice President and Treasurer, with a copy to
Executive Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132 (fax (901) 395-4758), and as to any Series, as
otherwise specified in the Series Supplement related thereto. The Company
or the Pass Through Trustee as to any Series, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications. Any party hereto may change the address to which notices
to such party will be sent by giving notice of such change to the other
party to this Pass Through Agreement.
Where this Pass Through Agreement or any Series Supplement
provides for notice to Certificateholders of any Series, such notice shall
be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each such
Certificateholder entitled thereto, at his or her last address as it
appears in the related Register. In any case where notice to
Certificateholders of any Series is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Certificateholder shall affect the sufficiency of such notice with respect
to other Certificateholders of such Series. Where this Pass Through
Agreement or any Series Supplement provides for notice in any manner, such
notice may be waived in writing by the person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Certificateholders shall
be filed with the Pass Through Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon
such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to any
Certificateholders when such notice is required to be given pursuant to any
provision of this Pass Through Agreement or any related Series Supplement,
then any manner of giving such notice as shall be satisfactory to the Pass
Through Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 13.07. Officer's Certificate and Opinion of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Pass Through Trustee to take any action, the Company shall
furnish to the Pass Through Trustee (i) an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Pass Through
Agreement and the applicable Series Supplement relating to the proposed
action have been complied with and that the proposed action is in
conformity with the requirements of this Pass Through Agreement and such
Series Supplement, or (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as
to which the furnishing of such documents is specifically required by any
provision of this Pass Through Agreement or such Series Supplement relating
to such particular application or demand, no additional certificate or
opinion need be furnished.
Each certificate or opinion required by this Pass Through
Agreement or any Series Supplement and delivered to the Pass Through
Trustee with respect to compliance with a condition or covenant provided
for in this Pass Through Agreement or such Series Supplement, except for
the certificate required by Section 4.03(d) hereof shall include (a) a
statement that the person making such certificate or opinion has read such
covenant or condition, (b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based, (c) a statement that,
in the opinion of such person, he or she has made such examination or
investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied
with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which
is in the possession of the Company, upon the certificate, statement or
opinion of or representations by an officer or officers of the Company
unless such counsel knows that the certificate, statement or opinion or
representations with respect to the matters upon which his or her
certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the
Company or of counsel thereto may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by
an accountant or firm of accountants employed by the Company unless such
officer or counsel, as the case may be, knows that the certificate or
opinion or representations with respect to the accounting matters upon
which such certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same
are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Pass Through Trustee shall contain a statement
that such firm is independent.
SECTION 13.08. Conflict of Any Provision of Pass Through
Agreement with the Trust Indenture Act. If and to the extent that any
provision of this Pass Through Agreement limits, qualifies or conflicts
with another provision included in this Pass Through Agreement by operation
of Sections 310 to 317, inclusive, of the Trust Indenture Act (an
"incorporated provision"), such incorporated provision shall control.
SECTION 13.09. Severability. Any provision of this Pass
Through Agreement or any Series Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 13.10. No Oral Modifications or Continuing Waivers.
No terms or provisions of this Pass Through Agreement, any Series
Supplement, or any Pass Through Certificates may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms
hereof or thereof shall be effective only in the specific instance and for
the specific purpose given.
SECTION 13.11. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit
of, each of the parties hereto and the successors and permitted assigns of
each, all as herein provided. Any request, notice, direction, consent,
waiver or other instrument or action by any Certificateholder shall bind
the successors and assigns of such Certificateholder.
SECTION 13.12. Headings. The headings of the various Articles
and Sections herein and in the table of contents hereto are for the
convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
SECTION 13.13. Normal Commercial Relations. Anything
contained in this Pass Through Agreement to the contrary notwithstanding,
the Pass Through Trustee and any Certificateholder, or any bank or other
affiliate of any such party, may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Company fully to the same extent as if this Pass Through Agreement were not
in effect, including without limitation the making of loans or other
extensions of credit to the Company for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
SECTION 13.14. Governing Law; Counterpart Form. THROUGH
CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass Through Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 13.15. Distributions Due on Days Other than Business
Days. If, for any Pass Through Trust, any Distribution Date is not a
Business Day, then such distribution need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect
as if made on the applicable Distribution Date, and no interest shall
accrue for the intervening period.
SECTION 13.16. Registration of Equipment Certificates in Name
of Subordination Agent. If a Pass Through Trust is party to an
Intercreditor Agreement, the Pass Through Trustee agrees that all Equipment
Certificates to be purchased by such Pass Through Trust shall be issued in
the name of the Subordination Agent under such Intercreditor Agreement or
its nominee and held by such Subordination Agent in trust for the benefit
of the Certificateholders, or, if not so held, such Subordination Agent or
its nominee shall be reflected as the owner of such Equipment Certificates
in the register of the issuer of such Equipment Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Pass
Through Agreement to be duly executed this _____ day of _________, ____ by
their respective officers thereunto duly authorized, and acknowledge that
this Pass Through Agreement has been made and delivered in the City of New
York, and this Pass Through Agreement shall be effective only upon such
execution and delivery.
______________________________________,
not in its individual capacity,
except as otherwise expressly
provided herein, but solely
as Pass Through Trustee
By: __________________________________________
Name:
Title:
FEDERAL EXPRESS CORPORATION
By: __________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director - Structured Finance
Exhibit A
to
Pass Through Agreement
FORM OF PASS THROUGH CERTIFICATE
[THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
Unless this pass through certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Pass Through Trustee or its agent for registration or
transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.]
_________
This paragraph is required only if the Pass Through Certificates are
to be represented by the Registered Global Certificate.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__ - __
199_ Pass Through Certificate, Series ___
CUSIP ______
Final Regular Distribution Date: _______
evidencing a fractional undivided interest in a pass
through trust, the property of which includes certain
Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 199__ - _____: ____%.
$___________ Fractional Undivided Interest representing _______ of the Pass
Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ______________, for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional
Undivided Interest in the Federal Express Corporation Pass Through Trust,
199_-_ (the "Pass Through Trust") created and declared by
___________________________________, as pass through trustee (the "Pass
Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of
__________, _____ (the "Pass Through Agreement"), as supplemented by Series
Supplement __ thereto dated ____________, 199_ (the "Series Supplement")
between the Pass Through Trustee and Federal Express Corporation, a
Delaware corporation (the "Company"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings
assigned to them in the Pass Through Agreement and the Series Supplement.
This Pass Through Certificate is one of the duly authorized
Pass Through Certificates designated as "Federal Express Corporation 199_
Pass Through Certificates, Series _______." This Pass Through Certificate
is issued under and is subject to the terms, provisions, and conditions of
the Pass Through Agreement, the Series Supplement and any Intercreditor
Agreement, to which the Certificateholder of this Pass Through Certificate
by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Pass Through Trust
includes certain Equipment Certificates and all rights of the Pass Through
Trust to receive any payments under any Intercreditor Agreement or
Liquidity Facility (the "Trust Property"). Each series of Equipment
Certificates is secured by a security interest in (A) an aircraft leased to
or owned by the Company and, in the case of a leased aircraft, an
assignment of the rights of the Related Owner Trustee with respect to such
aircraft, including the right to receive rent and other amounts payable
under the related Lease or Indenture with respect to such aircraft or (B) a
collateral account holding securities purchased with the proceeds of the
sale of such series of Equipment Certificates. The Pass Through
Certificates represent fractional undivided interests in the Pass Through
Trust and the Trust Property, and have no rights, benefits or interests in
respect of any other separate trust established pursuant to the terms of
the Pass Through Agreement for any other series of Pass Through
Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, from
funds then available to the Pass Through Trustee, there will be distributed
on each ______ and _____ (a "Regular Distribution Date"), commencing on
_______, __, to the Person in whose name this Pass Through Certificate is
registered at the close of business on the 15th day preceding the
applicable Regular Distribution Date, an amount in respect of the Scheduled
Payments on the Equipment Certificates due on such Regular Distribution
Date, equal to the product of the percentage interest in the Pass Through
Trust evidenced by this Pass Through Certificate and an amount equal to the
sum of such Scheduled Payments.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, if
Special Payments on the Equipment Certificates are received by the Pass
Through Trustee, from funds then available to the Pass Through Trustee,
there shall be distributed on the applicable Special Distribution Date, to
the Person in whose name this Pass Through Certificate is registered at the
close of business on the 15th day preceding such Special Distribution Date,
an amount in respect of such Special Payments on the Equipment
Certificates, equal to the product of the percentage interest in the Pass
Through Trust evidenced by this Pass Through Certificate and an amount
equal to the sum of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution
shall be made on the immediately following Business Day with the same force
and effect as if made on such Distribution Date and no interest shall
accrue during the intervening period. The Special Distribution Date shall
be the ______ day of the month determined as provided in the Pass Through
Agreement and the Series Supplement, except in certain circumstances, in
which case it will be the date of receipt of proceeds by the Pass Through
Trustee as provided in the Series Supplement. The Pass Through Trustee
shall mail notice of each Special Payment and the Special Distribution Date
therefor to the Certificateholder of this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by
the Pass Through Trustee to the Person entitled thereto, without the
presentation or surrender of this Pass Through Certificate or the making of
any notation hereon. Except as otherwise provided in the Pass Through
Agreement and notwithstanding the above, the final distribution on this
Pass Through Certificate will be made after notice mailed by the Pass
Through Trustee of the pendency of such distribution and only upon
presentation and surrender of this Pass Through Certificate at the office
or agency of the Pass Through Trustee specified in such notice.
[NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL
RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN
"ERISA" PLAN), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES.
THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A
REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED
OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE
TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS
THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON
IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH
ASSETS OF AN ERISA PLAN.]
This Pass Through Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
_________
Subject to revision as set forth in Section 6.06 hereof.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been
executed by the Pass Through Trustee, by manual signature, this Pass
Through Certificate shall not be entitled to any benefit under the related
Pass Through Trust or be valid for any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, SERIES 199__-__
By: __________________________,
as Pass Through Trustee
By: ___________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and related Series Supplement.
_________________________,
as Pass Through Trustee
By: ______________________
Authorized Signatory
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct
obligation of, or an obligation guaranteed by, or an interest in, the
Company or the Pass Through Trustee or any affiliate thereof. The Pass
Through Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Pass Through Agreement
and the Series Supplement. All payments or distributions made to
Certificateholders under the Pass Through Agreement shall be made only from
the Trust Property and only to the extent that the Pass Through Trustee
shall have sufficient income or proceeds from the Trust Property to make
such payments in accordance with the terms of the Pass Through Agreement
and the Series Supplement.
Each Certificateholder of this Pass Through Certificate, by its
acceptance hereof, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for distribution
to such Certificateholder as provided in the Pass Through Agreement and the
Series Supplement.
In connection with withholding taxes, under certain
circumstances the Pass Through Trustee may retain certain amounts otherwise
distributable to a Certificateholder. The purchase by any
Certificateholder of any Pass Through Certificate constitutes the consent
of such Certificateholder to such retention in accordance with the terms of
the Pass Through Agreement.
This Pass Through Certificate does not purport to summarize the
Pass Through Agreement and the Series Supplement and reference is made to
the Pass Through Agreement and the Series Supplement for information with
respect to the interests, rights, benefits, obligations, proceeds, and
duties evidenced hereby. A copy of the Pass Through Agreement may be
examined by any Certificateholder upon request, during normal business
hours at the principal office of the Pass Through Trustee, and at such
other places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate,
and assuming that no prepayment or default in respect of the Equipment
Certificates shall occur, the aggregate scheduled repayments of principal
on the Equipment Certificates for the Pass Through Trust and the resulting
Pool Factors for the Pass Through Trust after taking into account each such
repayment are set forth below:
Pass Through Trust, 199__-___
Regular Scheduled Principal
Distribution Date Payments on
Equipment Certificates Pool Factor
$ 0.0000000
The Pass Through Agreement and the Series Supplement permits, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificateholders under the Pass Through Trust at any time by the
Company and the Pass Through Trustee with the consent of the Majority In
Interest of Certificateholders in the Pass Through Trust. Any such consent
by the Certificateholder of this Pass Through Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Pass Through Certificate and of any Pass Through
Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Pass
Through Certificate. The Pass Through Agreement and the Series Supplement
also permits the amendment thereof, in certain limited circumstances,
without the consent of the Certificateholders of any of the Pass Through
Certificates.
As provided in the Pass Through Agreement and the Series
Supplement and subject to certain limitations set forth therein, the
transfer of this Pass Through Certificate is registrable in the Register
upon surrender of this Pass Through Certificate for registration of
transfer at the facilities or agencies maintained by the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Pass Through Trust will be issued to
the designated transferee or transferees.
The Pass Through Certificates are issuable only as registered
Pass Through Certificates without coupons in minimum denominations of
$1,000 fractional undivided interest and integral multiples thereof. As
provided in the Pass Through Agreement and the Series Supplement and
subject to certain limitations set forth therein, the Pass Through
Certificates are exchangeable for new Pass Through Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust, as requested by the Certificateholder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Pass Through Trustee may require payment of a
sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Pass Through Trustee, the Registrar, and any agent of the
Pass Through Trustee or the Registrar may treat the person in whose name
this Pass Through Certificate is registered as the owner hereof for all
purposes, and neither the Pass Through Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Pass
Through Agreement and the Series Supplement and the Pass Through Trust
created thereby shall terminate upon the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to the Pass
Through Agreement and the Series Supplement and the disposition of all
property held as part of the Trust Property.
Exhibit B
to
Pass Through Agreement
__________________________________________
SERIES SUPPLEMENT 199__-___
Dated __________, 199__
Between
___________________________________
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
to
PASS THROUGH TRUST AGREEMENT
Dated as of _________, ____
$__________________
Federal Express Corporation
Pass Through Trust, 199__-___
Federal Express Corporation
199__ Pass Through Certificates,
Series ___
__________________________________________
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. ......................... 4
SECTION 2.02. Declaration of Trust; Authorization...................... 4
SECTION 2.03. Issuance of Pass Through Certifi-cates................... 5
SECTION 2.04. Purchase of Equipment Certificates. ..................... 5
SECTION 2.05. Representations and Warranties of the Company............ 5
SECTION 2.06. The Trustee. ............................................ 5
SECTION 2.07. Conditions Precedent..................................... 5
SECTION 2.08. Acceptance of Appointment of Pass Through Trustee........ 5
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND
THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates. ..................................... 6
SECTION 3.02. Record Dates............................................. 6
SECTION 3.03. Certificate Account and Special Payments Account. ....... 6
SECTION 3.04. Form of Pass Through Certificates. ...................... 6
SECTION 3.05. Indenture Documents...................................... 7
SECTION 3.06. Appointment of Authenticating Agent; Paying Agent and
Registrar................................................ 7
SECTION 3.07. Predelivery Funding...................................... 7
SECTION 3.08. ERISA.................................................... 8
SECTION 3.09. Registered Global Certificate............................ 8
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. ........................ 9
SECTION 4.02. Reports by the Company................................... 9
SECTION 4.03. Modification and Ratification of Pass Through Agreement.. 9
SECTION 4.04. Termination. ............................................ 9
Exhibit A Form of Pass Through Certificate
SERIES SUPPLEMENT 199__-___
SERIES SUPPLEMENT 199__-___, dated _________, 199__ (this "Series
Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Company") and ______________________________________, a _____________________
company, as Pass Through Trustee (the "Pass Through Trustee"), to the Pass
Through Trust Agreement, dated as of ________, ____ (the "Pass Through
Agreement"), between the Company and ___________________________________, a
___________________________.
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agree-ment provides,
among other things, that the Company and
the Pass Through Trustee may execute and deliver one or more series
supplements, each for the purpose of forming a separate pass through trust
for the benefit of the certificate-holders of the series of pass through
certificates to be issued pursuant to such pass through trust, appointing
an institution to act as Pass Through Trustee if different from the
institution executing the Pass Through Agreement, establishing certain
terms of such pass through certificates, and pursuant to which the pass
through certificates of such series shall be executed and authenticated by
the Pass Through Trustee and delivered as directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company
has agreed to cause the Equipment Certificates to be issued and sold to the
Pass Through Trustee, and the Pass Through Trustee has agreed to purchase
the Equipment Certificates, which will be held in trust as Trust Property
for the benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has
agreed, pursuant to the Underwriting Agreement, to cause the Pass Through
Trustee to issue and sell the Pass Through Certificates to the
Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms
of this Series Supplement, the Pass Through Trustee will execute,
authenticate and deliver the Pass Through Certificates to the Underwriters
upon receipt by the Pass Through Trustee of the purchase price therefor,
which will be applied in accordance with this Series Supplement to purchase
the Equipment Certificates;
WHEREAS, the Pass Through Trustee hereby declares the creation
of this Pass Through Trust for the benefit of the Certificateholders, and
the initial Certificateholders of such Pass Through Certificates, as the
grantors of such Pass Through Trust, by their respective acceptances of
such Pass Through Certificates, join in the creation of such Pass Through
Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates
to, and the purchase of the Equipment Certificates by, the Pass Through
Trustee on behalf of this Pass Through Trust, the Company has duly
authorized the execution and delivery of this Series Supplement as the
"issuer," as such term is defined in and solely for purposes of the
Securities Act, of the Pass Through Certificates and as the "obligor," as
such term is defined in and solely for purposes of the Trust Indenture Act,
with respect to all such Pass Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in
the Pass Through Agreement, either directly or by reference therein, have
the meanings assigned to them therein as supplemented by this Article I, if
applicable, except to the extent the context requires otherwise. Any such
defined term that is defined in the Pass Through Agreement as relating to a
particular Pass Through Trust or Series rather than to any Pass Through
Trust or Series generally shall, when used in this Series Supplement,
relate solely to the Federal Express Corporation Pass Through Trust, 199__-
___, or the Federal Express Corporation 199__ Pass Through Certificates,
Series ___, as the case may be, whether or not expressly so stated herein.
"Aircraft" means ___________________________ aircraft ,
including the Engines (as such term is defined in the related Participation
Agreement) relating thereto, (i) leased or to be leased by the Owner
Trustee to the Company pursuant to a Lease or (ii) to be purchased by the
Company as provided, and under the circumstances specified, in Section 3.07
hereof) and, collectively, means all of the foregoing.
"Authenticating Agent" has the meaning set forth in Section
3.06 hereof.
"Certificate Account" means the Certificate Account specified
in Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series
of Pass Through Certificates designated in Section 2.01 hereof.
"Collateral Account" means the Collateral Account established
pursuant to the Indenture for Federal Express Corporation Trust No.
N_____FE into which the proceeds of sale of the related Equipment
Certificates will be deposited.
"Cut-off Date for Pass Through Trust" is inapplicable.
"Delivery Date" means, for any Equipment Certificates, the
Refunding Date (as such term is defined in the related Participation
Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Certificates
listed in Schedule I hereto.
"Intercreditor Agreement" has the meaning defined in Article I
of the Pass Through Agreement.
"Issuance Date" means the date defined as the Closing Time in
the Underwriting Agreement.
"Liquidity Facility" has the meaning defined in Article I of
the Pass Through Agreement.
"Liquidity Provider" means _______________________________.
"Participation Agreements" means those Participation Agreements
listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through Certificates
designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other like
words means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section
3.06 hereof.
"Record Date" means any Record Date specified in Section 3.02
hereof.
"Registrar" means the Person specified as such in Section 3.06
hereof.
"Regular Distribution Date" means any Regular Distribution Date
specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment, the
Special Distribution Date for such Special Payment specified in Section
3.01 hereof.
"Special Payments Account" means the Special Payments Account
specified in Section 3.03 hereof.
"Subordination Agent" shall have the meaning specified therefor
in any Intercreditor Agreement.
"Trust Property" means (i) all money, instruments, including
the Equipment Certificates that have been issued by the related Owner
Trustee and delivered to and accepted by the Pass Through Trustee for the
benefit of the Certificateholders, and other property held as the property
of this Pass Through Trust, including all distributions thereon and
proceeds thereof and (ii) all rights of the Pass Through Trust and the Pass
Through Trustee, on behalf of the Pass Through Trust, under any
Intercreditor Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all
monies paid to the Pass Through Trustee on behalf of the Pass Through Trust
pursuant to any Intercreditor Agreement or the Liquidity Facility.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
_________, 199__ among the Company and ____________________________.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. The Pass
Through Trust created hereby shall be designated Federal Express
Corporation Pass Through Trust, 199__-___ (herein some-times called this
"Pass Through Trust"). The Pass Through Certificates evidencing Fractional
Undivided Interests in such Pass Through Trust shall be designated as the
Federal Express Corporation 199__ Pass Through Certificates, Series ___
(herein sometimes called the "Series ___ Pass Through Certifi-cates"). The
Series ___ Pass Through Certificates shall be the only instruments
evidencing a fractional undivided interest in such Pass Through Trust.
Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass
Through Agreement, the aggregate amount of Series ___ Pass Through
Certificates that may be authenticated, delivered and outstanding under
this Series Supplement is limited to $_________________.
SECTION 2.02. Declaration of Trust; Authorization. Each
initial Certificateholder, by its acceptance of any Series ___ Pass Through
Certificate is hereby deemed (1) as grantor, to join in the creation and
declaration of this Pass Through Trust and (2) as beneficiary of such Pass
Through Trust, to authorize and direct the Pass Through Trustee to execute
and deliver all documents to which the Pass Through Trustee is a party that
may be necessary or desirable to consummate the transactions contemplated
hereby and to exercise its rights and perform its duties under the
Participation Agreements, the Indentures, the Pass Through Agreement and
this Series Supplement.
The Pass Through Trustee hereby acknowledges and accepts this
grant of trust and declares that it will hold the Trust Property as Pass
Through Trustee of this Pass Through Trust for the use and benefit of the
Certificate-holders.
SECTION 2.03. Issuance of Pass Through Certifi-cates. Subject
to the terms set forth herein, on the Issuance Date (i) the Company shall
direct the Underwriters to execute a wire transfer or intra-bank transfer
to the Pass Through Trustee in the amount of the total proceeds payable by
such Underwriters pursuant to the Underwriting Agreement with respect to
the Series ___ Pass Through Certificates and (ii) the Pass Through Trustee
shall deliver the Series ___ Pass Through Certificates to the Underwriters
as provided in the Underwriting Agreement upon receipt by the Pass Through
Trustee of such proceeds.
SECTION 2.04. Purchase of Equipment Certificates. On the
Issuance Date, the Pass Through Trustee shall pur-chase, in accordance with
Section 2.02 of the Pass Through Agreement, each of the Equipment
Certificates upon the satisfaction or waiver of the conditions for such
purchase by the Pass Through Trustee set forth in the related Participation
Agreement.
SECTION 2.05. Representations and Warranties of the Company.
All of the representations and warranties of the Company set forth or
incorporated by reference in Section 1 of the Underwriting Agreement are
incorporated by reference in this Series Supplement as if set forth herein
and the Company represents and warrants that such representations and
warranties are true and correct on the date hereof, except to the extent
that such representations and warranties expressly relate solely to an
earlier date or later date (in which case such representations and
warranties were correct on and as of such earlier date or will be correct
on and as of such later date, as the case may be).
SECTION 2.06. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance
Date in the form delivered to the Trustee by the Company. The Trustee
represents and warrants that the Intercreditor Agreement will be duly
executed and delivered by one of its officers who is duly authorized to
execute and deliver such document on its behalf.
SECTION 2.07. Conditions Precedent. The obliga-tions of the
Pass Through Trustee to participate in the transactions described in
Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass
Through Trustee of a certificate of the Company to the same effect as the
certifi-cate of the Company delivered to the Underwriters pursuant to
Section 5(c) of the Underwriting Agreement, and (ii) satis-faction or
waiver of the conditions for the purchase by the Underwriters of the Pass
Through Certificates set forth in Section 5 of the Underwriting Agreement,
which satisfaction or waiver for the purposes hereof shall be conclusively
demonstrated by the receipt by the Pass Through Trustee of the total
proceeds payable by such Underwriters pursuant to the Underwriting
Agreement with respect to the Series ___ Pass Through Certificates.
SECTION 2.08. Acceptance of Appointment of Pass Through
Trustee. __________________________ represents and warrants that it is
qualified to serve as Pass Through Trustee and satisfies the criteria
specified in Section 10.02 of the Pass Through Agreement for eligibility as
a Pass Through Trustee. _______________________________ hereby agrees to
serve as Pass Through Trustee for the Pass Through Certificates and
acknowledges its appointment as Pass Through Trustee in accordance with the
provisions of, and subject to all of the terms and conditions set forth in,
the Pass Through Agreement and this related Series Supplement upon the
execution and delivery of this Series Supplement.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND
THE CERTIFICATEHOLDERS
SECTION 3.01. Distribution Dates. The Regular Distribution
Dates are each _____________ and ____________, commencing on ____________,
199__. The Special Distribution Date for any month in which a Special
Payment is to be distributed will be the __________ day of such month,
except that the Special Distribution Date for any Special Payment received
by the Pass Through Trustee in connection with a prepayment of any
Equipment Certificate pursuant to Section 6.02(a)(i), 6.02(a)(v) or, in the
case of the Indenture in respect of Federal Express Corporation Trust No.
N_____FE, 6.02(a)(vi) of the related Indenture will correspond to the date
of the receipt of such Special Payment by the Pass Through Trustee. Notice
of such Special Payment shall be mailed as soon as practicable after
receipt by the Pass Through Trustee of the notice of such prepayment.
SECTION 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are __________ and ___________, respectively, and the
Record Date for any Special Distribu-tion Date is the fifteenth day
preceding such Special Distri-bution Date, in any event, whether or not
such date is a Business Day.
SECTION 3.03. Certificate Account and Special Payments
Account. In accordance with Section 5.01(a) of the Pass Through Agreement
and upon receipt of any Scheduled Payment, the Pass Through Trustee shall
immediately deposit such Scheduled Payment into the Certificate Account, a
separate and non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose. In accordance with Section 5.01(b) of
the Pass Through Agreement and upon receipt of any Special Payment, the
Pass Through Trustee shall immediately deposit such Special Payment into
the Special Payments Account, a separate and, except as provided in Section
5.04 of the Pass Through Agreement, non-interest bearing account designated
by the Pass Through Trustee to be used for such purpose.
SECTION 3.04. Form of Pass Through Certificates. Subject to
Section 2.07 of the Pass Through Agreement, each of the Series ___ Pass
Through Certificates will be substan-tially in the form of Exhibit A
hereto. The Series ___ Pass Through Certificates will be issued pursuant
to a book-entry system in the form of one Registered Global Certificate and
subject to the conditions set forth in the Letter of Representations among
the Company, the Pass Through Trustee and The Depository Trust Company.
SECTION 3.05. Indenture Documents. The related Indenture
Documents are listed in Schedule I hereto.
SECTION 3.06. Appointment of Authenticating Agent; Paying
Agent and Registrar. (a) The Pass Through Trustee may appoint an
authenticating agent (the "Authenticating Agent") with respect to the Pass
Through Certificates which shall be authorized to act on behalf of the Pass
Through Trustee to authenticate the Pass Through Certificates issued upon
original issue and upon exchange or registration of transfer thereof or
pursuant to Section 2.09 of the Pass Through Agreement. Pass Through
Certificates so authenti-cated shall be entitled to the benefits of the
Pass Through Agreement and this Series Supplement and shall be valid and
obligatory for all purposes as if authenticated by the Pass Through
Trustee. Whenever reference is made in the Pass Through Agreement or this
Series Supplement to the authenti-ca-tion and delivery of Pass Through
Certificates by the Pass Through Trustee or the Pass Through Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Pass Through Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf
of the Pass Through Trustee by an Authenticating Agent.
(b) The Paying Agent, Registrar and Authenticating Agent for
the Series ___ Pass Through Certificates initially shall be
________________________________________.
________________________________________ hereby represents and warrants to
the Company that it is qualified to serve as Paying Agent, Registrar and
Authenticating Agent under the provisions of, and subject to all of the
terms and conditions set forth in, the Pass Through Agreement and this
related Series Supplement.
SECTION 3.07. Predelivery Funding. During the period between
the date of issuance of Equipment Certificates by the Owner Trustee in
respect of Federal Express Corporation Trust No. N_____FE and the delivery
date of the related Aircraft, such Equipment Certificates will not be
secured by such Aircraft or the related Lease, but will be secured by the
Collateral Account. Pursuant to the related Indenture, the Owner Trustee
will deposit the proceeds from the sale of the related Equipment
Certificates into the Collateral Account for the benefit of the related
Indenture Trustee.
Sums deposited in the Collateral Account will be invested in:
(a) direct obligations of the United States of America or obligations fully
guaranteed by the United States of America; (b) commercial paper rated A-
1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service,
Inc., respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (c) overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers; and (d) overnight repurchase agreements with respect
to the securities described in clause (a) above entered into with an office
of a bank or trust company which is located in the United States of America
of any bank or trust company which is organized under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million. The Company will pay to the
Indenture Trustee on demand any losses on such investments. On the
delivery date of such Aircraft, upon satisfaction or waiver of the
conditions to the Indenture Trustee's release of amounts in the Collateral
Account, the Indenture Trustee will release such amounts. Such amounts
will be applied by the Indenture Trustee in accordance with the related
Participation Agreement to pay a portion of the purchase price for such
Aircraft on the delivery date thereof.
The Company will pay to the Indenture Trustee on such delivery
date the excess, if any, of the portion of the purchase price for such
Aircraft required to be paid by the Indenture Trustee over the amounts
released from the Collateral Account net of investment earnings (which will
be paid to the Company). The Company is obligated to cause the proceeds of
the Equipment Certificates to be utilized to acquire such Aircraft in all
circumstances other than the failure of the manufacturer to deliver such
Aircraft. Accordingly, if the related Owner Participant does not make
available its portion of the purchase price on the delivery date of such
Aircraft or the Company does not enter into the related Lease on or prior
to ______________, 199__ for any reason other than the failure of the
manufacturer to deliver such Aircraft, the Company will purchase such
Aircraft and assume on a fully recourse basis all of the obligations of the
Owner Trustee under the related Equipment Certificates pursuant to an
indenture containing terms substantially identical to those contained in
the Leases and Indentures in respect of Federal Express Corporation Trust
No. N____FE. In such case, the Indenture Trustee will release the amounts
in the Collateral Account to the Company to pay a portion of the purchase
price for such Aircraft.
SECTION 3.08. ERISA. [Any Person who is, or who in acquiring a
Pass Through Certificate is or may be using the assets of, an employee
benefit plan subject to Title I of The Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or an individual retirement account or
plan subject to Section 4975 of the Code, or any trust established under
any such plan or account, may acquire or hold any of the Pass Through
Certificates, if such Person determines either that an administrative or a
statutory exemption from the prohibited transaction rules under Section 406
of ERISA and Section 4975 of the Code is applicable to its purchase and
holding of a Pass Through Certificate or that its purchase and holding of a
Pass Through Certificate will not result in a prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.]
_________
Subject to revision as set forth in Section 6.06 of The Pass Through
Agreement.
SECTION 3.09. Registered Global Certificate. The Series ___
Pass Through Certificates are to be issued in whole in the form of a
Registered Global Certificate, and Section 2.12 of the Pass Through
Agreement shall, accordingly, be applicable. The Depository for the
Registered Global Certificate and the Letter of Representations is The
Depository Trust Company.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN
SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH
SERIES ___ PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute but one
and the same instrument.
SECTION 4.02. Reports by the Company. In addition to the
reports required to be provided by the Company pursuant to Section 4.03 of
the Pass Through Agreement, the Company agrees to furnish to the Pass
Through Trustee from time to time, such other financial information as the
Pass Through Trustee may reasonably request.
SECTION 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incor-porated herein by reference
in its entirety, and shall be deemed to be a part of this Series Supplement
as if set forth in full herein, and is in all respects ratified and
confirmed, as supplemented and modified by this Series Supple-ment.
SECTION 4.04. Termination. In no event shall this Pass
Through Trust continue beyond the expiration of 21 years after the death of
the last survivor of George Pataki, Governor of New York State, living on
the date of this Series Supplement.
IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all
on the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
_____________________________________,
as Pass Through Trustee
By: _________________________________
Name:
Title:
Exhibit A
to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
[Unless this pass through certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Pass Through Trustee or its agent for registration or
transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.]
_________
This paragraph is required only if the Pass Through Certificates are to
be represented by the Registered Global Certificate.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__-___
199__ Pass Through Certificate, Series ___
CUSIP _________________
Final Regular Distribution Date: __________, ______ evidencing a fractional
undivided interest in a pass through trust, the property of which includes
certain Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in Pass Through
Trust, 199__-___: _____%.
$___________ Fractional Undivided Interest representing _______ of the
Pass Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ____________________, for value received, is
the registered owner of a $_________ (_____________ dollars) Fractional
Undivided Interest in the Federal Express Corporation Pass Through Trust,
199__-___ (the "Pass Through Trust") created and declared by
___________________________, as pass through trustee (the "Pass Through
Trustee"), pursuant to the Pass Through Trust Agreement dated as of
_________, ____ (the "Pass Through Agreement"), as supplemented by Series
Supplement 199__-___ thereto dated _________, 199__ (the "Series
Supplement") between the Pass Through Trustee and Federal Express
Corporation, a Delaware corporation (the "Company"), a summary of certain
of the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Pass Through Agreement and the Series
Supplement.
This Pass Through Certificate is one of the duly authorized
Pass Through Certificates designated as "Federal Express Corporation 199__
Pass Through Certificates, Series ___." This Pass Through Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Pass Through Agreement, the Series Supplement and any Intercreditor
Agreement, to which the Certificateholder of this Pass Through Certificate
by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Pass Through Trust
includes certain Equipment Certificates and all rights of the Pass Through
Trust to receive payments under the Intercreditor Agreement and the
Liquidity Facility (the "Trust Property"). Each series of Equipment
Certificates is secured by a security interest in (A) an aircraft leased to
or owned by the Company and, in the case of a leased aircraft, an
assignment of the rights of the Related Owner Trustee with respect to such
aircraft, including the right to receive rent and other amounts payable
under the related Lease or Indenture with respect to such aircraft or (B) a
collateral account holding securities purchased with the proceeds of the
sale of such series of Equipment Certificates. Each of the Pass Through
Certificates represents a Fractional Undivided Interest in the Pass Through
Trust and the Trust Property, and has no rights, benefits or interests in
respect of any other separate trust established pursuant to the terms of
the Pass Through Agreement for any other series of Pass Through
Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, from
funds then available to the Pass Through Trustee, there will be distributed
on each ___________ and ___________ (a "Regular Distribution Date"),
commencing on ___________, 199__, to the Person in whose name this Pass
Through Certificate is registered at the close of business on the 15th day
preceding the applicable Regular Distribution Date, an amount in respect of
the Scheduled Payments on the Equipment Certificates due on such Regular
Distribution Date, equal to the product of the percentage interest in the
Pass Through Trust evidenced by this Pass Through Certificate and an amount
equal to the sum of such Scheduled Payments.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, if
Special Payments on the Equipment Certificates are received by the Pass
Through Trustee, from funds then available to the Pass Through Trustee,
there shall be distributed on the applicable Special Distribution Date, to
the Person in whose name this Pass Through Certificate is registered at the
close of business on the 15th day preceding such Special Distribution Date,
an amount in respect of such Special Payments on the Equipment
Certificates, equal to the product of the percentage interest in the Pass
Through Trust evidenced by this Pass Through Certificate and an amount
equal to the sum of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution shall be
made on the immediately following Business Day with the same force and
effect as if made on such Distribution Date and no interest shall accrue
during the intervening period. The Special Distribution Date shall be the
______ day of the month determined as provided in the Pass Through
Agreement and the Series Supplement, except in certain circumstances, in
which case it will be the date of receipt of proceeds by the Pass Through
Trustee as provided in the Series Supplement. The Pass Through Trustee
shall mail notice of each Special Payment and the Special Distribution Date
therefor to the Certificateholder of this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by the
Pass Through Trustee to the Person entitled thereto, without the
presentation or surrender of this Pass Through Certificate or the making of
any notation hereon. Except as otherwise provided in the Pass Through
Agreement and notwithstanding the above, the final distribution on this
Pass Through Certificate will be made after notice is mailed by the Pass
Through Trustee of the pendency of such distribution and only upon
presentation and surrender of this Pass Through Certificate at the office
or agency of the Pass Through Trustee specified in such notice.
[Any Person who is, or who in acquiring this Pass Through Certificate
is or may be using the assets of, an employee benefit plan subject to Title
I of The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account,
may acquire or hold any of the Pass Through Certificates, if such Person
determines either that an administrative or a statutory exemption from the
prohibited transaction rules under Section 406 of ERISA and Section 4975 of
the Code is applicable to its purchase and holding of this Pass Through
Certificate or that its purchase and holding of this Pass Through
Certificate will not result in a prohibited transaction under Section 406
of ERISA and Section 4975 of the Code.]
This Pass Through Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Pass Through
Certificate shall not be entitled to any benefit under the Pass Through
Trust or be valid for any purpose.
_________
Subject to revision as set forth in Section 6.06 of The Pass Through
Agreement.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, 199__-___
_______________________________________,
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and the Series Supplement.
_______________________________________,
as Pass Through Trustee
By: ________________________________
Authorized Signatory
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct
obligation of, or an obligation guaranteed by, or an interest in, the
Company or the Pass Through Trustee or any affiliate thereof. The Pass
Through Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Pass Through Agreement
and the Series Supplement. All payments or distributions made to
Certificateholders under the Pass Through Agreement shall be made only from
the Trust Property and only to the extent that the Pass Through Trustee
shall have sufficient income or proceeds from the Trust Property to make
such payments in accordance with the terms of the Pass Through Agreement
and the Series Supplement. Each Certificateholder of this Pass Through
Certificate, by its acceptance hereof, agrees that it will look solely to
the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Pass Through
Agreement and the Series Supplement.
In connection with withholding taxes, under certain
circumstances the Pass Through Trustee may retain certain amounts otherwise
distributable to a Certificateholder. The purchase by any
Certificateholder of any Pass Through Certificate constitutes the consent
of such Certificateholder to such retention in accordance with the terms of
the Pass Through Agreement.
This Pass Through Certificate does not purport to summarize the
Pass Through Agreement and the Series Supplement and reference is made to
the Pass Through Agreement and the Series Supplement for information with
respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby. A copy of the Pass Through Agreement may be
examined by any Certificateholder upon request during normal business hours
at the principal office of the Pass Through Trustee, and at such other
places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate,
and assuming that no prepayment or default in respect of payment on the
Equipment Certificates shall occur, the aggregate scheduled repayments of
principal on the Equipment Certificates for the Pass Through Trust and the
resulting Pool Factors for the Pass Through Trust after taking into account
each such repayment are set forth below:
Pass Through Trust, 199__-___
Scheduled
Principal
Payments on
Regular Equipment
Distribution Dates Certificates Pool Factor
The Pass Through Agreement and the Series Supple-ment permit, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificate-holders under the Pass Through Trust at any time by the
Company and the Pass Through Trustee with the consent of the Majority In
Interest of Certificateholders in the Pass Through Trust. Any such consent
by the Certificate-holder of this Pass Through Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Pass Through Certificate and of any Pass Through
Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Pass
Through Certificate. The Pass Through Agreement and the Series Supplement
also permit the amendment thereof, in certain limited circumstances,
without the consent of the Certificate-holders of any of the Pass Through
Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of
this Pass Through Certificate for registration of transfer to the Pass
Through Trustee in its capacity as Registrar, or by any successor
Registrar, duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Pass Through Trustee and the Registrar duly
executed by the Certificateholder hereof or such Certificateholder's
attorney duly authorized in writing, and thereupon one or more new Pass
Through Certificates of authorized denomina-tions evidencing the same
aggregate Fractional Undivided Interest in the Pass Through Trust will be
issued to the designated transferee or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
fractional undivided interests and integral multiples thereof. As provided
in the Pass Through Agreement and the Series Supplement and subject to
certain limitations set forth therein, the Pass Through Certificates are
exchangeable for new Pass Through Certifi-cates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Pass
Through Trust, as requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this
Pass Through Certificate is registered as the owner hereof for all
purposes, and neither the Pass Through Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created
thereby shall terminate upon the distribution to Certificateholders of all
amounts required to be distributed to them pursuant to the Pass Through
Agreement and the Series Supplement and the disposition of all property
held as part of the Trust Property.
Schedule I
to
Series Supplement
Federal Express Corporation Pass Through Trust, 199__-___
Equipment Certificates; Related Indenture Documents
Equipment Certificates (Federal Express Corporation Trust No. N___ FE):
Interest Rate: ________%
Maturity: _____________
Principal Amount: $____________
Related Indenture Documents:
Exhibit 23(e)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Post-Effective Amendment No. 1 to Form
S-3 registration statement of our reports dated July 1, 1996, included (or
incorporated by reference) in Federal Express Corporation's Form 10-K for
the year ended May 31, 1996, and to all references to our firm included in
this registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee
April 21, 1997.
