As filed with the Securities and Exchange Commission on May 15, 1998
Registration No. 333-49411
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Karen M. Clayborne, Esq.
Senior Vice President and General Counsel
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, Tennessee 38132
(901) 395-3392
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Sarah Beshar, Esq.
Juliet Cain, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
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Approximate date of commencement of proposed sale to the
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. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Maximum Aggregate
Title of Each Class of Amount to Be Aggregate Price Offering Amount of
Securities Being Registered Registered(1) Per Unit Price(1) Registration Fee
--------------------------- ------------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Equipment Trust Certificates.......
Pass Through Certificates..........
Debt Securities.................... $991,967,000 100% $991,967,000 $292,630(2)
</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
(2) Previously paid.
Pursuant to Rule 429 under the Securities Act, the Prospectuses
filed as part of this Registration Statement relate to the securities
registered hereby and to the remaining unsold $8,033,000 amount of Equipment
Trust Certificates, Pass Through Certificates and Debt Securities previously
registered by Federal Express Corporation under its Registration Statement on
Form S-3, File No. 333-07691 in respect of which a filing fee of $2,770 was
paid.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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EXPLANATORY NOTE
This Registration Statement contains three forms of prospectus:
each, as supplemented, to be used in connection with offerings of (1)
equipment trust certificates; (2) pass through certificates; or (3) debt
securities, 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 MAY 15, 1998
PROSPECTUS
[COMPANY LOGO]
EQUIPMENT TRUST CERTIFICATES
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Up to $1,000,000,000 aggregate principal amount of 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 formed by Federal
Express Corporation (the "Corporation"), 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
the Corporation, to finance or refinance a portion of the payment by such
Owner Trustee of the purchase price for the Aircraft. The trust property of
each Owner Trust will consist of the specified Aircraft (or, if the delivery
of such Aircraft is delayed, the proceeds of the sale of the related
Certificates), and the rights of the Owner Trustee under the related
documentation. 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. The
obligations of the related Owner Trustee with respect to each Series of
related Certificates will rank pari passu with the obligations of such Owner
Trustee with respect to each other Series of such Certificates.
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 the applicable Prospectus
Supplement specifies that Certificates will be issued in certificated form, 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. It is expected that the
Certificates will be assigned an "investment grade" rating by one or more
nationally recognized statistical rating organizations. Such rating or
ratings will be set forth in the Prospectus Supplement applicable to the
Certificates being sold.
This Prospectus may not be used to consummate sales of any
Certificates unless accompanied by the Prospectus Supplement applicable to the
Certificates being sold.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May __, 1998.
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
may 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 the registration statement or qualification under the
securities laws of any such state.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of
the Exchange Act, and in accordance therewith files reports and other
information with 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
filed by the Corporation under 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, 1997 filed August 8, 1997.
2. The Corporation's Quarterly Reports on Form 10-Q for the
fiscal quarters ended August 31, 1997, November 30, 1997 and February 28,
1998, filed October 14, 1997, January 13, 1998 and April 10, 1998,
respectively.
3. The Corporation's Current Reports on Form 8-K dated May 22,
June 11, June 30, July 7, August 8, September 30 and October 6, 1997, and
February 26, 1998, respectively, filed June 2, June 19, July 7, July 9,
August 14, October 8 and October 8, 1997, and March 6, 1998, 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:
Elizabeth R. Allen, Investor Relations, FDX Corporation, by mail at Box 727,
Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478.
FEDERAL EXPRESS CORPORATION
The Corporation is a wholly-owned subsidiary of FDX
Corporation. The Corporation offers a wide range of express services for the
time-definite transportation of documents, packages and freight throughout the
world using an extensive fleet of aircraft and vehicles and leading-edge
information technologies. Corporate headquarters are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
Year Ended May 31, February 28,
--------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges(a)......... 1.4x 1.7x 2.0x 1.9x 2.0x 1.9x 2.0x
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(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.
RISK FACTORS
In addition to the information set forth elsewhere in this
Prospectus, prospective investors should consider carefully the factors set
forth below in connection with an investment in Certificates. The following
discussion should be read in conjunction with the more detailed information
set forth in the applicable Prospectus Supplement.
Appraisals and Realizable Value of Aircraft
The Prospectus Supplement will contain the appraised value of
each Aircraft based upon the lesser of the average and the median value of
such Aircraft as appraised by independent appraisers who will be named in the
applicable Prospectus Supplement (the "Appraisals") and whose report will be
contained therein. The Appraisals will be based on various assumptions and
methodologies, which vary among the Appraisals.
Appraisals based on different assumptions or methodologies may
result in valuations that are significantly different from those contained in
the Appraisals. An appraisal is only an estimate of value and should not be
relied upon as a measure of realizable value. The proceeds realized upon the
sale of any Aircraft may be less than the appraised value thereof. In
addition, the value of the Aircraft in the event of the exercise of remedies
under the related Indenture will depend on market and economic conditions at
the time, the availability of buyers, the condition of the Aircraft, whether
the Aircraft are sold separately or as a block and other factors. Accordingly,
there can be no assurance that the proceeds realized upon any such exercise
with respect to the Certificates and the Aircraft pursuant to the related
Indenture will be as appraised or sufficient to satisfy in full payments due
on the Certificates issued thereunder.
The Certificates are not cross-collateralized and,
consequently, liquidation proceeds from the sale of an Aircraft in excess of
the principal amount of the Certificates related to such Aircraft will not be
available to cover losses, if any, on any other Certificates.
Lack of Cross-Collateralization and Cross-Default Provisions
There will be no cross-collateralization provisions in the
Indentures and consequently the Certificates issued in respect of one Aircraft
will be secured only by that Aircraft and will not be secured by any other
Aircraft or the Leases related to such other Aircraft. 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.
Ratings of the Certificates
It is expected that the Certificates will be assigned an
"investment grade" rating by one or more Rating Agencies. Such rating or
ratings will be set forth in the Prospectus Supplement applicable to the
Certificates being sold. A rating is not a recommendation to purchase, hold
or sell Certificates, inasmuch as such rating does not address market price
or suitability for a particular investor. There is no assurance that a rating
will remain for any given period of time or that a rating will not be lowered
or withdrawn entirely by a Rating Agency if in its judgment circumstances in
the future (including the downgrading of the Corporation) so warrant. The
rating of the Certificates will be based primarily on the default risk of the
Certificates and the collateral value provided by the Aircraft. The ratings
are expected to address the likelihood of timely payment of interest (at the
non-default rate) when due on the Certificates and the ultimate payment of
principal of the Certificates on the final expected distribution date. Such
ratings are not expected to address the possibility of a Lease Event of
Default or Indenture Event of Default or other circumstances (such as an Event
of Loss) which may result in the payment of the outstanding principal amount
of the Certificates prior to such final expected distribution date.
Unless specified in the applicable Prospectus Supplement, the
reduction, suspension or withdrawal of the ratings of the Certificates will
not, in and of itself, constitute an Indenture Event of Default.
Highly Leveraged Transaction
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.
Absence of a Public Market for the Certificates
Prior to their issuance, there will have been no public 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 Certificates
on a national securities exchange. There can be no assurance as to the
liquidity of the public market for the Certificates or that any active public
market for the Certificates will develop or continue. If an active public
market does not develop or continue, the market price and liquidity of the
Certificates may be adversely affected.
USE OF PROCEEDS
The proceeds from the sale of the Certificates of each Series
offered pursuant to this Prospectus and a related Prospectus Supplement will
be used to finance or refinance the debt portion and, in those cases where the
Owner Participant wishes for tax purposes to prevent specific allocation of
interest expense to the related Aircraft, to repay some of the equity portion
of a separate leveraged lease transaction entered into by the Corporation, as
lessee, with respect to an Aircraft specified in such Prospectus Supplement.
For each Aircraft, the debt portion financed or refinanced is not expected to
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. 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 the Owner Trustee of
an Owner Trust for the benefit of the Owner Participant. Simultaneously with
such sale, the Owner Trustee has leased or will lease the Aircraft to the
Corporation pursuant to a Lease. Each of the leveraged lease transactions was
or will be effected pursuant to a Participation Agreement.
For each Aircraft, the related Certificates will be issued as a
separate Series by the Owner Trustee, as nonrecourse obligations, and
authenticated by the Indenture Trustee pursuant to 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.
In addition to the glossary contained in this Prospectus, each
Prospectus Supplement will include a glossary of certain terms used in
connection with the Certificates offered thereby. Except as otherwise
indicated below, 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.
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 Holders of the
Certificates of such Series. 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 Certificates in certificated form are issued, 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 of a Certificate initially issued as a global security 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
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. Certificates initially issued in the form
of a global security 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. In general, 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 Salt Lake City, Utah or at such other office or
agency, including the office or agency of 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 Salt Lake
City, Utah. 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 the rights of any other
entity under a sublease or assignment permitted under such Lease, so that
the Indenture Trustee will not have the right to disturb the Corporation's
quiet enjoyment of such Aircraft so long as no Lease Event of Default shall
have occurred and be continuing; 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 Aircraft
will be secured only by that Aircraft and will not be secured by any other
Aircraft or the Leases related to such other Aircraft. 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, 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 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.
The Corporation will be able, in certain circumstances, to
re-register any Aircraft in certain countries other than the United States.
In general, 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 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 Limitations 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 monetary defaults. 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
which 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 Corporation 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, First Security Bank, National Association will be the Indenture
Trustee under each Indenture. First Security Bank, National Association 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, First Security Bank, National Association 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. The applicable Prospectus Supplement will contain a
description of the insurance arrangements applicable to each Aircraft. In
general, the Corporation will be obligated to carry comprehensive aircraft
liability insurance, including property damage liability insurance and cargo
legal liability insurance as described below. Such insurance must be in such
amounts, against such risks and with such retentions as the Corporation
customarily maintains. Such insurance must also be with such insurers of
recognized responsibility and against such other risks as is usually carried
by corporations situated similarly to the Corporation and engaged in the same
business as, or business similar to, the Corporation and owning or operating
aircraft and engines similar to the related Aircraft and related engines. In
general, the Corporation will also be obligated to carry, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the related Aircraft and all-risk coverage with respect to the related
engines and parts while temporarily removed from such Aircraft and not
replaced by similar engines or parts, as described below. Such insurance
includes war-risk and allied perils, hijacking and governmental confiscation
and expropriation insurance (except in the country of registry), must be in
such form and amounts, and with such retentions 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 related Aircraft,
and may not be in an amount below certain stipulated values. The Corporation
may self-insure against the risks required to be insured against under the
related lease in such reasonable amounts as are then applicable to other
aircraft or engines of the Corporation of value comparable to the related
Aircraft. Such self-insurance with respect to all aircraft in the
Corporation's fleet may not, however, in the aggregate exceed an amount equal
to the lesser of (a) 50% of the highest replacement value of any single
aircraft in such fleet, or (b) 1.5% of the average aggregate insured value
from time to time of the Corporation's entire aircraft fleet, provided that a
standard deductible per occurrence per aircraft no greater than the amount
customarily allowed as a deductible in the industry will be permitted in
addition to such self-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. In general,
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 limited in
the related Prospectus Supplement, each Owner Participant may convey all of
its interest in the related Owner Trust. Davis Polk & Wardwell has advised the
Corporation based on law in effect on the date hereof 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 ERISA, or individual retirement
account or plan subject to Section 4975 of the Internal Revenue Code. Certain
governmental plans and non-electing church plans, however, are not subject to
Title I of ERISA or Section 4975 of the Internal Revenue 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 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 Karen M. Clayborne, Senior
Vice President and General Counsel of the Corporation, as to the Corporation's
authorization, execution and delivery of the Indentures. At February 28,
1998, Ms. Clayborne owned 2,000 shares of FDX Corporation's common stock and
had been granted options to purchase 32,500 shares of FDX Corporation's common
stock. Of the options granted, 6,800 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, 1997 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, 1997, November 30, 1997 and February 28, 1998,
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.
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus.
Definitions contained in this glossary may be different from definitions used
in the applicable Prospectus Supplement. Accordingly, any Prospectus
Supplement should be read in conjunction with the glossary or other definition
of terms contained in such Prospectus Supplement.
"Aircraft" means an aircraft specified in a Prospectus Supplement which
has been or will be leased to the Corporation in connection with a leveraged
lease transaction.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. et
seq.), as amended, or any successor thereto.
"Cede" means Cede & Co., as nominee for DTC.
"Certificateholder" means, as of any particular time, the person in
whose name a Certificate shall be registered.
"Certificates" means the equipment trust certificates issued by the
Owner Trustee pursuant to the related Indenture and any certificate issued in
exchange therefor or replacement thereof pursuant to the related Indenture.
"Commission" means the Securities and Exchange Commission of the United
States.
"Convention" means the Convention on the International Recognition of
Rights in Aircraft.
"Corporation" means Federal Express Corporation.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participants of DTC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Loss" means, for any Aircraft, each of the events designated
as such in the related Lease.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means the registered holders of the related Certificates.
"Indenture" means a trust indenture and security agreement among the
Owner Trustee, the Indenture Trustee and the Corporation.
"Indenture Default" means any event or condition, which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
"Indenture Event of Default" means, for any Indenture, each of the
events designated as an event of default in such Indenture.
"Indenture Trustee" means First Security Bank, National Association, or
another bank or trust company, in its capacity as indenture trustee under the
related Indenture and any successor thereunder.
"Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended.
"Lease" means a lease agreement between the Owner Trustee, as lessor,
and the Corporation, as lessee, in each case under which the Owner Trustee
leases, or is expected to lease, the related Aircraft to the Corporation.
"Lease Event of Default" means, for any Lease, each of the events
designated as an event of default in such Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
"Operative Agreements" means, for any Aircraft, the related Indenture,
Equipment Certificates, Participation Agreement, Lease, Trust Agreement and
any other related documents defined as such in such Participation Agreement.
"Owner Participant" means the owner participant named in the related
Trust Agreement.
"Owner Trust" means a trust created pursuant to a Trust Agreement.
"Owner Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, or another bank or trust company, not in
its individual capacity but solely as owner trustee of an Owner Trust.
"Participation Agreement" means a participation agreement among the
Owner Participant, the Owner Trustee, the Indenture Trustee, the Corporation
and, in the case of a refinancing, each holder of a loan certificate issued
under the related Indenture as originally executed.
"Paying Agent" means a paying agent appointed by the related Indenture
Trustee.
"Prospectus Supplement" means a supplement to this Prospectus.
"Purchase Agreement" means, for any Aircraft, the purchase agreement
between the manufacturer and the Corporation, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to such Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
"Purchase Agreement Assignment" means, for any Aircraft, the purchase
agreement assignment between the related Owner Trustee and the Corporation.
"Rating Agency" means a "nationally recognized statistical rating
organization", as such term is defined in Rule 436(g)(2) under the Securities
Act.
"Registration Statement" means a registration statement on Form S-3
(together with all amendments and exhibits).
"Securities Act" means the Securities Act of 1933, as amended.
"Series" means one or more series of Certificates issued by the related
Owner Trustee, the Certificates of each respective series having identical
interest rates and maturity dates.
"Transportation Code" means Title 49 of the United States Code, as
amended.
"Trust Agreement" means a trust agreement between the Owner Trustee and
the Owner Participant.
"U.S. Citizen" means a citizen of the United States as defined in
Section 40102(a)(15) of the Transportation Code, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
"Underwriters' Counsel" means the counsel for any agents, dealers or
underwriters.
================================================================================
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations 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...............................................2
Incorporation of Certain Documents by
Reference...........................................................2
Federal Express Corporation.........................................3
Ratio of Earnings to Fixed Charges..................................3
Risk Factors........................................................3
Use of Proceeds.....................................................4
Outline of Leveraged Lease Transactions.............................5
Description of the Certificates.....................................5
ERISA Considerations...............................................15
Plan of Distribution...............................................15
Legal Matters......................................................16
Experts............................................................16
Glossary...........................................................18
================================================================================
$1,000,000,000
[COMPANY LOGO]
$1,000,000,000
Equipment Trust Certificates
----------
PROSPECTUS
----------
May __, 1998
================================================================================
Subject To Completion
PRELIMINARY PROSPECTUS DATED MAY 15, 1998
PROSPECTUS
[COMPANY LOGO]
PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES
----------
Up to $1,000,000,000 aggregate amount of 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 by Federal Express Corporation
(the "Corporation") pursuant to the Pass Through Agreement and a Series
Supplement. 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
held in any other such Pass Through Trust.
The Trust Property of each Pass Through Trust will consist of
(a) Owned Aircraft Certificates or (b) Leased Aircraft Certificates, or both.
The Owned Aircraft Certificates will be issued to finance or refinance all or
a portion of the purchase price of each of 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 the Leased
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. 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)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is May __, 1998.
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
may 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 the registration statement or qualification under the
securities laws of any such state.
(continued from previous page)
The Owned Aircraft Certificates issued with respect to each
Owned Aircraft will be secured by a security interest in such Owned Aircraft
and will be direct obligations of the Corporation. The Leased Aircraft
Certificates issued with respect to each Leased Aircraft, except during the
Pre-Funding Period, if any, will be secured by a security interest in such
Leased Aircraft and by the Lease relating thereto, including the right to
receive rent payable by the Corporation under such Lease. The trust property
of each Owner Trust in the case of Leased Aircraft will consist of the
specified Leased Aircraft (or, if the delivery of such Leased Aircraft is
delayed, the proceeds of the sale of the related Leased Aircraft Certificates
or such other collateral described herein) and the rights of such Owner
Trustee under the related documentation. 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.
If specified in the applicable Prospectus Supplement, during
any Pre-Funding Period, the related Leased Aircraft Certificates will be
secured either 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) or by a Depositary Arrangement. Funds in such
collateral account, together with any such other security or amounts payable
under a Depositary Arrangement 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 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 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 as the Liquidity Provider in the applicable Prospectus
Supplement. As specified in such Prospectus Supplement, the Liquidity
Provider will enter into a separate Liquidity Facility, which may be a
revolving credit agreement, letter of credit or other arrangement, with
respect to each relevant Pass Through Trust. Under each Liquidity Facility,
the Liquidity Provider will make advances up to a specified maximum amount
solely for the payment of interest when due in an aggregate amount sufficient
to pay interest on the relevant Pass Through Certificates on one or more
scheduled interest payment dates, if there are otherwise insufficient funds to
make such interest payments. The Liquidity Facility for such Pass Through
Certificates will not provide for such advances to pay principal of or premium
on such Pass Through Certificates, any interest on such Pass Through
Certificates in excess of the stated interest rate thereon, or principal of or
interest on the Pass Through Certificates relating to any other Pass Through
Trust. Upon each such advance under a Liquidity Facility, a subordination
agent will be obligated to reimburse (to the extent funds are available) the
Liquidity Provider for the amount of such advance. The obligation to
reimburse the Liquidity Provider under each Liquidity Facility will rank pari
passu with such agent's reimbursement obligations relating to other Liquidity
Facilities, and will rank senior to the related Pass Through Certificates in
right of payment.
The Pass Through Certificates will be issued in registered form
only and, unless the applicable Prospectus Supplement otherwise specifies that
Pass Through Certificates will be issued in certificated form, 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."
It is expected that the Pass Through Certificates will be
assigned an "investment grade" rating by one or more nationally recognized
statistical rating organizations. Such rating or ratings will be set forth in
the Prospectus Supplement applicable to the Pass Through Certificates being
sold.
This Prospectus may not be used to consummate sales of any Pass
Through Certificates unless accompanied by the Prospectus Supplement
applicable to the Pass Through Certificates being sold.
----------
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of
the Exchange Act, and in accordance therewith files reports and other
information with 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
filed by the Corporation under 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, 1997 filed August 8, 1997.
2. The Corporation's Quarterly Reports on Form 10-Q for the
fiscal quarters ended August 31, 1997, November 30, 1997 and February 28,
1998, respectively, filed October 14, 1997, January 13, 1998 and April 10,
1998, respectively.
3. The Corporation's Current Reports on Form 8-K dated May 22,
June 11, June 30, July 7, August 8, September 30 and October 6, 1997, and
February 26, 1998, respectively, filed June 2, June 19, July 7, July 9,
August 14, October 8 and October 8, 1997, and March 6, 1998, 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:
Elizabeth R. Allen, Investor Relations, FDX Corporation, by mail at Box 727,
Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478.
FEDERAL EXPRESS CORPORATION
The Corporation is a wholly-owned subsidiary of FDX
Corporation. The Corporation offers a wide range of express services for the
time-definite transportation of documents, packages and freight throughout the
world using an extensive fleet of aircraft and vehicles and leading-edge
information technologies. Corporate headquarters are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
Year Ended May 31, February 28,
----------------------------------- ---------------
1993 1994 1995 1996 1997 1997 1998
Ratio of Earnings to ---- ---- ---- ---- ---- ---- ----
Fixed Charges(a)..... 1.4x 1.7x 2.0x 1.9x 2.0x 1.9x 2.0x
- ----------
(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.
RISK FACTORS
In addition to the information set forth elsewhere in this
Prospectus, prospective investors should consider carefully the factors set
forth below in connection with an investment in Pass Through Certificates.
The following discussion should be read in conjunction with the more detailed
information set forth in the applicable Prospectus Supplement.
Appraisals and Realizable Value of Aircraft
The Prospectus Supplement will contain the appraised value of
each Aircraft based upon the lesser of the average and the median value of
such Aircraft as appraised by independent appraisers who will be named in the
applicable Prospectus Supplement (the "Appraisals") and whose reports or
summaries thereof may be contained therein. The Appraisals will be based on
various assumptions and methodologies, which vary among the Appraisals.
Appraisals based on different assumptions or methodologies may
result in valuations that are significantly different from those contained in
the Appraisals. An appraisal is only an estimate of value and should not be
relied upon as a measure of realizable value. The proceeds realized upon the
sale of any Aircraft may be less than the appraised value thereof. In
addition, the value of the Aircraft in the event of the exercise of remedies
under the related Indenture will depend on market and economic conditions at
the time, the availability of buyers, the condition of the Aircraft, whether
the Aircraft are sold separately or as a block and other factors. Accordingly,
there can be no assurance that the proceeds realized upon any such exercise
with respect to the Equipment Certificates and the Aircraft pursuant to the
related Indenture will be as appraised or sufficient to satisfy in full
payments due on the Equipment Certificates issued thereunder or the Pass
Through Certificates.
The Equipment Certificates are not cross-collateralized and,
consequently, liquidation proceeds from the sale of an Aircraft in excess of
the principal amount of the Equipment Certificates related to such Aircraft
will not be available to cover losses, if any, on any other Equipment
Certificates.
Priority of Distributions; Subordination
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 one Indenture may, under certain
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 Indentures. If this occurs, the interest accruing on the remaining
Equipment Certificates will be less than the interest accruing on the
remaining Pass Through Certificates because the Pass Through Certificates will
have a greater proportion of higher interest rate junior Classes. As a result
of this possible interest shortfall, the holders of one or more junior Classes
of Pass Through Certificates may not receive the full amount due them even if
all the Equipment Certificates are eventually paid in full. The applicable
Prospectus Supplement related to an issuance of Pass Through Certificates will
describe any such intercreditor agreement and cross-subordination provisions
and any related terms.
Ratings of the Pass Through Certificates
It is expected that the Pass Through Certificates will be
assigned an "investment grade" rating by one or more Rating Agencies. Such
rating or ratings will be set forth in the Prospectus Supplement applicable to
the Pass Through Certificates being sold. A rating is not a recommendation to
purchase, hold or sell Pass Through Certificates, inasmuch as such rating does
not address market price or suitability for a particular investor. There is no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future (including the downgrading of the
Corporation or the provider of a Liquidity Facility, if any) so warrant. The
rating of the Pass Through Certificates will be based primarily on the default
risk of the Equipment Certificates, the availability of the Liquidity Facility
for the holders of the Pass Through Certificates, the collateral value
provided by the Aircraft and any intercreditor and cross-subordination
arrangements. The ratings are expected to address the likelihood of timely
payment of interest (at the non-default rate) when due on the Pass Through
Certificates and the ultimate payment of principal of the Pass Through
Certificates on the final expected distribution date. Such ratings are not
expected to address the possibility of an Event of Default or an Indenture
Event of Default or other circumstances (such as an Event of Loss) which may
result in the payment of the outstanding principal amount of the Pass Through
Certificates prior to such final expected distribution date.
Unless specified in the applicable Prospectus Supplement, the
reduction, suspension or withdrawal of the ratings of the Pass Through
Certificates will not, in and of itself, constitute an Event of Default.
Owner Participant; Revisions to Agreements
If specified in the applicable Prospectus Supplement, at the
time of issue of Pass Through Certificates, the Corporation may still be
seeking Owner Participants with respect to the trusts relating to certain of
the Aircraft. The Corporation will hold the beneficial interest under the
Trust Agreement relating to each such Aircraft until the date upon which a
prospective Owner Participant commits to participate in the purchase price of
such Aircraft (which date may be up to 90 days after the scheduled delivery
date of the Aircraft). The Corporation will transfer to such Owner Participant
on such date the Corporation's beneficial interest under the Trust Agreement.
Such prospective Owner Participants may request revisions to the Participation
Agreement, Lease, Trust Agreement and Indenture so that the terms of such
agreements applicable to these Aircraft may differ from the description of
such agreements contained in the applicable Prospectus Supplement.
Notwithstanding the foregoing, the terms of such agreements
will be required to (i) contain certain mandatory document terms and (ii) not
vary certain mandatory economic terms. In addition, the Corporation will be
obligated (i) to certify to the Pass Through Trustee that any such
modifications will not materially and adversely affect the Certificateholders
and (ii) if the documents are modified in any material respect, to obtain
written confirmation from each Rating Agency that the use of modified versions
of such agreements will not result in a withdrawal, suspension or downgrading
of the rating of any Class of Pass Through Certificates.
Highly Leveraged Transaction
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.
Absence of a Public Market for the Pass Through Certificates
Prior to their issuance, there will have been no public 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. There can be no assurance as to the liquidity of the public market
for the Pass Through Certificates or that any active public market for the
Pass Through Certificates will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of the Pass
Through Certificates may be adversely affected.
OUTLINE OF PASS THROUGH TRUST STRUCTURE
For each Series of Pass Through Certificates offered pursuant
to this Prospectus and a related Prospectus Supplement, a Pass Through Trust
will be formed pursuant to a Series Supplement in accordance with the Pass
Through Agreement for the benefit of the Certificateholders of such Series of
Pass Through Certificates evidencing fractional undivided interests in such
Pass Through Trust. The Trust Property will consist of (a) the Owned Aircraft
Certificates or (b) the Leased Aircraft Certificates, or both, as specified in
the applicable Prospectus Supplement.
As more fully described below under "Use of Proceeds," in
connection with each purchase or leveraged lease transaction, one or more
Equipment Certificates may be issued, each of which may have different
interest rates and final maturity dates 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 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 Owned
Aircraft, as specified in the applicable Prospectus Supplement, or (b) the
financing or refinancing of the debt portion and, in those cases where the
Owner Participant wishes for tax purposes to prevent specific allocation of
interest expense to the related Aircraft, repaying 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 Leased
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 the Owner Trustee of separate Owner Trusts for the benefit of
the related Owner Participant, in connection with one or more leveraged lease
transactions, in each case to finance or refinance a portion, which is not
expected to exceed 80% and which will be set forth in the applicable
Prospectus Supplement, 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 or into a Deposit
Account pursuant to a Depositary Arrangement. Such Collateral Account, together
with the other security, if any, pledged under the related Indenture (see
"Description of the Equipment Certificates -- Security" below), or such
Depositary Arrangement, will secure such Leased Aircraft Certificates during the
related Pre-Funding Period 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 or amounts payable under a Depositary Arrangement 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 Indenture Trustee under a Leased Aircraft Indenture.
Each Owner Participant will have provided or will provide, from sources other
than the related Leased Aircraft Certificates, a portion, which is not
expected to be less than 20% and which will be set forth in the applicable
Prospectus Supplement, 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 an Owned Aircraft
Indenture. 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 rates and final maturity dates and rankings 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.
[GRAPHIC - A diagram is included here which 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.]
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, and is qualified in its
entirety by the more detailed information appearing 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, and Depositary Arrangement, 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.
In addition to the glossary contained in this Prospectus, 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.
General
The Pass Through Certificates will be issued in fully
registered form only and, unless certificated Pass Through Certificates are
issued, will be registered in the name of Cede as the nominee of 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, 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 and Special Distribution Dates
applicable to such Pass Through Certificates and the applicable Cut-off
Date, 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 Equipment 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
or Depositary Arrangement, 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 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 Pass Through Certificates in fully registered
certificated form are issued, 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 of a Pass
Through Certificate initially issued as a global certificate 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 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. Pass Through Certificates initially issued
in the form of global 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. In general, 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 or amounts payable under a Depositary Arrangement 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. 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 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, will be distributed on the dates determined as set forth in the
applicable Prospectus Supplement 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 another date is 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 Certificate Accounts
and one or more Special Payment Accounts. 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.
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 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 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.
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)
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 Pass Through 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 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 as the occurrence and continuance of an Indenture Event of
Default under one or more of the related Indentures. The Indenture Events of
Default under the Indentures will be described in the applicable Prospectus
Supplement and, for the Leased Aircraft, will include 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, in the absence of such cross-default provisions,
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 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 one Indenture under which no Indenture Event of Default has
occurred will be distributed first to holders of Pass Through Certificates
issued under the Pass Through Trust which holds the most senior Equipment
Certificates issued under all 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 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)
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 of 1939, as amended, 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; or
(e) cause the Pass Through Trust to become taxable as an
"association" within the meaning of Treasury Regulation Section 301.7701-4.
(Pass Through Agreement, Section 11.02)
Modification, Consents and Waivers under the Indenture and Related Agreements
If the Pass Through Trustee, as the holder of any Equipment
Certificates held in a Pass Through Trust, receives a request for its consent
to any amendment, modification or waiver under the Indenture, or other document
relating to such Equipment Certificates (including any Lease with respect to
Leased Aircraft Certificates), the Pass Through Trustee will mail a notice of
such proposed amendment, modification or waiver to each Certificateholder of
such Pass Through Trust as of the date of such notice. The Pass Through
Trustee will request instructions from such Certificateholders as to whether
or not to consent to such amendment, modification or waiver. The Pass Through
Trustee will vote or consent with respect to such Equipment Certificates in
the same proportion as the Pass Through Certificates of such Pass Through
Trust are actually voted by such Certificateholders by a certain date. If an
Event of Default relating to such Indenture has occurred and is continuing
under such Pass Through Trust, the Pass Through Trustee may, in the absence of
instructions from Certificateholders holding a majority in interest of such
Pass Through Trust 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 Indenture. 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 one 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 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
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 until applied to such purchase. (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. 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, First Security Bank, National Association will be the Indenture
Trustee under the Indentures under which the Equipment Certificates have been
or will be issued. First Security Bank, National Association 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, First Security Bank, National Association 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, 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 or Depositary Arrangement, 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 or
Depositary Arrangement, 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, 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 or from amounts payable under a Depositary
Arrangement. 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" and
"Federal Income Tax Consequences" below. The terms and conditions under which
any such sale and leaseback transaction may be consummated will be described
in the applicable Prospectus Supplement.
Until the Corporation has entered into a Lease in connection
with a Leased Aircraft, the Corporation will not be obligated to make any
scheduled rental payments and during any Pre-Funding Period for such Leased
Aircraft the related Leased Aircraft Certificates will not be secured by such
Leased Aircraft or the related Lease, including any rental payments under such
Lease. During any Pre-Funding Period for such Leased Aircraft, however, the
related Collateral Account, together with any other security pledged under the
related Indenture or otherwise available to the Indenture Trustee or amounts
payable under a Depositary Arrangement 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.
If specified in the applicable Prospectus Supplement, payments
of interest and principal due on senior Equipment Certificates issued in
respect of an Aircraft will be made prior to payments of interest and
principal on Equipment Certificates issued in respect of such Aircraft which
are subordinated to such senior Equipment Certificates.
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, so that the Indenture Trustee will not have the right to disturb the
Corporation's quiet enjoyment of such Aircraft so long as no Lease Event of
Default shall have occurred and be continuing; 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 be secured only by that Aircraft
and will not be secured by any other Aircraft or, in the case of Leased
Aircraft Certificates, the Leases related to such other Aircraft. 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. However, 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 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.
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 (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 monetary defaults. 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,
Additional Collateral or by a Depositary Arrangement. 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 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.
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 or until payment by the
provider of Depositary Arrangement of the debt portion of the purchase price
for such Leased Aircraft, such Leased Aircraft is referred to as a "Delayed
Lease Aircraft" and the period prior to commencement of such Lease and the
Indenture Trustee's release of such funds is referred to as the "Pre-Funding
Period."
In the case of Leased Aircraft Certificates relating to a
Delayed Lease Aircraft, the proceeds from sale of such Leased Aircraft
Certificates to the applicable Pass Through Trusts, after deducting certain
expenses of the offering of the related Pass Through Certificates, will be
deposited by the Owner Trustee, on the date of such sale, in a Collateral
Account established pursuant to the Indenture or pursuant to a Collateral
Agreement. Such Collateral Account will secure payment of the related Leased
Aircraft Certificates pending delivery of the related Aircraft. In addition,
if the Prospectus Supplement so provides, the Corporation will be required to
provide to the Indenture Trustee Additional Collateral (in addition to such
Collateral Account) for such Leased Aircraft Certificates during the related
Pre-Funding Period. Alternatively, the Corporation may establish a Depositary
Arrangement pursuant to which the proceeds from sale of such Leased Aircraft
Certificates will be deposited in a deposit account with a third party (having
a short-term senior unsecured credit rating at least equal to the highest
rating applicable to the Pass Through Certificates), who agrees to pay amounts
corresponding to amounts payable on the Leased Aircraft Certificates in
respect of the related Pre-Funding Period and the debt portion of the purchase
price of the related Aircraft upon delivery thereof. See "Security" above.
Funds in any Collateral Account will be invested 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.
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 any Collateral Account and
any Additional Collateral or together with a Depositary Arrangement, 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, on each
date during any 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 or, in the case of a
Depositary Arrangement, shall withdraw such amount from the Deposit Account.
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) the Collateral Account and, to the extent
necessary, any Additional Collateral will be drawn upon or, in the case of a
Depositary Arrangement, the Deposit Account 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. The applicable Prospectus Supplement will contain a
description of the insurance arrangements applicable to each Aircraft. In
general, the Corporation will be obligated to carry comprehensive aircraft
liability insurance, including property damage liability insurance and cargo
legal liability insurance as described below. Such insurance must be in such
amounts, against such risks and with such retentions as the Corporation
customarily maintains. Such insurance must also be with such insurers of
recognized responsibility and against such other risks as is usually carried
by corporations situated similarly to the Corporation and engaged in the same
business as, or business similar to, the Corporation and owning or operating
aircraft and engines similar to the related Aircraft and related engines.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation will also be obligated to carry, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the related Aircraft and all-risk coverage with respect to the related engines
and parts while temporarily removed from such Aircraft and not replaced by
similar engines or parts, as described below. Such insurance includes
war-risk and allied perils, hijacking and governmental confiscation and
expropriation insurance (except in the country of registry), and must be in
such form and amounts, and with such retentions 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 related Aircraft.
The Corporation may self-insure against the risks required to be insured
against under the related lease in such reasonable amounts as are then
applicable to other aircraft or engines of the Corporation of value comparable
to the related Aircraft. Such self-insurance with respect to all aircraft in
the Corporation's fleet may not, however, in the aggregate exceed an amount
equal to the lesser of (a) 50% of the highest replacement value of any single
aircraft in such fleet, or (b) 1.5% of the average aggregate insured value
from time to time of the Corporation's entire aircraft fleet, provided that a
standard deductible per occurrence per aircraft no greater than the amount
customarily allowed as a deductible in the industry will be permitted in
addition to such self-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. In general, 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 Limitations 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 or 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 or amounts payable under a Depositary
Arrangement 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. Additionally, if the
applicable Prospectus Supplement provides for a Liquidity Facility to support
payments of interest on one or more series of Leased Aircraft Certificates,
interest payments on the Leased Aircraft Certificates will be made under such
Liquidity Facility to the extent provided therein. 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 or from amounts payable under a Depositary
Arrangement. 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. The applicable Prospectus Supplement will contain a
description of the insurance arrangements applicable to each Aircraft. In
general, the Corporation will be obligated to carry comprehensive aircraft
liability insurance, including property damage liability insurance and cargo
legal liability insurance as described below. Such insurance must be in such
amounts, against such risks and with such retentions as the Corporation
customarily maintains. Such insurance must also be with such insurers of
recognized responsibility and against such other risks as is usually carried
by corporations situated similarly to the Corporation and engaged in the same
business as, or business similar to, the Corporation and owning or operating
aircraft and engines similar to the related Aircraft and related engines. In
general, the Corporation will also be obligated to carry, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the related Aircraft and all-risk coverage with respect to the
related engines and parts while temporarily removed from such Aircraft and not
replaced by similar engines or parts, as described below. Such insurance
includes war-risk and allied perils, hijacking and governmental confiscation
and expropriation insurance (except in the country of registry), must be in
such form and amounts, and with such retentions 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 related Aircraft,
and may not be in an amount below certain stipulated values. The Corporation
may self-insure against the risks required to be insured against under the
related lease in such reasonable amounts as are then applicable to other
aircraft or engines of the Corporation of value comparable to the related
Aircraft. Such self-insurance with respect to all aircraft in the
Corporation's fleet may not, however, in the aggregate exceed an amount equal
to the lesser of (a) 50% of the highest replacement value of any single
aircraft in such fleet, or (b) 1.5% of the average aggregate insured value
from time to time of the Corporation's entire aircraft fleet, provided that a
standard deductible per occurrence per aircraft no greater than the amount
customarily allowed as a deductible in the industry will be permitted in
addition to such self-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. In
general, 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 themselves be subject to
federal income taxation. 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 should
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 Equipment
Certificates, an Owner Participant's conveyance of its interest in an Owner
Trust will not constitute a taxable event to the holders of interests in the
related Equipment Certificates. However, if (a) the Corporation were to assume
an Owner Trust's obligations under the related Equipment Certificates upon a
purchase of the related Aircraft by the Corporation, or (b) an Owner Trust
assumes the Corporation's obligations under the Owned Aircraft Certificates,
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 a different Series
and receives less than the full amount of the receipts of principal or
interest paid with respect to the Equipment Certificates held by it 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 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 Internal Revenue Code. Any such withheld amounts will be
allowed as a credit against the Certificateholder's federal income tax and may
entitle such Certificateholder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
CERTAIN UTAH 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 national banking association with
its principal corporate trust office in Salt Lake City, Utah. Ray, Quinney &
Nebeker, counsel to the Pass Through Trustee, has advised the Corporation that,
in its opinion, under currently applicable Utah 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 Utah: (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 Utah 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, Utah 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 Utah 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 States 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 ERISA, or individual
retirement account or plan subject to Section 4975 of the Internal Revenue Code.
Certain governmental plans and non-electing church plans, however, are not
subject to Title I of ERISA or Section 4975 of the Internal Revenue 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 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 Karen M. Clayborne, Senior
Vice President and General Counsel of the Corporation, as to the Corporation's
authorization, execution and delivery of the Pass Through Agreement. At
February 28, 1998, Ms. Clayborne owned 2,000 shares of FDX Corporation's
common stock and had been granted options to purchase 32,500 shares of FDX
Corporation's common stock. Of the options granted, 6,800 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, 1997 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, 1997, November 30, 1997 and February 28, 1998,
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.
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus.
Definitions contained in this glossary may be different from definitions used
in the applicable Prospectus Supplement. Accordingly, any Prospectus
Supplement should be read in conjunction with the glossary or other definition
of terms contained in such Prospectus Supplement.
"Aircraft" means, collectively, the Owned Aircraft and the Leased
Aircraft.
"Additional Collateral" means 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.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. et
seq.), as amended, or any successor thereto.
"Business Day" means any day other than a Saturday, a Sunday or other
day on which commercial banks in New York City, Memphis, Tennessee or the city
in which the office or agency in the United States is maintained by the Pass
Through Trustee for the payment of the Pass Through Certificates are
authorized or required by law to close, and after the lien of the related
Indenture is discharged, the city in which the principal place of business of
the related Owner Trustee is located.
"Cede" means Cede & Co., as nominee for DTC.
"Certificate Account" means a non-interest bearing account for the
deposit of Scheduled Payments on the Equipment Certificates held in the
related Pass Through Trust.
"Certificateholder" means, for any Pass Through Trust, the registered
holder of any Pass Through Certificate issued by such Pass Through Trust.
"Class" means the Equipment Certificates or Pass Through Certificates,
as the case may be, of any priority of payment.
"Collateral Account" means an account into which proceeds from the sale
of the related Leased Aircraft Certificates will be deposited by the related
Owner Trustee for the benefit of the related Indenture Trustee as set forth in
this Prospectus and the applicable Prospectus Supplement.
"Collateral Agreement" means a collateral agreement between the Owner
Trustee and the Indenture Trustee with respect to the related Collateral
Account.
"Commission" means the Securities and Exchange Commission of the United
States.
"Convention" means the Convention on the International Recognition of
Rights in Aircraft.
"Corporation" means Federal Express Corporation.
"Cut-off Date" means, if applicable to an Aircraft, the date 90 days
after the scheduled delivery date for such Aircraft.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participants of DTC.
"Delayed Lease Aircraft" means a Leased Aircraft to which a Pre-Funding
Period applies, which term shall be applicable to such Leased Aircraft until
commencement of the related Lease and the related Indenture Trustee's release
of funds from the related Collateral Account or until payment by the provider
of the Depositary Arrangement of the debt portion of the purchase price for
such Leased Aircraft.
"Deposit Account" means the deposit account established under a
Depositary Arrangement.
"Depositary Arrangement" means the agreement of a person (having a
short-term senior unsecured credit rating at least equal to the highest rating
applicable to the Pass Through Certificates) to pay amounts corresponding to
amounts payable on the Leased Aircraft Certificates in respect of any related
Pre-Funding Period and the debt portion of the purchase price of the related
Aircraft upon delivery thereof.
"Distribution Date" means, collectively, the Regular Distribution Date
and the Special Distribution Date.
"Equipment Certificates" means, collectively, the Owned Aircraft
Certificates and the Leased Aircraft Certificates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means each of the events designated as an event of
default under the Pass Through Agreement with respect to the related Pass
Through Trust.
"Event of Loss" means, for any Aircraft, each of the events designated
as such in the related Lease.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means the registered holders of the related Equipment
Certificates.
"Indentures" means, collectively, the related Owned Aircraft Indentures
and the related Leased Aircraft Indentures.
"Indenture Event of Default" means, for any Indenture, each of the
events designated as an event of default in such Indenture.
"Indenture Trustee" means First Security Bank, National Association, or
another bank or trust company, in its capacity as indenture trustee under the
related Indenture and any successor thereunder.
"Intercreditor Agreement" means the agreement among the Pass Through
Trustee, the subordination agent named therein and the Liquidity Provider
specified in the applicable Prospectus Supplement.
"Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended.
"Lease" means a lease agreement between the Owner Trustee, as lessor,
and the Corporation, as lessee, in each case under which the Owner Trustee
leases, or is expected to lease, the related Aircraft to the Corporation.
"Lease Event of Default" means, for any Lease, each of the events
designated as an event of default in such Lease.
"Leased Aircraft" means one or more aircraft specified in a Prospectus
Supplement which has been or will be leased to the Corporation.
"Leased Aircraft Certificates" means the equipment trust certificates
issued as nonrecourse obligations by the related Owner Trustee, each acting
not in its individual capacity but solely as the Owner Trustee of a separate
Owner Trust in connection with a separate leveraged lease transaction relating
to an Aircraft.
"Leased Aircraft Indenture" means a trust indenture and security
agreement between the Owner Trustee and the Indenture Trustee relating to a
Leased Aircraft.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
"Liquidity Facility" means a liquidity facility issued by the related
Liquidity Provider as provided in the applicable Prospectus Supplement.
"Liquidity Provider" means an institution identified in the applicable
Prospectus Supplement which will enter into a Liquidity Facility to support
certain 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 as provided in such Prospectus Supplement.
"Owned Aircraft" means one or more aircraft specified in a Prospectus
Supplement that have been or will be purchased and owned by the Corporation.
"Owned Aircraft Certificates" means the equipment purchase certificates
relating to an Owned Aircraft issued as recourse obligations by the
Corporation.
"Owned Aircraft Indenture" means a trust indenture and security
agreement between the Corporation and the Indenture Trustee relating to an
Owned Aircraft.
"Owner Participant" means the owner participant named in the related
Trust Agreement.
"Owner Trust" means a trust created pursuant to a Trust Agreement.
"Owner Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, or another bank or trust company, not in
its individual capacity but solely as owner trustee of an Owner Trust.
"Participation Agreement" means a participation agreement among the
Owner Participant, the Owner Trustee, the Indenture Trustee, the Corporation
and, in the case of a refinancing, each holder of a loan certificate issued
under the related Indenture as originally executed.
"Pass Through Agreement" means the Pass Through Trust Agreement dated as
of May 1, 1997, between the Corporation and First Security Bank, National
Association, in accordance with which each of the Pass Through Trusts will be
formed pursuant to the related Series Supplement.
"Pass Through Certificates" means the pass through certificates to be
issued by the related Pass Through Trustee pursuant to the Pass Through
Agreement and the related Series Supplements and which represent the
fractional undivided interests in the related Pass Through Trusts.
"Pass Through Trust" means the pass through trust to be formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement.
"Pass Through Trustee" means First Security Bank, National Association
in its capacity as pass through trustee under the Pass Through Agreement, as
supplemented by the related Series Supplement, for the related Pass Through
Trust, and its successors and assigns thereunder.
"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, a Division
of the McGraw-Hill Company, Inc., 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.
"Pool Balance" means, unless otherwise described in the applicable
Prospectus Supplement, for each Pass Through Trust, 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 such Equipment
Certificates.
"Pool Factors" means, unless otherwise described in the applicable
Prospectus Supplement, for each Pass Through Trust, as of any Distribution
Date, 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.
"Pre-Funding Period" means, with respect to any Aircraft, the period, if
any, commencing on the date of the issuance of the related Pass Through
Certificates to but not including the date on which the funds from the related
Collateral Account or Depositary Arrangement are released by the related
Indenture Trustee.
"Prospectus Supplement" means a supplement to this Prospectus.
"Purchase Agreement" means, for any Aircraft, the purchase agreement
between the manufacturer and the Corporation, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to such Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
"Purchase Agreement Assignment" means, for any Aircraft, the purchase
agreement assignment between the related Owner Trustee and the Corporation.
"Rating Agency" means a "nationally recognized statistical rating
organization", as such term is defined in Rule 436(g)(2) under the Securities
Act.
"Registration Statement" means a registration statement on Form S-3
(together with all amendments and exhibits).
"Regular Distribution Date" means, for each Pass Through Trust, any date
specified for distribution of a Scheduled Payment to the related Pass Through
Trustee in the applicable Prospectus Supplement.
"Scheduled Payment" means the payment of principal of, and or interest
on, the Equipment Certificates scheduled to be received by the related Pass
Through Trustee on a Regular Distribution Date.
"Securities Act" means the Securities Act of 1933, as amended.
"Series" means one of a series of Pass Through Certificates evidencing
fractional undivided interests in such Pass Through Trust.
"Series Supplement" means each of the series supplements between the
Corporation and the Pass Through Trustee, in each case pursuant to which the
related Pass Through Trust will be formed in accordance with the Pass Through
Agreement and the related Pass Through Certificates will be issued.
"Shortfall Amount" means any amount less than the full amount of the
receipts of principal or interest paid with respect to the related Equipment
Certificates.
"Special Distribution Date" means any Business Day on which a Special
Payment is to be distributed.
"Special Payment" means, for any Pass Through Trust, any payment of
principal, premium, if any, or interest, other than a Scheduled Payment,
received by the related Pass Through Trustee on any of the Equipment
Certificates held in such Pass Through Trust and any proceeds from the sale of
any such Equipment Certificates by such Pass Through Trustee.
"Special Payment Account" means a non-interest bearing account for the
deposit of Special Payments on the Equipment Certificates held in the related
Pass Through Trust.
"Subordinated Certificateholder" means the corresponding owners of
beneficial interests in the Subordinated Certificates.
"Subordinated Certificates" means any Pass Through Certificate relating
to a Subordinated Trust.
"Subordinated Trust" means any Pass Through Trust with respect to a
Series which is subordinated with respect to other Pass Through Trusts of the
same Series.
"Transportation Code" means Title 49 of the United States Code, as
amended.
"Trust Agreement" means a trust agreement between the related Owner
Trustee and the related Owner Participant.
"Trust Property" means the property held in the related Pass Through
Trust.
"U.S. Citizen" means a citizen of the United States as defined in
Section 40102(a)(15) of the Transportation Code, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
"Underwriters' Counsel" means the counsel for any agents, dealers or
underwriters.
================================================================================
No dealer, salesperson or other individual has been authorized to
give any information or to make any representations 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
Page
----
Available Information................................................4
Reports to Pass Through Certificateholders...........................4
Incorporation of Certain Documents by
Reference............................................................4
Federal Express Corporation..........................................5
Ratio of Earnings to Fixed Charges...................................5
Risk Factors.........................................................5
Outline of Pass Through Trust Structure..............................7
Use of Proceeds......................................................7
Diagram of Payments..................................................9
Description of the Pass Through Certificates........................10
Description of the Equipment Certificates...........................25
Federal Income Tax Consequences.....................................35
Certain Utah Taxes..................................................36
ERISA Considerations................................................37
Plan of Distribution................................................37
Legal Matters.......................................................38
Experts.............................................................38
Glossary............................................................39
================================================================================
$1,000,000,000
[COMPANY LOGO]
$1,000,000,000
Pass Through Certificates
----------
PROSPECTUS
----------
May__, 1998
================================================================================
Subject To Completion
PRELIMINARY PROSPECTUS DATED MAY 15, 1998
PROSPECTUS
[COMPANY LOGO]
DEBT SECURITIES
----------
Up to $1,000,000,000 aggregate principal amount of Debt
Securities of Federal Express Corporation (the "Corporation") 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, a 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 the applicable Prospectus Supplement
specifies that the Debt Securities will be issued in certificated form, 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. It is expected that the Debt
Securities will be assigned an "investment grade" rating by one or more
nationally recognized statistical rating organizations. Such rating or
ratings will be set forth in the Prospectus Supplement applicable to the Debt
Securities being sold.
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 May __, 1998.
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
may 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 the registration statement or qualification under the
securities laws of any such state.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of
the Exchange Act, and in accordance therewith files reports and other
information with 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
filed by the Corporation under 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, 1997 filed August 8, 1997.
2. The Corporation's Quarterly Reports on Form 10-Q for the
fiscal quarters ended August 31, 1997, November 30, 1997 and February 28,
1998, filed October 14, 1997, January 13, 1998 and April 10, 1998,
respectively.
3. The Corporation's Current Reports on Form 8-K dated May 22,
June 11, June 30, July 7, August 8, September 30 and October 6, 1997, and
February 26, 1998, respectively, filed June 2, June 19, July 7, July 9,
August 14, October 8 and October 8, 1997, and March 6, 1998, 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:
Elizabeth R. Allen, Investor Relations, FDX Corporation, by mail at Box 727,
Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478.
FEDERAL EXPRESS CORPORATION
The Corporation is a wholly-owned subsidiary of FDX
Corporation. The Corporation offers a wide range of express services for the
time-definite transportation of documents, packages and freight throughout the
world using an extensive fleet of aircraft and vehicles and leading-edge
information technologies. Corporate headquarters are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months Ended
Year Ended May 31, February 28,
----------------------------------- ---------------
1993 1994 1995 1996 1997 1997 1998
Ratio of Earnings to ---- ---- ---- ---- ---- ---- ----
Fixed Charges(a)..... 1.4x 1.7x 2.0x 1.9x 2.0x 1.9x 2.0x
- -------------------
(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.
As a result of an offering of Debt Securities, the Corporation
may be more highly leveraged than currently reflected in this table.
RISK FACTORS
In addition to the information set forth elsewhere in this
Prospectus, prospective investors should consider carefully the factors set
forth below in connection with an investment in Debt Securities.
Subordination to Debt of Subsidiaries
The Corporation's right and the rights of its creditors,
including 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 subsidiaries' creditors, except to the extent that the
Corporation may itself be a creditor with recognized claims against such
subsidiary.
Highly Leveraged Transaction; No Limit on Amount of Indebtedness That May be
Incurred
The Indenture does not limit the amount of secured or unsecured
indebtedness which may be incurred by the Corporation or its subsidiaries.
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 of control of the Corporation.
Ratings of the Debt Securities
It is expected that the Debt Securities will be assigned an
"investment grade" rating by one or more Rating Agencies. Such rating or
ratings will be set forth in the Prospectus Supplement applicable to the Debt
Securities being sold. A rating is not a recommendation to purchase, hold or
sell Debt Securities, inasmuch as such rating does not address market price or
suitability for a particular investor. There can be no assurance that a rating
will remain for any given period of time or that a rating will not be lowered
or withdrawn entirely by a Rating Agency if in its judgment circumstances in
the future so warrant. The rating of the Debt Securities will be based
primarily on the default risk of the Debt Securities and are expected to
address the likelihood of timely payment of interest when due on the Debt
Securities and the ultimate payment of principal of the Debt Securities on the
final maturity date. The reduction, suspension or withdrawal of the ratings of
the Debt Securities will not, in and of itself, constitute an Event of
Default.
Absence of a Public Market for the Debt Securities
Prior to their issuance, there will have been no public market
for the Debt Securities 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 Debt Securities on
a national securities exchange. There can be no assurance as to the liquidity
of the public market for the Debt Securities or that any active public market
for the Debt Securities will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of the Debt
Securities may be adversely affected.
USE OF PROCEEDS
The use of proceeds from the sale of Debt Securities will be
set forth in the Prospectus Supplement applicable to such Debt Securities.
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 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, 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.
General
The Debt Securities are to be issued under an Indenture. 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 Debt Securities in certificated form are issued, 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, DTC, and registered in its name or in the name of Cede, its nominee. No
Holder of a Debt Security initially issued as a global certificate 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 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 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. Debt Securities initially issued in the
form of a global certificate 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 Debt Securities and the performance of
every covenant of the 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), 1005 (certificates of compliance) and (ii) that Sections 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 Debt Securities, the legality of the Debt Securities
will be passed upon for the Corporation by Karen M. Clayborne, Senior Vice
President and General Counsel of the Corporation, and by counsel for any
underwriters, dealers and agent. At February 28, 1998, Ms. Clayborne owned
2,000 shares of FDX Corporation's common stock and had been granted options to
purchase 32,500 shares of FDX Corporation's common stock. Of the options
granted, 6,800 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, 1997 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, 1997, November 30, 1997 and February 28, 1998,
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.
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus.
Definitions contained in this glossary may be different from definitions used
in the applicable Prospectus Supplement. Accordingly, any Prospectus
Supplement should be read in conjunction with the glossary or other definition
of terms contained in such Prospectus Supplement.
"Additional Amounts" means any additional amounts which are required by
any Debt Security or related Indenture, under circumstances specified therein,
to be paid by the Corporation in respect of certain taxes, assessments or
other governmental charges imposed on Holders specified therein and which are
owing to such Holders.
"Cede" means Cede & Co., as nominee for DTC.
"Commission" means the Securities and Exchange Commission of the United
States.
"Corporation" means Federal Express Corporation.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participants of DTC.
"Debt Securities" means unsecured debt securities (or the equivalent
thereof in foreign currency) relating to this Prospectus and the applicable
Prospectus Supplement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Event of Default" means each of the events designated as an event of
default in the related Indenture.
"Foreign Currency" means any currency, currency unit or composite
currency, including, without limitation, the European currency units, issued
by the government of one or more countries other than the United States or by
any recognized confederation or association of such governments.
"Government Obligations" means securities which are (x) direct
obligations of the United States of America or the other government or
governments in the confederation which issued the Foreign Currency in which
the principal of or any premium or interest on any Debt Security or any
Additional Amounts in respect thereof shall be payable, in each case where the
payment or payments thereunder are supported by the full faith and credit of
such government or governments, or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America or such other governments or governments, in each case where the
payment or payments thereunder are unconditionally guaranteed as a full faith
and credit obligation by the United States of America or such other
governments or governments, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank as custodian with respect to any such
Government Obligation or a specific payment of principal of or interest on any
such Government Obligation held by such custodian for the account of the holder
of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the
custodian in respect to the Government Obligation or the specific payment of
principal of or interest on the Government Obligation evidenced by such
depository receipt.
"Holder" means a Person in whose name a Debt Security is registered in
the Security Register.
"Indenture" means an indenture agreement between the Trustee and the
Corporation with respect to the related Debt Securities.
"Maturity," with respect to any Debt Security, means the date on which
the principal of such Debt Security, or an installment of principal, becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, notice of redemption or repurchase or
otherwise and includes the Redemption Date.
"Offered Debt Securities" means a particular series or issue of Debt
Securities which is offered pursuant to this Prospectus and the applicable
Prospectus Supplement.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board, the President or any Vice President, and attested by the Secretary
or any Assistant Secretary of the Corporation, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or of counsel to the Corporation, or other counsel reasonably
satisfactory to the Trustee.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Prospectus Supplement" means a supplement to this Prospectus.
"Rating Agency" means a "nationally recognized statistical rating
organization", as such term is defined in Rule 436(g)(2) under the Securities
Act.
"Redemption Date," with respect to any Debt Security or portion thereof
to be redeemed, means the date fixed for such redemption by or pursuant to the
Indenture or such Debt Security.
"Registration Statement" means a registration statement on Form S-3
(together with all amendments and exhibits).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" means a register in which, subject to such
reasonable regulations as it may prescribe, the Corporation shall provide for
the registration of Debt Securities and of transfers of Debt Securities.
"Series" means one or more series of Debt Securities, the Debt
Securities of each respective series having identical interest rates, rankings
and maturity dates.
"Stated Maturity" means, with respect to any Debt Security or any
installment of principal thereof or interest thereon or any Additional
Amounts, the date established by or pursuant to the Indenture or such Debt
Security as the fixed date on which the principal of such Debt Security or
such installment of principal or interest is, or such Additional Amounts are,
due and payable.
"Trustee" means The First National Bank of Chicago as trustee under the
related Indenture.
================================================================================
No dealer, salesperson or other individual has been authorized to
give any information or to make any representations 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
Page
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Available Information...................................2
Incorporation of Certain Documents by
Reference...............................................2
Federal Express Corporation.............................3
Ratio of Earnings to Fixed Charges......................3
Risk Factors............................................3
Use of Proceeds.........................................4
Description of Debt Securities..........................5
Plan of Distribution...................................11
Legal Matters..........................................12
Experts................................................12
Glossary...............................................13
================================================================================
$1,000,000,000
[COMPANY LOGO]
$1,000,000,000
Debt Securities
----------
PROSPECTUS
----------
May __, 1998
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following are the estimated expenses of the issuance and
distribution of the securities (other than underwriting discounts and
commissions) being registered, all of which will be paid by the Registrant:
SEC Registration Fee................... 292,630
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.................................. 1,027,630
============
All of the above amounts, other than the SEC Registration Fee,
are estimated.
Item 15. Indemnification of Directors and Officers
(a) Reference is made to Section 145 of the Delaware General
Corporation Law ("DGCL") as to indemnification by the Registrant of
officers and directors.
(b) Section 13 of Article III of the by-laws of the Registrant
provides for indemnification of directors as follows:
Section 13. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact
that he, his testator or intestate is or was a director of the
corporation or serves or served as a director, officer, employee or agent
of any other enterprise at the request of the corporation.
Section 18 of Article V of the by-laws of the Registrant provides
for indemnification of officers as follows:
Section 18. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact
that he, his testator or intestate is or was an officer or Managing
Director of the corporation or serves or served as a director, officer,
employee or agent of any other enterprise at the request of the
corporation.
(c) The Underwriting Agreements filed as Exhibits 1(a), 1(b) and
1(c) to this Registration Statement provide, under certain circumstances,
for indemnification for the Registrant and certain other persons against
certain liabilities.
(d) 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
1(a) Form of Underwriting Agreement relating to Equipment Trust
Certificates (Filed as Exhibit 1(a) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and incorporated
herein by reference, except that reference in such Exhibit to such File
Number shall be left blank)
1(b) Form of Underwriting Agreement relating to Pass Through Certificates
(Filed as Exhibit 1(b) to Registrant's Registration Statement on Form
S-3, Commission File No. 333-07691, and incorporated herein by
reference)
1(c) Form of Underwriting Agreement relating to Debt Securities (Filed as
Exhibit 1(c) to Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by reference)
4(a)(1) Pass Through Trust Agreement, dated as of May 1, 1997, between Federal
Express Corporation and First Security Bank, National Association
(Filed as Exhibit 4.a.3 to Registrant's Current Report on Form 8-K
dated May 12, 1997, Commission File No. 1-7806, and incorporated herein
by reference)
4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1))
4(b)(1) Form of Trust Indenture and Security Agreement among the Owner
Trustee, the Indenture Trustee and Federal Express Corporation, as
Lessee, for an offering of Equipment Trust Certificates (Filed as
Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3,
Commission File No. 33-52142, and incorporated herein by reference)*
4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1))
4(c)(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 (Filed as Exhibit 4(c)(2) to Registrant's Registration
Statement on Form S-3, Commission File No. 333-07691, and incorporated
herein by reference)*
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) (Filed as Exhibit 4(e)(2) to
Registrant's Registration Statement on Form S-3, Commission File No.
333-07691, and incorporated herein by reference)*
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 (Filed as Exhibit 4(f)(2) to Registrant's Registration
Statement on Form S-3, Commission File No. 333-07691, and incorporated
herein by reference)*
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 (Filed as Exhibit
4(g)(2) to Registrant's Registration Statement on Form S-3, Commission
File No. 333-07691, and incorporated herein by reference)*
4(h) Form of Collateral Agreement between the Owner Trustee and the
Indenture Trustee (Filed as Exhibit 4(g) to Registrant's Registration
Statement on Form S-3, Commission File 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 (Filed as Exhibit 4(i)
to Registrant's Registration Statement on Form S-3, Commission File No.
333-07691, and incorporated herein by reference)
4(j) Form of Debt Security (included in Exhibit 4(i))
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 Ray, Quinney & Nebeker, counsel for the Pass Through
Trustee**
5(c) Opinion of Bingham Dana LLP, counsel for the Owner Trustee**
5(d)(1) Opinion of Karen M. Clayborne, Senior Vice President and General
Counsel of Federal Express Corporation, relating to Equipment Trust
Certificates and Pass Through Certificates**
5(d)(2) Opinion of Karen M. Clayborne, Senior Vice President and General
Counsel of Federal Express Corporation, relating to Debt Securities**
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 Ray, Quinney & Nebeker, special counsel for the Pass
Through Trustee (included under the caption "Certain Utah Taxes" in the
Prospectus relating to Pass Through Certificates) (included in Exhibit
5(b))
12 Computation of Ratio of Earnings to Fixed Charges**
15 Letters of Arthur Andersen LLP, independent public accountants (Filed as
Exhibits 15.1 to Registrant's FY98 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 Ray, Quinney & Nebeker, counsel for the Pass Through Trustee
(included in Exhibit 5(b))
23(c) Consent of Bingham Dana LLP, counsel for the Owner Trustee (included in
Exhibit 5(c))
23(d) Consent of Karen M. Clayborne (included in Exhibits 5(d)(1) and 5(d)(2))
23(e) Consent of Arthur Andersen LLP, independent public accountants
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
(Filed as Exhibit 25(a) to Registrant's Registration Statement on Form
S-3, Commission File No. 333-07691, and incorporated herein by
reference)
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 (Filed as
Exhibit 25(b) to Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by reference)
25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of First Security Bank, National Association, as Pass
Through Trustee (Filed as Exhibit 4.a.3 to Registrant's Current Report
on Form 8-K dated May 12, 1997, Commission File No. 1-7806, and
incorporated herein by reference)
- ----------
* 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.
** Filed previously.
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)(2) 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
Amendment No. 1 to Registration Statement No. 333-49411 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Memphis,
State of Tennessee, on this 15th day of May 1998.
FEDERAL EXPRESS CORPORATION
By: /s/ Michael W. Hillard
---------------------------------------
Name: Michael W. Hillard
Title: Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to Registration Statement No. 333-49411 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 and Director May 15, 1998
- -------------------------
Frederick W. Smith
/s/ Alan B. Graf, Jr. Director May 15, 1998
- -------------------------
Alan B. Graf, Jr.
/s/ Theodore L. Weise President, Chief Executive Officer May 15, 1998
- ------------------------- and Director (Principal Executive
Theodore L. Weise Officer)
/s/ Kenneth R. Masterson Director May 15, 1998
- -------------------------
Kenneth R. Masterson
/s/ T. Michael Glenn Director May 15, 1998
- -------------------------
T. Michael Glenn
/s/ Dennis H. Jones Director May 15, 1998
- -------------------------
Dennis H. Jones
/s/ David J. Bronczek Executive Vice President, Chief May 15, 1998
- ------------------------- Operating Officer and Director
David J. Bronczek
/s/ George W. Hearn Director May 15, 1998
- -------------------------
George W. Hearn
/s/ Scott E. Hansen Director May 15, 1998
- -------------------------
Scott E. Hansen
/s/ Michael W. Hillard Vice President and Controller May 15, 1998
- ------------------------- (Principal Accounting Officer)
Michael W. Hillard
/s/ Tracy G. Schmidt Senior Vice President and Chief May 15, 1998
- ------------------------- Financial Officer (Principal
Tracy G. Schmidt Financial Officer)
EXHIBIT INDEX
Exhibits Exhibit Description
1(a) Form of Underwriting Agreement relating to Equipment Trust
Certificates (Filed as Exhibit 1(a) to Registrant's Registration
Statement on Form S-3, Commission File No. 33-52142, and incorporated
herein by reference, except that reference in such Exhibit to such
File Number shall be left blank)
1(b) Form of Underwriting Agreement relating to Pass Through Certificates
(Filed as Exhibit 1(b) to Registrant's Registration Statement on Form
S-3, Commission File No. 333-07691, and incorporated herein by
reference)
1(c) Form of Underwriting Agreement relating to Debt Securities (Filed as
Exhibit 1(c) to Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by reference)
4(a)(1) Pass Through Trust Agreement, dated as of May 1, 1997 between Federal
Express Corporation and First Security Bank, National Association
(Filed as Exhibit 4.a.3 to Registrant's Current Report on Form 8-K
dated May 12, 1997, Commission File No. 1-7806, and incorporated
herein by reference)
4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1))
4(b)(1) Form of Trust Indenture and Security Agreement among the Owner
Trustee, the Indenture Trustee and Federal Express Corporation, as
Lessee, for an offering of Equipment Trust Certificates (Filed as
Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3,
Commission File No. 33-52142, and incorporated herein by reference)*
4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1))
4(c)(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 (Filed as Exhibit 4(c)(2) to Registrant's Registration
Statement on Form S-3, Commission File No. 333-07691, and incorporated
herein by reference)*
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) (Filed as
Exhibit 4(e)(2) to Registrant's Registration Statement on Form S-3,
Commission File No. 333-07691, and incorporated herein by reference)*
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 (Filed as Exhibit 4(f)(2) to Registrant's
Registration Statement on Form S-3, Commission File No. 333-07691, and
incorporated herein by reference)*
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 (Filed as Exhibit
4(g)(2) to Registrant's Registration Statement on Form S-3, Commission
File No. 333-07691, and incorporated herein by reference)*
4(h) Form of Collateral Agreement between the Owner Trustee and the
Indenture Trustee (Filed as Exhibit 4(g) to Registrant's Registration
Statement on Form S-3, Commission File 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 (Filed as Exhibit 4(i)
to Registrant's Registration Statement on Form S-3, Commission File
No. 333-07691, and incorporated herein by reference)
4(j) Form of Debt Security (included in Exhibit 4(i))
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 Ray, Quinney & Nebeker, counsel for the Pass Through
Trustee**
5(c) Opinion of Bingham Dana LLP, counsel for the Owner Trustee**
5(d)(1) Opinion of Karen M. Clayborne, Senior Vice President and General
Counsel of Federal Express Corporation, relating to Equipment Trust
Certificates and Pass Through Certificates**
5(d)(2) Opinion of Karen M. Clayborne, Senior Vice President and General
Counsel of Federal Express Corporation, relating to Debt Securities**
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 Ray, Quinney & Nebeker, special counsel for the Pass
Through Trustee (included under the caption "Certain Utah Taxes" in
the Prospectus relating to Pass Through Certificates) (included in
Exhibit 5(b))
12 Computation of Ratio of Earnings to Fixed Charges**
15 Letters of Arthur Andersen LLP, independent public accountants (Filed
as Exhibits 15.1 to Registrant's FY98 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 Ray, Quinney & Nebeker, counsel for the Pass Through
Trustee (included in Exhibit 5(b))
23(c) Consent of Bingham Dana LLP, counsel for the Owner Trustee (included
in Exhibit 5(c))
23(d) Consent of Karen M. Clayborne (included in Exhibits 5(d)(1) and
5(d)(2))
23(e) Consent of Arthur Andersen LLP, independent public accountants
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 (Filed as Exhibit 25(a) to
Registrant's Registration Statement on Form S-3, Commission File No.
333-07691, and incorporated herein by reference)
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
(Filed as Exhibit 25(b) to Registrant's Registration Statement on Form
S-3, Commission File No. 333-07691, and incorporated herein by
reference)
25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of First Security Bank, National Association (Filed
as Exhibit 4.a.3 to Registrant's Current Report on Form 8-K dated May
12, 1997, Commission File No. 1-7806, and incorporated herein by
reference)
- ----------
* 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.
** Filed previously.
EXHIBIT 23.E
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-3 registration statement of our
reports dated June 30, 1997, included (or incorporated by reference) in Federal
Express Corporation's Form 10-K for the year ended May 31, 1997, and to all
references to our firm included in this registration statement.
/s/ Arthur Andersen LLP
- ------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee
May 11, 1998.
