As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. ___-______
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
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)
-----------------------
Copies to:
Sarah Beshar, Esq.
Juliet Cain, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
-----------------------
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>
Pass Through Certificates........................
Owned Aircraft Equipment Certificates(2).........
Leased Aircraft Equipment Trust Certificates.....
Debt Securities..................................
Total......................................... $133,478,000 100% $133,478,000 $37,107
================================================= ============= =============== ============ ================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
(2) Owned Aircraft Equipment Certificates will only be issued as part of the
trust property of the relevant pass through trust.
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 $166,522,000 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. 333-49411 in respect of which a filing fee of $49,124 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.
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains three forms of prospectus. Each
prospectus is accompanied by a prospectus supplement. The forms of prospectus
and their supplements will be used respectively to offer for sale:
o leased aircraft equipment trust certificates
o pass through certificates
o debt securities.
Sales of the above securities may not be consummated without both the
applicable prospectus and the prospectus supplement.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 4, 1999
$300,000,000
[COMPANY LOGO]
LEASED AIRCRAFT EQUIPMENT TRUST CERTIFICATES
-----------------------
This prospectus relates to the issuance of Certificates by an Owner
Trustee, acting not in its individual capacity but solely as the Owner Trustee
of a separate Owner Trust.
The Certificates:
o will have an aggregate public offering price of up to $300,000,000
o will be issued in one or more series
o will be issued to finance or refinance a portion of the payment by
the Owner Trustee of the cost of the Aircraft
o of each series will have a principal amount, maturity date and
interest rate specified in a prospectus supplement
o will be payable at the times and in the amount specified in a
prospectus supplement
o will be secured by a security interest in the related Aircraft and
by the Lease of that Aircraft to Federal Express, including the
right to receive rent payable by Federal Express as lessee under the
Lease, and
o will not be obligations of, or guaranteed by, Federal Express but
the amounts payable by Federal Express under the Lease will be
sufficient to pay in full when due all principal of and any premium
and interest on the Certificates, subject to any limitations
specified in a prospectus supplement.
Each Owner Trust will own:
o the specified Aircraft or, if the delivery of the Aircraft is
delayed, the proceeds of sale of the related Certificates, and
o the rights of the Owner Trustee under documentation relating to the
Aircraft.
The obligations of the Owner Trustee with respect to each series of
Certificates will rank equally with the obligations of the Owner Trustee with
respect to each other series of Certificates.
There was no public market for the Certificates of any series before
their issuance and there is no assurance that one will develop or continue.
Federal Express does not intend to apply for the listing of any series of
Certificates on a national securities exchange, unless otherwise indicated in
a prospectus supplement.
This prospectus will be accompanied by a prospectus supplement which will
describe the specific terms of the particular series of Certificates being
sold, the Indentures, Leases, leveraged lease transactions and Aircraft
relating to the Certificates. Sales of any Certificates may not be consummated
without both this prospectus and the prospectus supplement.
Investing in the Certificates involves risks which are described in the
"Risk Factors" section beginning on page 3 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
-----------------------
The date of this prospectus is June __, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may sell the Certificates described in this prospectus in one or
more offerings. This prospectus provides you with a general description of the
Certificates we may offer. Each time we sell Certificates, we will provide a
prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read carefully both this
prospectus and any prospectus supplement, together with the additional
information described below under "Where You Can Find More Information."
This prospectus does not contain all the information provided in the
Registration Statement that we filed with the SEC. For further information
about Federal Express or the Certificates, you should refer to that
Registration Statement. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those
contracts and other documents.
The Registration Statement that we filed with the SEC relating to the
Certificates can be obtained from the SEC as described below under "Where You
Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports with the SEC. These SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any such document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549, and in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms and copy
charges.
The SEC allows us to "incorporate by reference" the information we file
with it, which means:
o we can disclose important information to you by referring you to
those documents
o information incorporated by reference is considered to be part of
this prospectus, even though it is not repeated in this prospectus
or in any prospectus supplement, and
o information that we file with the SEC will automatically update and
supersede this prospectus and any prospectus supplement.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of the filing of this Registration Statement and
prior to its effectiveness, and until we complete our offering of the
Certificates:
o Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
filed August 21, 1998
o Quarterly Reports on Form 10-Q for the fiscal quarters ended August
31, 1998, November 30, 1998 and February 28, 1999, filed October 13,
1998, January 13, 1999 and April 13, 1999, respectively
o Current Reports on Form 8-K dated June 30, July 8, July 15, August
27, September 21, September 22, October 22 and November 17, 1998,
respectively, filed July 15, July 14, August 5, September 10,
October 5, October 6, November 12 and December 1, 1998,
respectively.
2
<PAGE>
You may obtain a copy of these filings, other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings, at
no cost by writing or telephoning us at the following address:
Elizabeth R. Allen
Investor Relations
FDX Corporation
Box 727
Memphis, Tennessee 38194-1854
(901) 395-3478
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely
on it. We are not making an offer to sell any Certificates in any jurisdiction
where the offer or sale is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front page of those documents. Also, you
should not assume that there has been no change in the affairs of Federal
Express since the date of this prospectus or any prospectus supplement.
FEDERAL EXPRESS CORPORATION
Federal Express is a wholly-owned subsidiary of FDX Corporation. Federal
Express 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 of Federal Express are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
Nine Months
Ended
Year Ended May 31, February 28,
---------------------------------------- --------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges........... 1.7x 2.0x 1.9x 2.0x 2.1x 2.0x 1.9x
</TABLE>
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 this offering of Certificates, Federal Express may be more
highly leveraged than currently reflected in this table.
RISK FACTORS
You should consider carefully the factors described below before you
invest. You should read the information below together with the other
information in this prospectus and the accompanying prospectus supplement.
3
<PAGE>
Federal Express' business is subject to risks and uncertainties
The operations and financial condition of Federal Express are subject to
risks and uncertainties, including:
o economic conditions in the markets in which Federal Express operates
can affect demand for Federal Express' services
o competition from other providers of express services with new or
improved services
o changes in customer demand patterns
o increases in aviation and motor fuel prices
o strikes, work stoppages and slowdowns by Federal Express' employees
o Federal Express' ability to match aircraft, vehicle and sort capacity
with customer volume levels
o Federal Express' ability to obtain aviation rights in important
international markets
o contributions to financial results from the sale of engine noise
reduction kits
o changes in government regulation, weather and technological changes,
and
o availability of financing on terms acceptable to Federal Express.
Proceeds from the sale of an aircraft may be less than its appraised value
The prospectus supplement will contain the appraised value of each
Aircraft based upon the lesser of the average and the median value of the
Aircraft as appraised by several independent appraisers who will be named in
the prospectus supplement. The prospectus supplement may contain reports or
summaries of these appraisals. Such appraisals will be based on various
assumptions and methodologies, which may vary, resulting in different
appraisals.
An appraisal is only an estimate of value and you should not rely upon it
as a measure of realizable value. The proceeds realized upon the sale of any
Aircraft may be less than the appraised value of that Aircraft because of:
o market and economic conditions at the time
o the availability of buyers
o the condition of the Aircraft
o whether the Aircraft are sold separately or as a block, and
o other factors.
Therefore, there is no assurance that the proceeds realized upon any sale
of an Aircraft will be as appraised or sufficient to satisfy in full payments
due on the Certificates.
Excess proceeds from the sale of one Aircraft will not be available to
cover losses on other Certificates relating to other Aircraft and events
resulting in a default under one Indenture may not result in a default under
other Indentures
4
<PAGE>
The Certificates are not cross-collateralized, which means that
liquidation proceeds from the sale of an Aircraft in excess of the principal
amount of the Certificates related to that Aircraft will not be available to
cover any losses on any other Certificates. 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 under any other Indenture.
Rating agencies may change their rating on the Certificates at any time
The Certificates are expected to be assigned an "investment grade" rating
by one or more Rating Agencies. The prospectus supplement will indicate the
rating assigned to the Certificates being sold. A rating is not a
recommendation to purchase, hold or sell the Certificates because a 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 so warrant, including the downgrading
of Federal Express. The ratings 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 when due on the Certificates, at the non-default rate, and the
ultimate payment of principal of the Certificates on the final expected
distribution date. The 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 the final expected distribution
date.
The reduction, suspension or withdrawal of the ratings of the
Certificates will not, in and of itself, constitute an Indenture Event of
Default, unless the prospectus supplement specifies otherwise.
The indenture does not limit the amount of debt Federal Express may incur or
protect against a highly leveraged transaction involving Federal Express
The Indenture does not limit the amount of secured or unsecured
indebtedness which Federal Express or its subsidiaries may incur. The
Indenture does not contain debt covenants or provisions that would give the
holders protection in the event of a highly leveraged transaction involving
Federal Express.
A public market for the Certificates may not develop or continue
There was no public market for the Certificates of any series before
their issuance and there is no assurance that one will develop or continue.
Federal Express does not intend to apply for the listing of any Certificates
on a national securities exchange, unless otherwise indicated in a prospectus
supplement. 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 Owner Trustee for each Owner Trust will use the proceeds from the
sale of the Certificates to finance or refinance the debt portion and, in
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
Federal Express, as lessee, with respect to the Aircraft specified in the
prospectus supplement. For each Aircraft, Federal Express does not expect the
debt portion to be financed or refinanced to exceed 80% of the purchase price
for the Aircraft.
The related Owner Participant will pay the discounts and commissions
relating to the offering of the related Certificates. The other expenses
relating to the issuance and offering of those Certificates, other than
various expenses to be paid directly by Federal Express, will be paid by the
related Owner Participant as such other expenses become due or, if previously
paid by Federal Express, will be reimbursed to Federal Express by the related
Owner Participant.
5
<PAGE>
OUTLINE OF LEVERAGED LEASE TRANSACTIONS
Each Aircraft in a leveraged lease transaction:
o has been or will be sold to the Owner Trustee for the benefit of the
Owner Participant, and
o has been or will be leased by the Owner Trustee to Federal Express
pursuant to a Lease.
Each Owner Participant will have provided or will provide at least 20% of
the purchase price of the Aircraft from sources other than the Certificates,
unless otherwise specified in the prospectus supplement.
Each prospectus supplement will specify the type and model of the
applicable Aircraft, the engines with which the Aircraft is equipped and
whether the Aircraft is already in use in Federal Express' fleet, has been
used in another operator's fleet or will be delivered new by the manufacturer
to Federal Express or to the Owner Trustee, as the case may be.
DESCRIPTION OF THE CERTIFICATES
The following is a summary description of the Certificates which we
expect will be common to all series of Certificates. The prospectus supplement
will describe the specific terms of any series of Certificates. Therefore, you
should rely on the information in the prospectus supplement, in particular if
the information in the prospectus supplement is different from the information
provided below.
Because the following description is a summary, it does not describe
every aspect of the Certificates, and it is qualified in its entirety by the
detailed information appearing in the prospectus supplement, the form of
Certificates and the related Indenture, Lease and Participation Agreement
which will be filed with the SEC, as exhibits to a post-effective amendment to
the Registration Statement of which this prospectus is a part or a Current
Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on
Form 10-K.
In the following description, we have included references to section
numbers of the Indenture so that you can easily locate those provisions.
General
The Owner Trustee will issue the Certificates as nonrecourse obligations.
Federal Express 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 rental and other payments will
be general obligations of Federal Express but will not be guaranteed by
Federal Express.
The Certificates will not be obligations of the Owner Trustee, in its
individual capacity, or of the Owner Participant. The Owner Trustee, in its
individual capacity, and the Owner Participant will not be liable for payment
of any principal of or any premium or interest on the Certificates.
Book-Entry Procedures
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. A
Certificateholder holding a Certificate initially issued as a global security
will not be entitled to receive a Certificate in certificated form, except as
indicated below.
DTC has advised Federal Express that:
6
<PAGE>
o 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.
o 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.
o DTC Participants include securities brokers and dealers, banks, trust
companies and clearing corporations.
o 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.
The DTC Participants will be responsible for distributions to
Certificateholders and such distributions will be made in accordance with
customary industry practices. Although Certificateholders will not have
possession of the Certificates, the rules of DTC provide a mechanism by which
the Certificateholders 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.
Federal Express, the Indenture Trustee or any other agent of Federal
Express or the Indenture Trustee will not be responsible or liable 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", for purposes of the Indenture, will be Cede, as nominee
of DTC, Certificateholders will not be recognized by the Indenture Trustee as
"Certificateholders", and Certificateholders will be permitted to exercise the
rights of "Certificateholders" only indirectly through DTC and DTC
Participants. DTC has advised Federal Express 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 Federal Express 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.
7
<PAGE>
DTC has provided us with the following additional disclosure about its
Year 2000 efforts:
o DTC management is aware that some Systems that are dependent upon
calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its DTC
Participants and other members of the financial community that it
has developed and is implementing a program so that its Systems, as
the same relate to the timely payment of distributions, including
principal and income payments, to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
o However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to, issuers
and their agents, as well as third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC
relies for information or for the provision of services, including
telecommunication and electrical utility service providers, among
others. DTC has informed DTC Participants and other members of the
financial community that it is contacting, and will continue to
contact, third party vendors from whom DTC acquires services to
impress upon them the importance of such services being Year 2000
compliant and to determine the extent of their efforts for Year 2000
remediation and the appropriate testing of their services. In
addition, DTC is in the process of developing such contingency plans
as it deems appropriate.
o According to DTC, the above information with respect to DTC has been
provided to the DTC Participants and other members of the financial
community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any
kind.
Same-Day Settlement and Payment. All payments Federal Express makes to
the Indenture Trustee under each Lease will be in immediately available funds
and will be passed through to DTC in immediately available funds.
Certificated Form. The Owner Trustee will issue physical certificates to
holders of a global security or their nominees if:
o 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 Federal Express is
unable to locate a qualified successor, or
o if Federal Express, 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:
o will be payable on the Certificates on the dates and at the rates
per annum indicated in the prospectus supplement, and
o will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
8
<PAGE>
Principal will be payable on the Certificates in scheduled amounts and on
specified dates indicated in the prospectus supplement. In general, the record
date for each interest and principal payment date will be the fifteenth day
prior to a payment date.
If the Certificates are issued in certificated form as discussed above,
principal of and any premium and interest on the Certificates will be payable
at the corporate trust office of the Indenture Trustee in New York, New York
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.
At their option, the Indenture Trustee or Paying Agent may make payments
by check mailed to the person entitled to the payments at the address shown in
the register maintained by the Indenture Trustee or any other registrar.
(Indenture, Sections 2.04, 3.02 and 3.04) 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 New York, New York. No service charge will be levied on
any Certificateholder for any transfer or exchange of Certificates, but the
Certificateholder may be required to pay any tax or other governmental
charges. (Indenture, Sections 2.04, 2.06 and 3.02)
Prepayment
The prospectus supplement will describe:
o the circumstances, whether voluntary or involuntary, under which the
related Certificates may or must be prepaid prior to the stated
maturity date, in whole or in part
o any premium applicable upon a prepayment, and
o other terms applying to the prepayment of the Certificates.
Security
The Certificates will be secured by:
o an assignment by the Owner Trustee to the Indenture Trustee of the
Owner Trustee's rights under the related Lease, including the right
to receive rent and other payments, but excluding the rights
described below
o a security interest in the related Aircraft, subject to the rights
of Federal Express under the Lease and to the rights of any other
entity under a sublease or assignment permitted under the Lease, so
that the Indenture Trustee will not have the right to disturb
Federal Express' quiet enjoyment of the Aircraft so long as no Lease
Event of Default has occurred and is continuing, and
o an assignment to the Indenture Trustee of the Owner Trustee's rights
relating to the Aircraft and the related engines under any
agreements for the purchase of the Aircraft between Federal Express
and the manufacturers of the Aircraft and the 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:
o indemnification by Federal Express for some matters
o proceeds of public liability insurance payable to the Owner Trustee
in its individual capacity and to the Owner Participant under
insurance maintained by Federal Express under the Lease, and
9
<PAGE>
o 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 to exercise any of the rights of the
Owner Trustee under the related Lease, except the right to receive payments of
rent due under the Lease, will be subject to the limitations described in the
prospectus supplement. (Indenture, Granting Clause and Section 8.01)
The Certificates are not cross-collateralized, which means that
liquidation proceeds from the sale of an Aircraft in excess of the principal
amount of the Certificates related to that Aircraft will not be available to
cover any losses on any other Certificates. 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 under any other Indenture.
The Indenture Trustee will deposit the proceeds from the sale of the
Certificates of any series received 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, in the investments described
below, to hold as security for the Certificates pending the delivery of the
Aircraft or the consummation of the refunding. The Indenture Trustee may also
hold funds as a result of other events, including:
o the occurrence of an Indenture Event of Default, which may cause the
Indenture Trustee to hold funds otherwise distributable to the Owner
Trustee, or
o an Event of Loss with respect to the Aircraft.
These funds will be invested in:
o obligations either of, or fully guaranteed by, the United States of
America
o certificates of deposit, bankers' acceptances and time deposits with
banks and trust companies meeting the criteria specified in the
prospectus supplement, or
o commercial paper issued by a U.S. corporation whose commercial paper
is rated at least A-1/P-1 by Standard & Poor's and Moody's Investors
Service, Inc., respectively, or if neither of these organizations
rates commercial paper, the highest rating by another nationally
recognized rating organization.
The Indenture Trustee will hold and apply any income realized as a result
of the investments, net of the Indenture Trustee's reasonable fees and
expenses incurred in making the investments, in the same manner as the
principal amount of the investment is to be applied. Any losses, after taking
into account such earnings and such reasonable fees and expenses, will be
charged against the principal amount invested. Federal Express will be
responsible for those losses. (Indenture, Section 5.08)
Registration of the Aircraft
Federal Express will be required, except under some 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 Aircraft under the Transportation
Code. The recordation will give the Indenture Trustee a security interest in
each such Aircraft perfected under the Transportation Code. The perfected
security interest will, with limited exceptions, be recognized in those
jurisdictions that have ratified the Convention.
Federal Express will be able, in some circumstances, to re-register any
Aircraft in some countries other than the United States. In general, prior to
any change in the jurisdiction of registry, the Indenture Trustee and the
related Owner Participant must receive assurances, including that the other
country would provide substantially
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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 the assurances are intended to provide that Federal
Express or the Owner Trustee's title to the Aircraft and the Indenture
Trustee's Lien on the Aircraft 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 Federal Express 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 and any premium 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, including rent payable by Federal Express under the related
Lease. See "The Leases -- Terms and Rentals" below. Federal Express'
obligations to pay rent and to cause other payments to be made under each
Lease will be general obligations of Federal Express. The Certificates will
not be direct obligations of, and will not be guaranteed by, Federal Express.
The Owner Trustee and the Indenture Trustee, in their individual
capacities, will not be liable to any Certificateholder or, in the case of the
Owner Trustee, in its individual capacity, to Federal Express 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
Federal Express will be prohibited from consolidating with or merging
into any other corporation under circumstances in which Federal Express is not
the surviving corporation, or from transferring all or substantially all of
its assets as an entirety to any other corporation, unless:
o the successor is a U.S. Citizen, and 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 of the United States
o the successor expressly assumes all the obligations of Federal
Express contained in the related Indenture, the Participation
Agreement, the Lease, the Purchase Agreement and the Purchase
Agreement Assignment
o immediately after giving effect to the consolidation, merger or
transfer, the successor or transferee is in compliance with all of
the terms and conditions of the documents, and
o the 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 Certificateholders protection in the event of a highly leveraged
transaction involving Federal Express.
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Events of Default, Notice and Waiver
The prospectus supplement will indicate the Indenture Events of Default
under each Indenture.
Each Indenture will provide that the Indenture Trustee:
o must give notice to the holders of outstanding Certificates of an
Indenture Default if a responsible officer of the Indenture Trustee
has actual knowledge of its occurrence
o must give the notice within 90 days after the occurrence of the
Indenture Default but not earlier than 60 days from the date of its
occurrence, and
o may withhold the notice in the manner described above, except in the
case of a default in the payment of the principal of and any
interest on any Certificate, if the Indenture Trustee in good faith
determines that the withholding of the notice is in the interests of
the holders of outstanding Certificates. (Indenture, Section 7.12)
The holders of not less than 50% in aggregate principal amount of the
outstanding Certificates may waive some past Indenture Defaults. Consent from
each holder of an outstanding Certificate is however required for:
o a waiver of an Indenture Default in the payment of the principal of
and any premium and interest on any Certificate then outstanding, and
o any covenant or provision of the Indenture or any other related
Operative Agreement which, pursuant to the Indenture, cannot be
modified or amended without the consent of the holders of outstanding
Certificates. (Indenture, Section 7.11)
The Owner Trustee or the related Owner Participant will have the right,
as specified in the 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
the cure right, the Indenture Event of Default will be deemed to be cured.
Remedies
Exercise of Rights and Remedies. The Indenture Trustee may exercise the
rights or remedies available to it if an Indenture Event of Default has
occurred or is continuing, including a Lease Event of Default. If a Lease
Event of Default has occurred, the Indenture Trustee may exercise the remedies
available to it with respect to the Aircraft pledged under the Indenture. The
Indenture Trustee's rights or remedies are subject to any right of the Owner
Trustee or the related Owner Participant to cure defaults or to prepay the
Certificates and to any limitation described in the prospectus supplement. The
Indenture Trustee may exercise the remedies to the exclusion of the Owner
Trustee and the Owner Participant. Any Aircraft sold in the exercise of the
remedies will be free and clear of any rights of those parties, including the
rights of Federal Express under the applicable Lease, provided that no
exercise of any remedies by the Indenture Trustee may affect the rights of
Federal Express under a Lease unless a Lease Event of Default under such Lease
has occurred and is continuing. (Indenture, Section 7.02(a))
Resale Value. 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 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 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.
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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.
Declaration. If an Indenture Event of Default occurs as a result of
specified events of bankruptcy, insolvency or reorganization of the Owner
Trustee, the related Owner Participant or Federal Express, then the unpaid
principal of all outstanding Certificates issued under the Indenture, together
with interest accrued but unpaid on the principal and all other amounts due
under the Certificates and under the 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 the Indenture, may declare the principal of all the Certificates
immediately due and payable, together with interest accrued but unpaid on the
principal and all other amounts due under the Certificates and under the
Indenture, by written notice or notices to the Owner Trustee and Federal
Express.
Rescind Declaration. The holders of not less than 50% in aggregate
principal amount of the outstanding Certificates of the series may rescind any
declaration by the Indenture Trustee or by those 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:
o all overdue installments of interest on all the Certificates,
together, to the extent permitted by law, with interest on the
overdue installments of interest
o the principal on any Certificates that has become due otherwise than
by the declaration
o all amounts paid or advanced by the Indenture Trustee, and
o other specified expenses
or all Indenture Events of Default under the Indenture, other than the
non-payment of principal that has become due solely because of the
declaration, have been cured or waived. (Indenture, Sections 7.02(b) and (c))
Bankruptcy. In the event of the bankruptcy of the Owner Participant, it
is possible that, notwithstanding that the Aircraft will be owned by the Owner
Trustee in trust, the Aircraft and the related Lease and Certificates might
become part of such bankruptcy proceeding. In this event, payments under the
Lease or Certificates might be interrupted and the ability of the Indenture
Trustee to exercise its remedies under the Indenture might be restricted,
although the Indenture Trustee would retain its status as a secured creditor
in respect of the Lease and Aircraft.
The right of any holder of a Certificate to institute an action for any
remedy under the Indenture pursuant to which the Certificate was issued,
including the right to enforce payment of the principal of and any premium and
interest on the 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 the 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
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entitled to be indemnified by those holders of that 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 the aircraft in compliance with the provisions of the lease, conditional
sale contract or security agreement, as the case may be, is not affected by:
o the automatic stay provision of the Bankruptcy Code, which provision
enjoins the taking of any action against a debtor by a creditor
o 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
o the confirmation of a plan by the bankruptcy court, and
o any power of the bankruptcy court to enjoin a repossession.
Section 1110 provides, however, that the right of a lessor, conditional
vendor or holder of a security interest to take possession of an aircraft in
the event of a default may not be exercised for 60 days following the date of
commencement of the reorganization proceedings, unless specifically permitted
by the bankruptcy court, and may not be exercised at all if, within such
60-day period, the trustee in reorganization or the debtor-in-possession
agrees to perform the debtor's obligations that become due on or after such
date and cures all existing defaults, other than defaults resulting solely
from the financial condition, bankruptcy, insolvency or reorganization of the
debtor. The prospectus supplement for each offering will discuss the
availability of the benefits of Section 1110 of the Bankruptcy Code with
respect to the related Aircraft.
Payments. 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 to the Indenture Trustee prior to any
payments to holders of the Certificates with respect to which the 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 by
the changes:
o reductions in the principal amount of or any premium and interest
payment payable on the Certificate or changes in the date on which
any principal and any premium or interest payment is due and payable
or which otherwise affect the terms of payment of the Certificate
o reductions in, and modifications or amendments to, any indemnities
payable by the related Owner Participant in favor of those holders
o reductions in the amount of any rent payable by Federal Express
below the amount required to pay all principal of and any premium
and interest on all the Certificates as and when due and payable
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o creations of any security interest with respect to the property
subject to the Lien of the Indenture ranking prior to or on a parity
with the security interest created by the Indenture or deprivation
to the holder of any such Certificate of the benefit of the Lien of
the Indenture upon the property subject to the Lien, or
o reductions in the percentage of the aggregate principal amount of the
Certificates necessary to modify or amend any provision of the
Indenture or to waive compliance with any provision. (Indenture,
Article XIII)
Some provisions of the Indentures, the Leases, the Participation
Agreements and the Trust Agreements may be modified by the Owner Trustee,
Federal Express and the Indenture Trustee without the consent of the holders of
the outstanding Certificates. (Indenture, Section 13.01)
The Indenture Trustee
Unless otherwise indicated in the prospectus supplement, The Bank of New
York will be the Indenture Trustee under each Indenture. The Bank of New York
acts as trustee under other indentures with respect to other indebtedness of
Federal Express, and Federal Express from time to time borrows from, and
maintains deposit accounts with, The Bank of New York and its affiliates.
Each Indenture will be deemed to provide that in the case of any
Indenture Event of Default, the Indenture Trustee will exercise the rights and
powers vested in it by the 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 the 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 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 and,
subject to some 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 of a related Certificate
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 Federal
Express and those 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 Federal Express 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) 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.
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The Leases
Terms and Rentals. Each Aircraft will be leased separately by the related
Owner Trustee to Federal Express 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 Federal
Express under each Lease will be payable on the dates specified in the
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 some
cases the scheduled rental payments under the Leases may be adjusted, under no
circumstances will the payments that Federal Express 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 prospectus supplement.
Net Lease. Federal Express' obligations under each Lease in respect of
the related Aircraft will be those of a lessee under a "net lease."
Accordingly, Federal Express 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 of the Aircraft
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
Federal Express, using its reasonable best efforts, undertakes such cure
promptly, diligently and continuously, then Federal Express will not be in
default with respect to such obligation.
Generally, Federal Express will be obligated to replace or cause to be
replaced all Aircraft parts that may become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for
use. Federal Express will have the right to make other modifications and
additions to an Aircraft so long as such 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 modification or addition, assuming
that the Aircraft was then in the condition and airworthiness required by the
related Lease. Also, in some circumstances, Federal Express will be permitted
to remove parts, without replacement, from an Aircraft or any engine, and
therefore from the Lien of the applicable Indenture, if Federal Express deems
such parts to be obsolete or no longer suitable or appropriate for use so long
as the removals do not decrease the utility, condition or airworthiness of the
Aircraft or any engine, although the value of the Aircraft or any engine may
be reduced by the removal. The prospectus supplement will contain a
description of any limitations applicable to the provisions described above.
Insurance. The prospectus supplement will contain a description of the
insurance arrangements applicable to each Aircraft. In general, Federal
Express will be obligated to carry comprehensive aircraft liability insurance,
including property damage liability insurance and cargo legal liability
insurance as described below. The insurance must be in the amounts, against
the risks and with the retentions as Federal Express customarily maintains.
The insurance must also be with insurers of recognized responsibility and
against the other risks as is usually carried by corporations situated
similarly to Federal Express and engaged in the same business as, or business
similar to, Federal Express and owning or operating aircraft and engines
similar to the related Aircraft and related engines. In general, Federal
Express 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 the Aircraft and not replaced by
similar engines or parts, as described below. The 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 Federal Express customarily maintains
with respect to other aircraft in Federal Express' 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
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stipulated values. Federal Express may self-insure against the risks required
to be insured against under the related Lease in the reasonable amounts as are
then applicable to other aircraft or engines of Federal Express of value
comparable to the related Aircraft. The self-insurance with respect to all
aircraft in Federal Express' fleet may not, however, in the aggregate exceed
an amount equal to the lesser of 50% of the highest replacement value of any
single aircraft in such fleet, or 1.5% of the average aggregate insured value
from time to time of Federal Express' 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.
Federal Express 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 prospectus supplement will
contain a description of any limitations applicable to the provisions
described in this paragraph.
Lease Events of Default; Remedies. The 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
Federal Express will be required to indemnify each Owner Participant, the
Owner Trustee, the Indenture Trustee and the parties affiliated with the
above, but not including Certificateholders, for the liabilities, losses, fees
and expenses and for the other matters arising out of the transactions
described in this prospectus or relating to the applicable Aircraft or the use
of the Aircraft. In addition, under some circumstances, Federal Express will
be required to indemnify these persons against some taxes, levies, duties,
withholdings and for some other matters relating to the transactions or the
applicable Aircraft.
Subject to some restrictions and unless otherwise limited in the
prospectus supplement, each Owner Participant may convey all of its interest
in the related Owner Trust. Davis Polk & Wardwell has advised Federal Express
based on law in effect on the date of this prospectus 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, the prospectus supplement may provide that in some
limited instances Federal Express may assume an Owner Trust's obligations
under the related Certificates on a full recourse basis. In this event, the
Certificateholders will recognize gain or loss on the related Certificates for
federal income tax purposes.
ERISA CONSIDERATIONS
Unless otherwise indicated in the 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.
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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.
Underwriters or agents may receive compensation from Federal Express 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 the 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
Federal Express and any profit on the resale of Certificates by them may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Any underwriter or agent will be identified, and any such compensation
received from Federal Express will be described, in the prospectus supplement.
Offers to purchase Certificates may be solicited directly and the sale of
Certificates 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 of Certificates. The terms of any sales will be
described in the prospectus supplement.
Underwriters and agents who participate in the distribution of
Certificates may be entitled to indemnification by Federal Express against
some liabilities, including liabilities under the Securities Act.
Federal Express 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 the Certificates, as permitted by applicable laws and regulations. No
underwriter would be obligated, however, to make a market in the Certificates,
and any 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.
Some of the underwriters or agents and their associates may be customers
of, engage in transactions with, and perform services for, Federal Express in
the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the prospectus supplement, the legality of
the Certificates offered by this prospectus will be passed upon for Federal
Express by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, and by Underwriters' Counsel. Unless otherwise indicated in the
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, our Senior Vice President and
General Counsel, as to Federal Express' authorization, execution and delivery
of the Indentures. At June 1, 1999, Ms. Clayborne owned 11,000 shares of FDX
Corporation's common stock and had been granted options to purchase 66,800
shares of FDX Corporation's common stock. Of the options granted, 3,750 were
vested at such date.
EXPERTS
The consolidated financial statements and schedule of Federal Express
included or incorporated by reference in Federal Express' Annual Report on
Form 10-K for the year ended May 31, 1998 and incorporated by reference in
this prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect to the consolidated
financial statements and schedule, and are incorporated by reference in this
prospectus in reliance upon the authority of Arthur Andersen LLP as experts in
giving those reports.
18
<PAGE>
With respect to the unaudited interim financial information for the
quarters ended August 31, 1998, November 30, 1998 and February 28, 1999,
included in Federal Express' 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 on the unaudited
interim financial information 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.
19
<PAGE>
GLOSSARY OF TERMS
The following is a glossary of terms used in this prospectus. The
glossary may contain definitions which are different from definitions used in
the prospectus supplement. You should read the prospectus supplement in
conjunction with the glossary or other definition of terms contained in the
prospectus supplement.
"Aircraft" means an aircraft specified in a prospectus supplement which
has been or will be leased to Federal Express 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 leased aircraft 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.
"Convention" means the Convention on the International Recognition of
Rights in Aircraft.
"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.
"Federal Express" means Federal Express Corporation.
"Indenture" means a trust indenture and security agreement among the
Owner Trustee, the Indenture Trustee and Federal Express.
"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 The Bank of New York, or another bank or trust
company, in its capacity as indenture trustee under the related Indenture and
any successor under the related Indenture.
"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
Federal Express, as lessee, in each case under which the Owner Trustee leases,
or is expected to lease, the related Aircraft to Federal Express.
20
<PAGE>
"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 the 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, Federal Express 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.
"Purchase Agreement" means, for any Aircraft, the purchase agreement
between the manufacturer and Federal Express, 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 Federal Express.
"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).
"SEC" means the Securities and Exchange Commission of the United States.
"Securities Act" means the Securities Act of 1933, as amended.
"Systems" means computer applications, systems and the like for processing
data.
"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.
21
<PAGE>
<TABLE>
<S> <C>
======================================================== =========================================================
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 $300,000,000
prospectus. If given or made, such information or
representation must not be relied upon as having
been authorized by Federal Express or the Underwriters. [COMPANY LOGO]
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 Federal
Express since the date of this Prospectus. Leased Aircraft
Equipment Trust Certificates
---------------------- ------------------------------------
TABLE OF CONTENTS PROSPECTUS
Page ---------------------------------------
About this Prospectus...............................2
Where You Can Find More Information.................2
Federal Express Corporation.........................3
Ratio of Earnings to Fixed Charges..................3
Risk Factors........................................3
Use of Proceeds.....................................5
Outline of Leveraged Lease Transactions.............6
Description of the Certificates.....................6
ERISA Considerations...............................17
Plan of Distribution...............................17 June __, 1999
Legal Matters......................................18
Experts............................................18
Glossary of Terms..................................20
======================================================== =========================================================
</TABLE>
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 4, 1999
$300,000,000
[COMPANY LOGO]
PASS THROUGH CERTIFICATES
-----------------------
This prospectus relates to the issuance of Pass Through Certificates by
one or more Pass Through Trusts.
The Pass Through Certificates:
o will have an aggregate public offering price of up to $300,000,000
o will be issued in one or more series
o will be payable at the times and in the amounts specified in a
prospectus supplement
o will represent interests in the relevant Pass Through Trust only,
will be paid only from the assets of that Pass Through Trust and
will not represent obligations of, or be guaranteed by, Federal
Express, and
o may have one or more forms of credit or liquidity enhancement.
Each Pass Through Trust:
o will issue one or more series of Pass Through Certificates
o will use the proceeds of each series of Pass Through Certificates to
purchase Equipment Certificates of
one or more series, and
o will pass through payments on the Equipment Certificates that it
owns, subject to any applicable subordination provisions.
The Equipment Certificates:
o will be issued in one or more series, and
o will be either:
- Owned Aircraft Certificates issued by Federal Express with
recourse to Federal Express either to finance or refinance all
or a portion of the cost of the Owned Aircraft, or
- Leased Aircraft Certificates issued on a non-recourse basis by
owner trustees pursuant to leveraged lease transactions to
finance or refinance a portion of the cost of the Leased
Aircraft. The amounts due from Federal Express under such
leases will be sufficient to pay in full when due all principal
of and any premium and interest on the related Equipment
Certificates, subject to any limitations specified in a
prospectus supplement.
There was no public market for the Pass Through Certificates of any
series before their issuance and there is no assurance that one will develop
or continue. Federal Express does not intend to apply for the listing of any
series of the Pass Through Certificates on a national securities exchange,
unless otherwise indicated in a prospectus supplement.
This prospectus will be accompanied by a prospectus supplement which will
describe the specific terms of the particular series of Pass Through
Certificates being sold and the underlying Equipment Certificates. Sales of
any Pass Through Certificates may not be consummated without both this
prospectus and the prospectus supplement.
Investing in the Pass Through Certificates involves risks which are
described in the "Risk Factors" section beginning on page 4 of this
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is June __, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may sell the Pass Through Certificates described in this
prospectus in one or more offerings. This prospectus provides you with a
general description of the Pass Through Certificates we may offer. Each time
we sell Pass Through Certificates, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read carefully both this prospectus and any
prospectus supplement, together with the additional information described
below under "Where You Can Find More Information."
This prospectus does not contain all the information provided in the
Registration Statement that we filed with the SEC. For further information
about Federal Express or the Pass Through Certificates, you should refer to
that Registration Statement. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those
contracts and other documents.
The Registration Statement that we filed with the SEC relating to the
Pass Through Certificates can be obtained from the SEC as described below
under "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports with the SEC. These SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any such document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549, and in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms and copy
charges.
The SEC allows us to "incorporate by reference" the information we file
with it, which means:
o we can disclose important information to you by referring you to
those documents
o information incorporated by reference is considered to be part of
this prospectus, even though it is not repeated in this prospectus
or in any prospectus supplement, and
o information that we file with the SEC will automatically update and
supersede this prospectus and any prospectus supplement.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of the filing of this Registration Statement and
prior to its effectiveness, and until we complete our offering of Pass Through
Certificates:
o Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
filed August 21, 1998
o Quarterly Reports on Form 10-Q for the fiscal quarters ended August
31, 1998, November 30, 1998 and February 28, 1999, filed October 13,
1998, January 13, 1999 and April 13, 1999, respectively
o Current Reports on Form 8-K dated June 30, July 8, July 15, August
27, September 21, September 22, October 22 and November 17, 1998,
respectively, filed July 15, July 14, August 5, September 10,
October 5, October 6, November 12 and December 1, 1998,
respectively.
2
<PAGE>
You may obtain a copy of these filings, other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings, at
no cost by writing or telephoning us at the following address:
Elizabeth R. Allen
Investor Relations
FDX Corporation
Box 727
Memphis, Tennessee 38194-1854
(901) 395-3478
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely
on it. We are not making an offer to sell any Pass Through Certificates in any
jurisdiction where the offer or sale is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front page of those
documents. Also, you should not assume that there has been no change in the
affairs of Federal Express since the date of this prospectus or any prospectus
supplement.
REPORTS TO PASS THROUGH CERTIFICATEHOLDERS
The Pass Through Trustee under each Pass Through Trust will provide each
Certificateholder with periodic statements concerning the distributions made
from such Pass Through Trust. See "Description of the Pass Through
Certificates -- Statements to Certificateholders."
FEDERAL EXPRESS CORPORATION
Federal Express is a wholly-owned subsidiary of FDX Corporation. Federal
Express 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 of Federal Express are located at 2005
Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600.
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months
Ended
Year Ended May 31 February 28,
----------------------------------- ------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges........... 1.7x 2.0x 1.9x 2.0x 2.1x 2.0x 1.9x
</TABLE>
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 this offering of Pass Through Certificates, Federal
Express may be more highly leveraged than currently reflected in this table.
3
<PAGE>
RISK FACTORS
You should consider carefully the risk factors described below before you
invest. You should read the information below together with the other
information in this prospectus and the accompanying prospectus supplement.
Federal Express' business is subject to risks and uncertainties
The operations and financial condition of Federal Express are subject to
risks and uncertainties, including:
o economic conditions in the markets in which Federal Express operates
can affect demand for Federal Express' services
o competition from other providers of express services with new or
improved services
o changes in customer demand patterns
o increases in aviation and motor fuel prices
o strikes, work stoppages and slowdowns by Federal Express' employees
o Federal Express' ability to match aircraft, vehicle and sort capacity
with customer volume levels
o Federal Express' ability to obtain aviation rights in important
international markets
o contributions to financial results from the sale of engine noise
reduction kits
o changes in government regulation, weather and technological changes,
and
o availability of financing on terms acceptable to Federal Express.
Proceeds from the sale of an aircraft may be less than its appraised value
The prospectus supplement will contain the appraised value of each
Aircraft based upon the lesser of the average and the median value of the
Aircraft as appraised by several independent appraisers who will be named in
the prospectus supplement. The prospectus supplement may contain reports or
summaries of these appraisals. Such appraisals will be based on various
assumptions and methodologies, which may vary, resulting in different
appraisals.
An appraisal is only an estimate of value and you should not rely upon it
as a measure of realizable value. The proceeds realized upon the sale of any
Aircraft may be less than the appraised value of that Aircraft because of:
o market and economic conditions at the time
o the availability of buyers
o the condition of the Aircraft
o whether the Aircraft are sold separately or as a block, and
o other factors.
4
<PAGE>
Therefore, there is no assurance that the proceeds realized upon any sale
of an Aircraft will be as appraised or sufficient to satisfy in full payments
due on the related Equipment Certificates or the Pass Through Certificates.
Some classes of Pass Through Certificates may be subordinate to other classes
of Pass Through Certificates
The Pass Through Trustee may enter into an intercreditor agreement which
will provide for the subordination of some classes of Pass Through Certificates
to other classes which may result in the subordinated classes receiving less
than the full amount due to them after a payment default on any Equipment
Certificates. The prospectus supplement will describe any such intercreditor
agreement and cross-subordination provisions and any related terms.
Excess proceeds from the sale of one Aircraft will not be available to cover
losses on other Equipment Certificates relating to other Aircraft
The Equipment Certificates are not cross-collateralized, which means that
liquidation proceeds from the sale of an Aircraft in excess of the principal
amount of the Equipment Certificates related to that Aircraft will not be
available to cover any losses on any other Equipment Certificates.
Rating Agencies may change their rating on the Pass Through Certificates at
any time
The Pass Through Certificates are expected to be assigned an "investment
grade" rating by one or more Rating Agencies. The prospectus supplement will
indicate the rating assigned to the Pass Through Certificates being sold. A
rating is not a recommendation to purchase, hold or sell Pass Through
Certificates because a 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 so
warrant, including the downgrading of Federal Express or the provider of a
Liquidity Facility. The ratings 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 Certificateholders, 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 when due on the Pass Through Certificates, at the
non-default rate, and the ultimate payment of principal of the Pass Through
Certificates on the final expected distribution date. The 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 the final expected distribution date.
The reduction, suspension or withdrawal of the ratings of the Pass
Through Certificates will not, in and of itself, constitute an Event of
Default, unless the prospectus supplement specifies otherwise.
Owner Participants may request changes to the underlying agreements
A prospectus supplement may specify that at the time of issuance of Pass
Through Certificates, Federal Express may still be seeking or negotiating with
Owner Participants with respect to the trusts relating to some of the
Aircraft. Federal Express will hold the beneficial interest under the Trust
Agreement relating to each of those Aircraft until the date upon which an
Owner Participant commits to purchase or purchases an Aircraft. Federal
Express will transfer to the Owner Participant on that date its beneficial
interest under the Trust Agreement. The purchase date may be up to 90 days
after the scheduled delivery date of the Aircraft. Those Owner Participants
may request revisions to the Participation Agreement, Lease, Trust Agreement
and Indenture, and there is no assurance that the terms of the agreements
applicable to those Aircraft will be the same as the description of the
agreements contained in the prospectus supplement.
5
<PAGE>
However, the terms of those agreements will be required to contain some
mandatory document terms and not vary some other mandatory economic terms.
Also, Federal Express will be obligated to certify to the Pass Through Trustee
that any modifications to these agreements will not materially and adversely
affect the Certificateholders and if the documents are modified in any
material respect, to obtain written confirmation from each Rating Agency that
the use of modified versions of those agreements will not result in a
withdrawal, suspension or downgrading of the rating of any class of Pass
Through Certificates.
The Indentures do not protect against a highly leveraged transaction involving
Federal Express
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 those Equipment
Certificates or Pass Through Certificates that would give the holders of
Equipment Certificates and Pass Through Certificates any protection in the
event of a highly leveraged transaction involving Federal Express.
A public market for the Pass Through Certificates may not develop or continue
There was no public market for the Pass Through Certificates of any
series before their issuance and there is no assurance that one will develop
or continue. Federal Express does not intend to apply for the listing of any
series of Pass Through Certificates on a national securities exchange, unless
otherwise indicated in a prospectus supplement. 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
Federal Express will offer one or more series of Pass Through
Certificates pursuant to this prospectus and a related prospectus supplement.
Each series of Pass Through Certificates will be issued by a separate Pass
Through Trust. Each Pass Through Trust will be formed pursuant to a Series
Supplement. The Pass Through Certificates issued by a particular Pass Through
Trust will represent fractional undivided interests in such Pass Through
Trust. Each Pass Through Trust will own the Owned Aircraft Certificates or the
Leased Aircraft Certificates or both, as specified in the prospectus
supplement.
Concurrently with the execution and delivery of each Series Supplement,
the Pass Through Trustee, on behalf of the Pass Through Trust formed by the
Series Supplement, will enter into one or more Participation Agreements to
purchase one or more Equipment Certificates. All of the Equipment Certificates
that constitute the property of a Pass Through Trust will have an identical
priority of payment relative to the other Equipment Certificates and an
identical interest rate, and this interest rate will be equal to the rate
applicable to the Pass Through Certificates issued by such Pass Through Trust.
The maturity date for the Equipment Certificates acquired by each Pass Through
Trust will occur on or before the final distribution date applicable to the
Pass Through Certificates issued by such Pass Through Trust.
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, any premium, and interest, received by it as holder of the
Equipment Certificates to the Certificateholders of the Pass Through Trust
holding such Equipment Certificates. See "Description of the Pass Through
Certificates" and "Description of the Equipment Certificates."
6
<PAGE>
USE OF PROCEEDS
The Pass Through Trustee for each Pass Through Trust will use the
proceeds from the sale of the Pass Through Certificates to purchase Owned
Aircraft Certificates or Leased Aircraft Certificates. The prospectus
supplement will specify the particular use of proceeds for the related
Equipment Certificates. We will specify in each prospectus supplement the type
and model of the applicable Aircraft, the engines with which the Aircraft is
equipped and whether the aircraft is already in use in Federal Express' fleet,
has been used in another operator's fleet or will be delivered new by the
manufacturer to Federal Express or to the Owner Trustee, as the case may be.
If the Pass Through Trustee does not use all the proceeds from the sale
of the Pass Through Certificates by the date specified in the prospectus
supplement to purchase the Equipment Certificates, it will distribute the
unused portion of such proceeds to the Certificateholders.
For any Leased Aircraft, if the Owner Trustee does not apply the proceeds
from the sale of the related Leased Aircraft Certificates to the purchase
price for such Leased Aircraft on the date on which the applicable Pass
Through Trust purchases such Leased Aircraft Certificates, then the Owner
Trustee will deposit such proceeds less the expenses relating to the Pass
Through Certificate offering into a Collateral Account or a Deposit Account
pursuant to a Depositary Arrangement. The "Description of Equipment
Certificates -- Delayed Lease Commencement" section below describes the
circumstances under which the proceeds may not be so applied. The prospectus
supplement may specify other action to be taken by the Owner Trustee for the
unapplied proceeds. The Collateral Account, together with any Additional
Collateral (see "Description of the Equipment Certificates -- Security"
below), or the Depositary Arrangement, will secure such Leased Aircraft
Certificates during the related Pre-Funding Period and will be available to
make scheduled payments of any principal 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
prospectus supplement or the Leased Aircraft suffers an Event of Loss during
the Pre-Funding Period, funds in the Collateral Account, together with
Additional Collateral or amounts payable under a Depositary Arrangement, will
be available to prepay the Leased Aircraft Certificates as described in the
prospectus supplement. Alternatively, these funds will be applied to finance
the aggregate principal amount of the debt to be issued by Federal Express in
connection with the acquisition of such Aircraft by Federal Express 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."
DIAGRAM OF PAYMENTS
We illustrate in the diagram below some aspects of the payment flows in
the Pass Through Trust structure for a possible Leased Aircraft transaction
and a possible Owned Aircraft transaction. This illustration is merely
intended as an example and you should refer to the prospectus supplement for
the particular features of the Pass Through Trust structure in which you are
making an investment.
Leased Aircraft Transaction
Federal Express:
o will lease each Leased Aircraft from the Owner Trustee under a
separate Lease
o will make scheduled rental payments for each Leased Aircraft under
the related Lease, and
o will make scheduled rental payments directly to the Indenture
Trustee.
The Indenture Trustee:
7
<PAGE>
o will, from the scheduled rental payments, pay principal and any
interest due from the Owner Trustee on the Leased Aircraft
Certificates, to the Pass Through Trustee, and
o will pay the remaining balance of scheduled rental payments 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 that 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.
Owned Aircraft Transaction
Federal Express will make scheduled payments on the Owned Aircraft
Certificates relating to each Owned Aircraft to the Indenture Trustee.
The Indenture Trustee will, from these payments, pay to the Pass Through
Trustee the principal and any interest due on the Owned Aircraft Certificates.
The Pass Through Trustee for each Pass Through Trust will distribute to
the related Certificateholders, payments received on the Owned Aircraft
Certificates held in that Pass Through Trust.
[GRAPHIC - A diagram is included here which contains boxes representing
the parties and payment flows described above.]
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The following is a summary description of the Pass Through Certificates
which we expect will be common to all series of Pass Through Certificates. The
prospectus supplement will describe the specific terms of any series of Pass
Through Certificates. Therefore, you should rely on the information in the
prospectus supplement, in particular if the information in the prospectus
supplement is different from the information provided below.
Because the following description is a summary, it does not describe
every aspect of the Pass Through Certificates, and it is qualified in its
entirety by reference to all the provisions of the Pass Through Agreement and
the applicable Series Supplements. Federal Express has filed the form of Pass
Through Agreement as an exhibit to the Registration Statement of which this
prospectus is a part. Federal Express will file with the SEC, the Series
Supplement relating to each series of Pass Through Certificates and the forms
of the related Indentures and any participation agreement, lease,
intercreditor agreement, liquidity facility, trust agreement, collateral
agreement and
8
<PAGE>
depositary arrangement relating to any offering of Pass Through Certificates
as exhibits to a post-effective amendment to the Registration Statement of
which this prospectus is a part or a Current Report on Form 8-K, a Quarterly
Report on Form 10-Q or an Annual Report on Form 10-K.
The Pass Through Certificates offered pursuant to this prospectus and one
or more prospectus supplements will have an aggregate public offering price of
up to $300,000,000. To the extent that any provision in any prospectus
supplement is inconsistent with any provision of this summary, the provision
of the prospectus supplement will control.
In the following description, we have included references to section
numbers of the Pass Through Agreement so that you can easily locate those
provisions.
General
Form. The Pass Through Certificates will be issued in fully registered
form only. The Pass Through Certificates will be issued in book-entry form and
registered in the name of a nominee of the depositary, unless otherwise
specified in the prospectus supplement. See "-- Book-Entry Procedures" below.
Trust Property. 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, and all payments and distributions will be
made only from the property of the Pass Through Trust. The property of each
Pass Through Trust will include the Equipment Certificates held in such Pass
Through Trust, all monies at any time paid on the Equipment Certificates, all
monies due and to become due under the Equipment Certificates 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 prospectus supplement,
rights under any intercreditor agreement relating to cross-subordination
arrangements and monies receivable under any additional security or liquidity
facility.
Denomination. 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 prospectus supplement, in minimum
denominations of $1,000 or any integral multiple of $1,000. (Pass Through
Agreement, Article II)
Terms. The prospectus supplement will describe the specific terms of each
series of Pass Through Certificates offered pursuant to the prospectus
supplement, including:
o the specific designation and title of the Pass Through Certificates
o the Pass Through Trustee for such series of Pass Through Certificates
o the Regular Distribution Dates and Special Distribution Dates
applicable to such Pass Through Certificates and any applicable
Cut-off Date
o the specific form of the Pass Through Certificates
o a description of:
- the Equipment Certificates to be purchased by such Pass Through
Trust, including the period or periods within which, the price
or prices at which, and the terms and conditions upon which
those Equipment Certificates may or must be repaid in whole or
in part, by Federal Express or, with respect to Leased Aircraft
Certificates, the related Owner Trustee
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- the payment priority of such Equipment Certificates in relation
to any other Equipment Certificates issued with respect to the
related Aircraft
- any additional security or liquidity enhancements for those
Equipment Certificates
- any intercreditor issues between or among the holders of
Equipment Certificates having different priorities issued by
the same Owner Trustee, and
- specific terms of the Equipment Certificates during any
Pre-Funding Period
o a description of the related Aircraft, including whether the Aircraft
is a Leased Aircraft or an Owned Aircraft
o a description of the related Participation Agreements and
Indentures, 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
remedies with respect to the Equipment Certificates
o if such Pass Through Certificates relate to Leased Aircraft, a
description of the related Lease, Trust Agreement and Collateral
Agreement or Depositary Arrangement, including:
- the name of the related Owner Trustee
- 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 remedies with
respect to those Leased Aircraft Certificates, and
- any rights of the related Owner Trustee or Owner Participant to
cure failures of Federal Express to pay rent under the related
Lease
o the extent to which the provisions of the operative documents
applicable to such Equipment Certificates may be amended by the
parties to those documents 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
o a description of any cross-default or cross-collateralization
provisions in the related Indenture
o a description of any subordination provisions among
Certificateholders, including any cross- subordination provisions
among the Certificateholders in separate Pass Through Trusts
o any additional security or liquidity facilities for the Pass Through
Certificates, and
o any other special terms pertaining to such Pass Through Certificates.
(Pass Through Agreement, Article II)
Equipment Certificates. 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 prospectus supplement, only Equipment
Certificates having the same class may be held in the same Pass Through Trust.
Interest. 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 specified for such Pass Through Trust on
the cover page of the prospectus supplement.
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Payments. 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 Federal Express,
the Pass Through Trustee, any related Owner Participant, the Owner Trustee in
its individual capacity or any affiliate of any of the above. 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 Series
Supplement. (Pass Through Agreement, Section 3.06)
Highly Leveraged Transactions. The Pass Through Agreement does not, and
the Indentures will not, contain any debt covenants or provisions that would
give Certificateholders protection in the event of a highly leveraged
transaction involving Federal Express. 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 as described below, 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. A
Certificateholder of a Pass Through Certificate initially issued as a global
certificate will not be entitled to receive a certificated Pass Through
Certificate, except as described below.
DTC has advised Federal Express that:
o 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.
o 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.
o DTC Participants include securities brokers and dealers, banks, trust
companies and clearing corporations.
o 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
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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.
The DTC Participants will be responsible for distributions to
Certificateholders and such distributions will be made in accordance with
customary industry practices. Although Certificateholders will not have
possession of the Pass Through Certificates, the rules of DTC provide a
mechanism by which the Certificateholders 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.
Federal Express, the Pass Through Trustee or any other agent of Federal
Express or the Pass Through Trustee will not be responsible or liable 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", for purposes of the Pass Through Agreement, will
be Cede, as nominee of DTC, Certificateholders will not be recognized by the
Pass Through Trustee as "Certificateholders", and Certificateholders will be
permitted to exercise the rights of "Certificateholders" only indirectly
through DTC and DTC Participants. DTC has advised Federal Express 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 Federal Express 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.
DTC has provided us with the following additional disclosure about its
Year 2000 efforts:
o DTC management is aware that some Systems that are dependent upon
calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its DTC
Participants and other members of the financial community that it
has developed and is implementing a program so that its Systems, as
the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
o However, DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers
and their agents, as well as third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC
relies for information or for the provision of services, including
telecommunication and electrical utility service providers, among
others. DTC has informed DTC Participants and other members of the
financial community that it is contacting, and will continue to
contact, third party vendors from whom DTC acquires services, to
impress upon them the importance of such services being Year 2000
compliant, and determine the extent of their efforts for Year 2000
remediation, and the appropriate testing, of their services. In
addition, DTC is in the process of developing such contingency plans
as it deems appropriate.
o According to DTC, the above information with respect to DTC has been
provided to the DTC Participants and other members of the financial
community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any
kind.
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Same-Day Settlement and Payment. All payments made by Federal Express 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 DTC will require secondary market
trading activity in the Pass Through Certificates to settle in immediately
available funds.
Certificated Form. The Owner Trustee will issue physical certificates to
holders of a global security or their nominees if:
o 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 Federal
Express is unable to locate a qualified successor, or
o if Federal Express, 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.
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. There will be no service charge 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
Federal Express 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,
Federal Express will make scheduled rental payments for each Leased Aircraft
under the related Lease. 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.
Pre-Funding Period. Until Federal Express has entered into a Lease in
connection with a Leased Aircraft, Federal Express will not be obligated to
make any scheduled rental payments and the related Leased Aircraft
Certificates will not be secured by such Leased Aircraft or the related Lease.
In general, during any Pre-Funding Period for such Leased Aircraft, the
related Collateral Account, any Additional Collateral or amounts payable under
a Depositary Arrangement, will be available to provide funds necessary to make
the corresponding scheduled payments of any principal and interest accrued on
the related Leased Aircraft Certificates during the Pre-Funding Period, and to
pay any portion 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
Federal Express on such payment date. See "Description of the Equipment
Certificates -- Delayed Lease Commencement."
Following any Pre-Funding Period. Upon commencement of the Lease for any
Leased Aircraft, after the Indenture Trustee has made 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,
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except under certain circumstances, pay any 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 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 prospectus
supplement. Subject to the effect of any cross-subordination provisions set
forth in the 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
after the Regular Distribution Date, it will be distributed on the date
received to Certificateholders. Each distribution of a Scheduled Payment will
be made by the Pass Through Trustee to Certificateholders of record of such
Pass Through Trust on the fifteenth day prior to such Regular Distribution
Date, subject to some exceptions. Each Certificateholder will be entitled to
receive a pro rata share of any distribution, except as provided in any
cross-subordination provisions of the prospectus supplement. (Pass Through
Agreement, Section 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 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, any premium, 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:
o for the prepayment of such Equipment Certificates in connection with
events specified in the prospectus supplement (including payments
upon unavailability of Trust Property and prepayments during any
Pre- Funding Period)
o upon the prepayment by the related Owner Trustee of such Equipment
Certificates following a default in respect of such Equipment
Certificates, and
o on account of the sale of such Equipment Certificates by the Pass
Through Trustee
will be distributed on the dates indicated in the prospectus supplement except
that unless otherwise specified in the prospectus supplement, payments
received by the Pass Through Trustee following a 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 prospectus supplement, 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 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 Special Distribution Date. Each
distribution of a Special Payment, other than the final distribution, for any
Pass Through Trust will be made
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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 prospectus supplement. Subject to the
effect of any cross-subordination provisions set forth in the 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 Trustee is required to 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 Payments 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 Payment received by it in the related Special Payments
Account pending distribution of such Special Payments. (Pass Through
Agreement, Section 5.01) A Special Payment that is 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
investment will be distributed with such Special Payment. (Pass Through
Agreement, Section 5.04)
If at any time, the Pass Through Certificates of any Pass Through Trust
are issued in the form of certificated Pass Through Certificates and not to
Cede, as nominee for DTC, distributions by the Pass Through Trustee from a
Certificate Account or a Special Payments Account of any Pass Through Trust on
any Distribution Date will be paid to each Certificateholder of record of such
Pass Through Trust on the applicable record date at its address appearing on
the register maintained for such Pass Through Trust. (Pass Through Agreement,
Section 5.02) The final distribution for each Pass Through Trust, however,
will be made only upon presentation and surrender of the Pass Through
Certificates for such Pass Through Trust at the office or agency of the Pass
Through Trustee specified in the notice given by the Pass Through Trustee of
such final distribution. The Pass Through Trustee will mail such notice of the
final distribution to the Certificateholders of such Pass Through Trust,
specifying the date set for such final distribution and the amount of such
distribution. (Pass Through Agreement, Section 12.01) See "Termination of Pass
Through Trusts" below.
If any Distribution Date is not a Business Day, distributions scheduled to
be made on such Distribution Date may be made on the next succeeding Business
Day without additional interest. (Pass Through Agreement, Section 13.15)
Pool Factors
Except as provided below, the Pool Factor 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
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 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 any payment of principal on the
Equipment Certificates held in such Pass Through Trust and its distribution 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 any principal on the
Equipment Certificates held in such Pass Through Trust and its distribution 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
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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 that distribution being made on that Distribution Date,
setting forth the following information (per $1,000 in aggregate amount of
Pass Through Certificates for the related Pass Through Trust, as to the first
and second categories of information listed below):
o the amount of that distribution allocable to principal and allocable
to any premium for the related Equipment Certificates
o the amount of that distribution allocable to interest for the related
Equipment Certificates, and
o 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 the first and second
categories of information listed 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 any time when 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 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 describes the circumstances in which the Pass Through Trustee will
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 is required to obtain
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
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of Pass Through Certificates held by the Certificateholders of such Pass
Through Trust taking the corresponding position. (Pass Through Agreement,
Section 11.08) If specified in the 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 described 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 Rights Upon an Event of Default
An Event of Default for any Pass Through Trust is the occurrence and
continuance of an Indenture Event of Default under one or more of the
Indentures. The Indenture Events of Default will be described in the
prospectus supplement and, for the Leased Aircraft, will include each Lease
Event of Default. For 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.
No cross defaults. 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 the 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
prospectus supplement. Consequently, 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.
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, any premium and interest on such Equipment
Certificates will continue to be distributed to the Certificateholders of such
Pass Through Trust as originally scheduled. If the prospectus supplement
contains the terms of any cross-subordination provisions among
Certificateholders of separate Pass Through Trusts, however, payments made
pursuant to an 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.
Cure rights. Under each Leased Aircraft Indenture, the related Owner
Trustee and the Owner Participant will have the right under some 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 its 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 prospectus supplement will contain a more detailed discussion of the
provisions described in this paragraph.
Remedies. If an Indenture Event of Default under an Indenture relating to
Equipment Certificates held in a Pass Through Trust has occurred and is
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, will 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, any accrued and unpaid interest, and all other amounts due
under such Equipment Certificates to be due and payable.
If an Indenture Event of Default has occurred and is continuing, the Pass
Through Trustee may, unless any intercreditor agreement provides otherwise,
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 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
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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)
Whether the Certificateholders of any one Pass Through Trust are able 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.
Conflict of Interest. 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 one of its affiliates 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 that Pass Through Trust
could for the same reason be faced with a potential conflict of interest upon
an Indenture Event of Default. In that case, the initial Pass Through Trustee
has indicated that it would resign as Pass Through Trustee of one or all of
those 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.
Sale. As an additional remedy, if an Indenture Event of Default under an
Indenture has occurred and is continuing, 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 of such Equipment Certificates, 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 Federal Express 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 to those
remaining Equipment Certificates.
Distribution. 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 that Pass Through Trust
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following an Indenture Event of Default under such Indenture will be deposited
in the Special Payments Account for that 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 any option it has to prepay or
purchase the outstanding Leased Aircraft Certificates issued under such
Indenture as described in the related prospectus supplement, the price paid by
it 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)
Permitted investments. 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 those funds on a Special Distribution Date. (Pass Through
Agreement, Article I and Section 5.04)
Notice. 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
a responsible officer of it. Under no circumstances, however, may the Pass
Through Trustee give 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 notice if it in good faith determines that withholding notice is
in the interests of such Certificateholders, except in the case of default in
the payment of principal of or any premium, interest or other amount due 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 is disregarded. (Pass Through Agreement, Section 7.11)
Indemnity. For each Pass Through Trust, the Pass Through Trustee is
entitled to be indemnified by the Certificateholders of that Pass Through
Trust before proceeding to exercise any right or power under that Pass Through
Trust or any intercreditor agreement at the request of those
Certificateholders. The Pass Through Trustee's entitlement to be indemnified
by the Certificateholders is subject to the duty of the Pass Through Trustee
during a default to act with the required standard of care. (Pass Through
Agreement, Section 8.03)
Waivers. Subject to any intercreditor agreement, in some cases, the
Certificateholders of a Pass Through Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of such Pass
Through Trust may on behalf of all the Certificateholders of such Pass Through
Trust or 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 in doing so annul any direction
given by such Certificateholders to the Pass Through Trustee or the Indenture
Trustee with respect to such default, except a default in payment of the
principal of or any premium, interest or other amount due on, any of the
Equipment Certificates held in that Pass Through Trust or 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 by such default.
Any 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 under that Indenture. (Pass Through
Agreement, Section 7.10)
Modifications of the Pass Through Agreement
Without the Consent of Certificateholders. Federal Express and the Pass
Through Trustee may enter into an agreement supplemental to any Pass Through
Trust, without the consent of the Certificateholders of such Pass Through
Trust, to:
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o provide for the formation of any Pass Through Trust and the issuance
of the related Pass Through Certificates
o evidence the succession of another corporation to Federal Express
and the assumption by that corporation of Federal Express'
obligations under the Pass Through Agreement and the applicable
Series Supplement
o add to the covenants of Federal Express for the protection of the
related Certificateholders
o surrender any right or power conferred upon Federal Express in the
Pass Through Agreement or any Series Supplement
o cure any ambiguity or correct any mistake or supplement any
defective or inconsistent provision of such Pass Through Agreement
or the applicable Series Supplement, any intercreditor agreement or
any Liquidity Facility
o modify any other provisions in regard to matters or questions
arising under the Pass Through Agreement or the applicable Series
Supplement, any intercreditor agreement or any Liquidity Facility
that will not adversely affect the interests of the related
Certificateholders
o correct or amplify the description of property that constitutes
Trust Property or the conveyance of such property to the Pass
Through Trustee
o evidence and provide for a successor Pass Through Trustee for some or
all of the Pass Through Trusts
o modify, eliminate or add to the provisions of the Pass Through
Agreement or any Series Supplement to the extent necessary to
continue to qualify the Pass Through Agreement or that Series
Supplement under the Trust Indenture Act of 1939, as amended, or any
similar federal statute enacted after the date of the Pass Through
Agreement
o make any other amendments or modifications to the Pass Through
Agreement which shall only apply to one or more Series issued after
the date of such supplemental agreement, and
o add, eliminate or change any provision under the Pass Through
Agreement that will not adversely affect the interests of the
Certificateholders.
However, in each of the above cases such supplemental agreement must not
cause the Pass Through Trust to become taxable as an association for federal
income tax purposes. (Pass Through Agreement, Section 11.01)
With the Consent of Certificateholders. Federal Express 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:
o 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
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o reduce, modify or amend any indemnities in favor of any
Certificateholder (unless consented to by each such holder adversely
affected by such reduction, modification or amendment)
o create or permit the creation of any lien on the Trust Property or
deprive any holder of any such Pass Through 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
o waive, amend or modify the priority of distributions of any
intercreditor agreement in a manner adverse to the Certificateholders
o 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
o cause the Pass Through Trust to become taxable as an association for
federal income tax purposes. (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 specific 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 Pass Through Trustee may enter into an intercreditor agreement which
provides that payments made to Certificateholders of a Pass Through Trust may
be subordinated to the prior payment of all amounts owing to
Certificateholders of another Pass Through Trust which holds senior Equipment
Certificates issued under all Indentures. The prospectus supplement will
describe the circumstances under which those payments may be subordinated. The
prospectus supplement will describe any such intercreditor agreement and the
cross- subordination provisions and any related terms, including who is
permitted to grant waivers of defaults under any related Indenture, consent to
the amendment or modification of any related Indentures or direct the exercise
of remedial actions under any related Indentures.
Termination of Pass Through Trusts
The obligations of Federal Express and the Pass Through Trustee with
respect to a Pass Through Trust will terminate upon the distribution to the
Certificateholders of the 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 the Pass Through
Trust. The Pass Through Trustee will notify each Certificateholder of record
of the Pass Through Trust by mail of, among other things, the termination of
the Pass Through Trust, the amount of the proposed final payment and the
proposed date for the distribution of such final
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payment for the Pass Through Trust. The final distribution for each
Certificateholder of the Pass Through Trust will be made only upon surrender of
the Certificateholder's Pass Through Certificates at the office or agency of
the Pass Through Trustee specified in the 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 of sale of Pass Through Certificates are not used to purchase the
Equipment Certificates contemplated to be held in the related Pass Through
Trust, those Equipment Certificates may be purchased by the Pass Through
Trustee at any time on or prior to the date specified in the prospectus
supplement. In that case, the Pass Through Trustee will transfer the proceeds
of sale on the date of issuance to Federal Express which will deposit such
amount into a deposit trust account pending the purchase of those Equipment
Certificates. Those 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 a
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 prospectus supplement, Federal Express will cause an amount equal to the
purchase price of those 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, Federal Express will pay
to the Pass Through Trustee an amount equal to the interest that would have
accrued on those Equipment Certificates from the date of the issuance of such
Pass Through Certificates to, but excluding, the date of the purchase of those
Equipment Certificates. (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 prospectus supplement to purchase the Equipment
Certificates that were contemplated to be held in such Pass Through Trust,
Federal Express 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 prospectus
supplement, together with interest thereon at a rate equal to the rate
applicable to such Pass Through Certificates, but without premium. Federal
Express will also pay to the Pass Through Trustee on such date an amount equal
to such interest. Federal Express will be responsible for any losses in the
deposit trust account. (Pass Through Agreement, Section 2.02)
Liquidity Facility
The 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 The
Bank of New York, unless otherwise specified in the related 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)
The Bank of New York will be the Indenture Trustee under the Indentures
under which the Equipment Certificates have been or will be issued, unless
otherwise specified in the related prospectus supplement. The Bank of New York
acts as trustee under other indentures with respect to other indebtedness of
Federal Express, and Federal Express from time to time borrows from, and
maintains deposit accounts with, The Bank of New York and its affiliates.
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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, Federal Express may remove the 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 the Pass Through Trustee and the appointment of a successor
trustee. In addition, the Certificateholders holding more than 50% in
aggregate amount of the related Pass Through Certificates may remove the Pass
Through Trustee of any Pass Through Trust without cause. (Pass Through
Agreement, Section 10.01)
In the case of the resignation or removal of the Pass Through Trustee,
Federal Express 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 the resignation and successor trustee provisions of the Pass
Through Agreement, 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 a resignation or
removal.
The Pass Through Agreement provides that Federal Express 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 Federal Express 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 made in the Pass Through
Agreement, the applicable Series Supplement or any related documents. In some
circumstances, the Pass Through Trustee is entitled to reimbursement 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 that
Pass Through Trust. (Pass Through Agreement, Articles VIII and IX)
DESCRIPTION OF THE EQUIPMENT CERTIFICATES
The following is a summary description of the Equipment Certificates
which we expect will be common to all Equipment Certificates. Where no
distinction is made between the Leased Aircraft Certificates and the Owned
Aircraft Certificates or between their respective Indentures, such statements
refer to any Equipment Certificates and any Indenture. The prospectus
supplement will describe the specific terms of any series of Equipment
Certificates. Therefore, you should rely on the information in the prospectus
supplement, in particular if the information in the prospectus supplement is
different from the information provided below.
Because the following description is a summary, it does not describe
every aspect of the Equipment Certificates, and is qualified in its entirety
by reference to all the provisions of the applicable Equipment Certificates,
the Indentures, the Participation Agreements, any Leases, any Collateral
Agreements or Depositary Arrangement, and other agreements and arrangements
relating to any particular offering of Equipment Certificates.
To the extent that any provision in any prospectus supplement is
inconsistent with any provision of this summary, the provision of the
prospectus supplement will control.
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General
Owned Aircraft. For each Owned Aircraft, the related Owned Aircraft
Certificates will be issued as direct obligations of Federal Express 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 prospectus supplement will specify the Owned Aircraft
relating to each Owned Aircraft Indenture and the related Owned Aircraft
Certificates. Federal Express will be directly obligated under each Owned
Aircraft Indenture to make payments of principal of, any premium and interest
on the related Owned Aircraft Certificates.
Leased Aircraft. 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 Federal Express pursuant to a separate Lease between such Owner
Trustee and Federal Express. 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.
Rental Payments. The prospectus supplement will specify the Leased
Aircraft subject to each Lease and the Leased Aircraft Certificates issued
under the related Leased Aircraft Indenture. Upon the commencement of the
Lease for any Leased Aircraft, Federal Express 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, for 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 Federal Express 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 Additional Collateral 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, Federal
Express. Federal Express' obligations to pay rent and to cause other payments
to be made under each Lease will be general obligations of Federal Express.
In circumstances described in the prospectus supplement, Federal Express
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.
Sale and Leaseback. For any Owned Aircraft, if specified in the
prospectus supplement, Federal Express may arrange for an Owner Trustee,
acting for an Owner Trust for the benefit of an Owner Participant, to purchase
that Owned Aircraft from Federal Express and lease such Aircraft back to
Federal Express 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 that prospectus supplement. In that case, the Owner
Trustee will assume, on a nonrecourse basis, the obligations of Federal
Express 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, Federal Express,
although Federal Express 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 the Owner Trustee to the Indenture Trustee of the 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 prospectus supplement will
specify the terms and conditions under which any sale and leaseback
transactions may be consummated.
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Pre-Funding Period. Until Federal Express has entered into a Lease of a
Leased Aircraft, Federal Express will not be obligated to make any scheduled
rental payments and during any Pre-Funding Period for the Leased Aircraft the
related Leased Aircraft Certificates will not be secured by the Leased
Aircraft or the related Lease. During any Pre-Funding Period for such Leased
Aircraft, however, the related Collateral Account, together with any
Additional Collateral 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 the Pre-Funding Period, including any portion 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 Federal Express
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 specified in the 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 specified
in the prospectus supplement. Principal received by the Pass Through Trustee
on the Equipment Certificates will be passed through to the Certificateholders
of such Pass Through Trust as specified in the prospectus supplement.
If specified in the 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 prospectus supplement will describe the circumstances, whether
voluntary or involuntary, under which the related Equipment Certificates may
or must be prepaid in whole or in part prior to their stated maturity date,
any premium applicable upon prepayment and other terms applying to the
prepayment. See "Mandatory Prepayment During the Pre-Funding Period" below for
a discussion of events which would require prepayment of Leased Aircraft
Certificates 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:
o an assignment by the related Owner Trustee to the Indenture Trustee
of the Owner Trustee's rights (except for limited rights described
below) under the applicable Lease, including the right to receive
rent and other payments under the Lease
o a security interest granted to the Indenture Trustee in the related
Leased Aircraft, subject to the rights of Federal Express under the
applicable Lease, so that the Indenture Trustee will not have the
right to disturb Federal Express' quiet enjoyment of such Aircraft
so long as no Lease Event of Default has occurred and is continuing,
and
o an assignment to the Indenture Trustee of the Owner Trustee's rights
relating to such Leased Aircraft and the related engines under the
agreements for the purchase of the Leased Aircraft and engines
between Federal Express and the respective manufacturers. See
"Registration of the Aircraft" below.
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The assignment by the Owner Trustee to the Indenture Trustee of its
rights under the related Lease will exclude rights of the Owner Trustee and
the related Owner Participant relating to:
o indemnification by Federal Express for some matters
o proceeds of public liability insurance payable to the Owner Trustee
in its individual capacity and to the Owner Participant under
insurance maintained by Federal Express under such Lease, and
o 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 the limitations
described in the prospectus supplement.
The Owned Aircraft Certificates issued under each Owned Aircraft
Indenture will be secured by a security interest granted to the Indenture
Trustee in all of Federal Express' right, title and interest in and to the
related Owned Aircraft and an assignment to the Indenture Trustee of some of
Federal Express' rights relating to such Owned Aircraft and the related
engines under the agreements for the purchase of such Owned Aircraft and
engines between Federal Express and the respective manufacturers. See
"Registration of the Aircraft" below.
Unless otherwise specified in the prospectus supplement, there will be no
cross-collateralization provisions in the Indentures and consequently, 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 prospectus supplement, there
will be no cross-default provisions in the Indentures and consequently, an
Indenture Event of Default under any particular Indenture may not result in an
Indenture Event of Default 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
and any premium and interest on such Equipment Certificates will continue to
be distributed to the Certificateholders of such Pass Through Trust as
originally scheduled, subject to any Intercreditor Agreement.
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:
o the automatic stay provision of the Bankruptcy Code, which provision
enjoins the taking of any action against a debtor by a creditor
o 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
o the confirmation of a plan by the bankruptcy court, and
o 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
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to perform the debtor's obligations that become due on or after such date and
cures all existing defaults, other than defaults resulting solely from the
financial condition, bankruptcy, insolvency or reorganization of the debtor.
The prospectus supplement for each offering will discuss the availability of
the benefits of Section 1110 of the Bankruptcy Code with respect to the
related Aircraft.
If the 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
Federal Express will be required, except under some circumstances, to
register and keep each Aircraft registered under Title 49 of the
Transportation Code, in the name of Federal Express, in the case of an Owned
Aircraft, or in the name of the Owner Trustee, in the case of a Leased
Aircraft, and to record and maintain the recordation of the Indenture and any
Lease relating to each Aircraft under the Transportation Code. The recordation
of the Indenture and any Lease 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 limited
exceptions, be recognized in those jurisdictions that have ratified to the
Convention.
Federal Express will be able, in some circumstances, to re-register any
Aircraft in specified countries other than the United States. Unless otherwise
specified in the prospectus supplement, prior to any change in the
jurisdiction of registry, the Indenture Trustee and, for Leased Aircraft, the
related Owner Participant must receive various 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 those assurances are intended to provide that Federal Express' (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 that 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 Federal Express 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
In the case of each Aircraft, Federal Express will be prohibited from
consolidating with or merging into any other corporation under circumstances
in which Federal Express 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:
o 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
Federal Express contained in the related Indenture, the
Participation Agreement, the Lease, the Pass Through Agreement, the
Purchase Agreement and the related Purchase Agreement Assignment
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o immediately after giving effect to the consolidation, merger or
transfer, the successor or transferee is in compliance with all of
the terms and conditions of those documents, and
o the consolidation, merger or transfer does not (or would not, if
prior to commencement of the related Lease) give rise to a Lease
Event of 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 prospectus supplement provides that a Pre-Funding Period will
apply to a Leased Aircraft, then until commencement of a Lease with respect to
the Leased Aircraft, the Leased Aircraft is referred to as a "Delayed Lease
Aircraft" and the period prior to commencement of such Lease is referred to as
the "Pre-Funding Period."
The proceeds from sale to the Pass Through Trusts of Leased Aircraft
Certificates relating to a Delayed Lease Aircraft, less expenses related to
the related Pass Through Certificate offering, will be deposited by the Owner
Trustee, on the date of the sale, in a Collateral Account established pursuant
to the Indenture or pursuant to a Collateral Agreement. The 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, Federal Express will be required to provide to the Indenture Trustee
Additional Collateral, in addition to the Collateral Account, for those Leased
Aircraft Certificates during the related Pre-Funding Period. Alternatively,
Federal Express 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, 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 of the Aircraft. 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 other
obligations described in the prospectus supplement. Earnings on 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:
o to make scheduled payments of principal, if any, and interest
accrued on the Leased Aircraft Certificates during the related
Pre-Funding Period specified in such prospectus supplement, and
o to finance the debt portion of the purchase price of such Delayed
Lease Aircraft, as specified in the 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 will withdraw from the Collateral Account and apply any
Additional Collateral to make the scheduled payment then due or, in the case
of a Depositary Arrangement, will withdraw that amount from the Deposit
Account.
Mandatory Prepayment During the Pre-Funding Period
If the Lease related to a Delayed Lease Aircraft has not commenced on or
prior to the Cut-off Date specified in the prospectus supplement as the last
date of the related permitted Pre-Funding Period either:
o 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
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Leased Aircraft Certificates, together with accrued but unpaid
interest thereon to the date designated for such prepayment
specified in such prospectus supplement, or
o Federal Express will assume the Leased Aircraft Certificates on a full
recourse basis.
The prospectus supplement will also describe in relation to any Delayed
Lease Aircraft:
o any mandatory prepayment of the related Leased Aircraft
Certificates, and the prepayment price for such Leased Aircraft
Certificates, upon any Event of Loss with respect to the Delayed
Lease Aircraft during the Pre-Funding Period, and
o any option Federal Express 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. Federal Express 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 of such Owned Aircraft to be maintained in good
standing at all times under the Transportation Code or, in some 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 Federal Express, using its
reasonable best efforts, undertakes such cure promptly, diligently and
continuously, then Federal Express will not be in default with respect to such
obligation.
Generally, Federal Express will be obligated to replace or cause to be
replaced all Owned Aircraft parts that become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use. Federal Express will have the right to make other modifications
and additions to an Owned Aircraft so long as the 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 the modification or addition, assuming that
such Owned Aircraft was then in the condition and airworthiness required by
the related Indenture. Also, in some circumstances, Federal Express 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 Federal
Express 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 prospectus supplement will contain a description of any
limitations applicable to provisions described in this paragraph.
Insurance. The prospectus supplement will contain a description of the
insurance arrangements applicable to each Aircraft. In general, Federal Express
will be obligated to carry comprehensive aircraft liability insurance,
including property damage liability insurance and cargo legal liability
insurance as described below. The insurance must be in the amounts, against
such risks and with such retentions as Federal Express customarily maintains.
The insurance must also be with insurers of recognized responsibility and
against such other risks as is usually carried by similar corporations situated
similarly to Federal Express and engaged in the same or similar business to
Federal Express and owning or operating aircraft and engines similar to the
related Aircraft and related engines. Unless otherwise indicated in the
prospectus supplement, Federal Express 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. That 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 Federal Express customarily
maintains for other aircraft in Federal Express' fleet of the same type and
model and operating on the same routes as the related Aircraft. Federal Express
may self-insure against the risks required to be insured against under the
related Lease in
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such reasonable amounts as are then applicable to other aircraft or engines of
Federal Express of value comparable to the related Aircraft. Self-insurance
for all aircraft in Federal Express' fleet may not, however, in the aggregate
exceed an amount equal to the lesser of 50% of the highest insured value of
any single aircraft in such fleet, or 1.5% of the average aggregate insured
value from time to time of Federal Express' entire aircraft fleet, although 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.
Federal Express 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 specified amounts. The prospectus supplement will
contain a description of any limitations 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 prospectus supplement, may be subordinated and junior in
right of payment to other Equipment Certificates related to the same Aircraft.
The prospectus supplement will specify the terms of any subordination.
Payments and Limitations of Liability
All payments of principal of, any premium and interest on any Leased
Aircraft Certificates will be made only from the assets subject to the Lien
described in the related Leased Aircraft Indenture or the income and proceeds
received by the Indenture Trustee from those assets or from other payments
received by the Indenture Trustee to be applied pursuant to the Leased
Aircraft Indenture. Those other payments include, 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, rent payable by Federal Express under the
related Lease. Additionally, if the 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
in the Liquidity Facility. The Leased Aircraft Certificates will not be direct
obligations of, or guaranteed by, Federal Express. Federal Express'
obligations to pay rent and to cause other payments to be made under each
Lease will be general obligations of Federal Express.
Neither the Owner Trustee nor 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 Federal Express 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.
Federal Express' obligations under each Owned Aircraft Indenture and
under the related Owned Aircraft Certificates will be general obligations of
Federal Express.
Indenture Events of Default and Remedies
For any Pass Through Trust, the 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 prospectus supplement, there will be no cross-default provisions in the
Indentures and, unless so specified, events resulting in an Indenture Event of
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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 Federal Express 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. Federal Express
will make the scheduled rental payments under each Lease on the dates
specified in the prospectus supplement. The Owner Trustee will assign to the
Indenture Trustee the respective payments 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 Federal Express 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, Federal Express 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 Federal Express
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 prospectus supplement.
Net Lease. Federal Express' obligations under each Lease in respect of
the related Leased Aircraft will be those of a lessee under a "net lease."
Accordingly, Federal Express 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 to be maintained in good standing at all times under the
Transportation Code or, in some circumstances, under the applicable
requirements of the aeronautical authority of another country of registry.
Generally, Federal Express will be obligated to replace or cause to be
replaced all Leased Aircraft parts that become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use. Federal Express will have the right to make other modifications
and additions to a Leased Aircraft so long as the 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 the modification or addition, assuming that
such Leased Aircraft was then in the condition and airworthiness required by
the related Lease. Also, in some circumstances, Federal Express 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 Federal
Express 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 prospectus supplement will contain a description
of any limitations applicable to provisions described above.
Insurance. The prospectus supplement will contain a description of the
insurance arrangements applicable to each Aircraft. In general, Federal
Express will be obligated to carry comprehensive aircraft liability insurance,
including property damage liability insurance and cargo legal liability
insurance as described below. The insurance
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must be in such amounts, against such risks and with such retentions as
Federal Express customarily maintains. Such insurance must also be with
insurers of recognized responsibility and against such other risks as is
usually carried by similar corporations situated similarly to Federal Express
and engaged in the same or similar business to Federal Express and owning or
operating aircraft and engines similar to the related Aircraft and related
engines. In general, Federal Express 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. The
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 Federal Express
customarily maintains with respect to other aircraft in Federal Express' 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. Federal
Express 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 Federal Express of value comparable to the related
Aircraft. Self-insurance for all aircraft in Federal Express' fleet may not,
however, in the aggregate exceed an amount equal to the lesser of 50% of the
highest insured value of any single aircraft in such fleet or 1.5% of the
average aggregate insured value from time to time of Federal Express' 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.
Federal Express 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 specified amounts. The
prospectus supplement will contain a description of any limitations applicable
to provisions described in this paragraph.
Lease Events of Default; Remedies. The 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
Federal Express 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 or the Certificateholders), for certain liabilities, losses,
fees and expenses and for certain other matters arising out of the
transactions described in this prospectus or relating to the applicable
Aircraft or the use of such Aircraft. In addition, under certain circumstances
Federal Express 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 some restrictions,
each Owner Participant may convey all of its right, title and interest
relating to any Leased Aircraft. Moreover, if so provided in the prospectus
supplement, in certain limited instances Federal Express may assume an Owner
Trust's obligations under the related Leased Aircraft Certificates on a full
recourse basis.
Liquidity Facility
The 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 prospectus supplement. Unless otherwise provided in the
prospectus supplement, the provider of the liquidity facility will have a
senior claim upon the assets securing the Equipment Certificates.
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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
that case, the prospectus supplement will describe the priority of
distributions among the Equipment Certificates (and any related liquidity
facilities), 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 related Leases) and other
intercreditor terms and provisions.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Davis Polk & Wardwell, tax counsel to Federal Express,
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 of the Pass Through
Certificates 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 prospectus
supplement. This opinion is based on laws, regulations, rulings and decisions
in effect as of the date of this prospectus. Changes to existing law, which
could have retroactive effect, may alter the consequences described below.
This opinion does not 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 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 held 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
in proportion to their fair market values at the time of purchase of the Pass
Through Certificate. Unless otherwise indicated in a prospectus supplement,
Federal Express 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 its 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. In
the case of 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
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Certificates. However, if Federal Express were to assume an Owner Trust's
obligations under the related Equipment Certificates upon a purchase of the
related Aircraft by Federal Express, or an Owner Trust assumes Federal
Express' 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. Immediately following such taxable
exchange of Equipment Certificates described in the previous sentence, the
Equipment Certificates owned by a Certificateholder will be deemed to be newly
issued Equipment Certificates (the "New Equipment Certificates"). For this
purpose the amount realized, as determined under current Treasury regulations
on original issue discount, will be equal to a Certificateholder's pro rata
share of the New Equipment Certificate's stated principal amount or, in the
event the New Equipment Certificates do not bear "adequate stated interest"
within the meaning of Section 1274 of the Code, their "imputed principal
amount," which is generally the sum of the present values of all payments due
under the New Equipment Certificates, discounted from the date of payment to
their issue date at the appropriate "applicable federal rate." In addition,
and unless de minimis rules apply, if after such taxable event the respective
Equipment Certificates do not provide for "adequate stated interest" and the
principal amount of the New Equipment Certificates is more than the "imputed
principal amount" then the New Equipment Certificates would have "original
issue discount" ("OID"). Certificateholders would be required to include the
OID attributable to their pro rata share of the New Equipment Certificates in
income for federal tax purposes as it accrues, in advance of receiving payment
attributable to such income, under a constant yield to maturity method.
Sales or Exchanges of Pass Through Certificates
A Certificateholder that sells or exchanges a Pass Through Certificate
will be considered to have sold its 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 could be treated for federal income tax purposes
as if they had:
o received as distributions their full share of such receipts
o paid over to the relevant preferred class of Certificateholders an
amount equal to their share of such Shortfall Amount, and
o retained the right to reimbursement of such amounts to the extent of
future amounts payable to the Subordinated Certificateholders with
respect to such Shortfall Amount.
Under this analysis:
o Subordinated Certificateholders incurring a Shortfall Amount would
be required to include as current income any interest or other
income of the corresponding Pass Through Trust which is subordinated
to other Pass Through Trusts that was a component of the Shortfall
Amount, even though such amount was in fact paid to the relevant
preferred class of Certificateholders
o a loss would only be allowed to such Subordinated Certificateholders
when their right to receive reimbursement of such Shortfall Amount
became worthless, that is, when it becomes clear that funds will not
be available from any source to reimburse such loss, and
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o 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.
NEW YORK 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 New York state banking corporation with its
principal corporate trust office in New York, New York. Powell, Goldstein,
Frazer & Murphy LLP, special state tax counsel to the Pass Through Trustee, has
advised Federal Express that, in its opinion, under currently applicable New
York laws and assuming the accuracy of the statements with respect to federal
income taxes in this prospectus, including the assumption that each Pass
Through Trust will not itself be subject to federal income taxation, assuming
that the Equipment Certificates will be treated as debt for federal income tax
purposes and assuming that the Pass Through Trustee will not hold legal or
equitable title to, or lease any real or tangible property located in New York
and will engage in only those activities contemplated in this prospectus, that
is, engaging in no activity other than holding the Equipment Certificates,
issuing the Pass Through Certificates, distributing the payments thereon and
performing other incidental activities:
o the Pass Through Trusts will not be subject to any tax, including,
without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax,
governmental fee or similar charge imposed by the state of New York
or any political subdivision of the state of New York as a result of
the transactions contemplated by the Pass Through Agreement and
o Certificateholders who are not residents of, or otherwise subject to
tax in or by, the state of New York will not be subject to any tax,
including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business
tax, governmental fee or similar charge imposed by the state of New
York or any political subdivision of the state of New York 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.
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<PAGE>
ERISA CONSIDERATIONS
Unless otherwise indicated in the 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. Some 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 Federal Express 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 Federal Express 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 Federal
Express will be described, in the 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 to such sales.
Under agreements which may be entered into by Federal Express,
underwriters and agents who participate in the distribution of Pass Through
Certificates may be entitled to indemnification by Federal Express against
certain liabilities, including liabilities under the Securities Act.
Unless otherwise indicated in the prospectus supplement, Federal Express
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.
Some of the underwriters or agents and their associates may be customers
of, engage in transactions with, and perform services for, Federal Express in
the ordinary course of business.
36
<PAGE>
LEGAL MATTERS
Unless otherwise indicated in the prospectus supplement, the legality of
the Pass Through Certificates offered hereby will be passed upon for Federal
Express by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, and by Underwriters' Counsel. Unless otherwise indicated in the
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 Federal Express, as to Federal Express' authorization, execution and
delivery of the Pass Through Agreement. At June 1, 1999, Ms. Clayborne owned
11,000 shares of FDX Corporation's common stock and had been granted options
to purchase 66,800 shares of FDX Corporation's common stock. Of the options
granted, 3,750 were vested at such date.
EXPERTS
The consolidated financial statements and schedule of Federal Express
included or incorporated by reference in Federal Express' Annual Report on
Form 10-K for the year ended May 31, 1998 and incorporated by reference in
this prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect to the consolidated
financial statements and schedule, and are incorporated by reference in this
prospectus in reliance upon the authority of Arthur Andersen LLP as experts in
giving those reports.
With respect to the unaudited interim financial information for the
quarters ended August 31, 1998, November 30, 1998 and February 28, 1999,
included in Federal Express' 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 on the unaudited
interim financial information 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.
37
<PAGE>
GLOSSARY OF TERMS
The following is a glossary of terms used in this prospectus. This
glossary may contain definitions which are different from definitions used in
the prospectus supplement. You should read the prospectus supplement in
conjunction with the glossary or other definition of terms contained in the
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 prospectus supplement, payments to
be made by Federal Express or 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 Federal Express'.
"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.
"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.
"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 prospectus supplement.
"Collateral Agreement" means a collateral agreement between the Owner
Trustee and the Indenture Trustee with respect to the related Collateral
Account.
"Convention" means the Convention on the International Recognition of
Rights in Aircraft.
"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.
"Deposit Account" means the deposit account established under a Depositary
Arrangement.
"Depositary Arrangement" means the agreement of a person 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.
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<PAGE>
"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 or the related Owned Aircraft Indenture, as the case
may be.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Federal Express" means Federal Express Corporation.
"Holders" means the registered holders of the related Equipment
Certificates.
"Indentures" means, collectively, the Owned Aircraft Indentures and the
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 The Bank of New York, 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 of each Pass Through Trust, the subordination agent named therein and
the Liquidity Provider specified in the 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
Federal Express, as lessee, in each case under which the Owner Trustee leases,
or is expected to lease, the related Aircraft to Federal Express.
"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 Federal Express.
"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 prospectus supplement.
39
<PAGE>
"Liquidity Provider" means an institution identified in the 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 Federal Express.
"Owned Aircraft Certificates" means the equipment purchase certificates
relating to an Owned Aircraft issued as recourse obligations by Federal
Express.
"Owned Aircraft Indenture" means a trust indenture and security agreement
between Federal Express 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
Indenture Trustee, the Pass Through Trustee, Federal Express, any subordination
agent, in the case of a refinancing, each holder of a loan certificate issued
under the related Indenture as originally executed, and, in the case of a
Leased Aircraft, the related Owner Participant and the related Owner Trustee.
"Pass Through Agreement" means the Pass Through Trust Agreement dated as
of June 1, 1999, between Federal Express and The Bank of New York, 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 The Bank of New York 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:
o direct obligations of the United States of America or obligations
fully guaranteed by the United States of America,
o 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,
o overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, and
40
<PAGE>
o overnight repurchase agreements with respect to the securities
described in the first bullet point 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 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 Federal Express 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 prospectus
supplement, for each Pass Through Trust, as of any Distribution Date, the
quotient (rounded to the seventh decimal place) computed by dividing the Pool
Balance, by the aggregate original principal amount of the Equipment
Certificates held in such Pass Through Trust.
"Pre-Funding Period" means, with respect to any Leased 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 related Lease
commences.
"Purchase Agreement" means, for any Aircraft, the purchase agreement
between the manufacturer and Federal Express, 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 Federal Express.
"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 in the prospectus supplement for distribution of a Scheduled Payment
to the related Pass Through Trustee.
"Scheduled Payment" means the payment of principal of, and interest on,
the Equipment Certificates scheduled to be received by the related Pass
Through Trustee on a Regular Distribution Date.
"SEC" means the Securities and Exchange Commission of the United States.
"Securities Act" means the Securities Act of 1933, as amended.
"Series Supplement" means each of the Series Supplements between Federal
Express 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.
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<PAGE>
"Special Payment" means, for any Pass Through Trust, any payment of
principal, any premium 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 Payments 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.
"Systems" means computer applications, systems and the like for processing
data.
"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.
"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.
42
<PAGE>
<TABLE>
<S> <C>
======================================================== =========================================================
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 $300,000,000
not be relied upon as having been authorized by Federal
Express or the Underwriters. This prospectus does not
constitute an offer to sell, or the solicitation of an [COMPANY LOGO]
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 Federal Express
since the date of this prospectus.
Pass Through Certificates
TABLE OF CONTENTS
Page
About This Prospectus...............................2
Where You Can Find More Information.................2 ------------------------------------
Reports to Pass Through Certificateholders..........3
Federal Express Corporation.........................3 PROSPECTUS
Ratio of Earnings to Fixed Charges..................3
Risk Factors........................................4 ------------------------------------
Outline of Pass Through Trust Structure.............6
Use of Proceeds.....................................7
Diagram of Payments.................................7
Description of the Pass Through Certificates........8
Description of the Equipment Certificates..........23
Federal Income Tax Consequences....................33
New York Taxes.....................................35
ERISA Considerations...............................36
Plan of Distribution...............................36 June__, 1999
Legal Matters......................................37
Experts............................................37
Glossary of Terms..................................38
======================================================== =========================================================
</TABLE>
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 4, 1999
$300,000,000
[COMPANY LOGO]
DEBT SECURITIES
-----------------------
We may offer and sell from time to time up to $300,000,000 aggregate
initial public offering price of our debt securities.
The debt securities:
o will be offered in one or more series
o will be unsecured obligations of Federal Express
o will rank equally with all other unsecured and unsubordinated
indebtedness of Federal Express, and
o will be payable at the times, in the amounts and on the terms
specified in a prospectus supplement.
There was no public market for the debt securities of any series before
their issuance and there is no assurance that one will develop or continue. We
do not intend to apply for the listing of any series of debt securities on a
national securities exchange, unless otherwise indicated in the prospectus
supplement.
This prospectus will be accompanied by a prospectus supplement which will
describe the specific terms of the particular series of debt securities being
sold and the Indenture relating to the debt securities. Sales of the debt
securities may not be consummated without both this prospectus and the
prospectus supplement.
Investing in the debt securities involves risks, which are described in
the "Risk Factors" section beginning on page 3 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is June __, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may sell the debt securities described in this prospectus in one
or more offerings. This prospectus provides you with a general description of
the debt securities we may offer. Each time we sell debt securities, we will
provide a prospectus supplement that will contain specific information about
the terms of that offering. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read carefully
both this prospectus and any prospectus supplement, together with the
additional information described below under "Where You Can Find More
Information."
This prospectus does not contain all the information provided in the
Registration Statement that we filed with the SEC. For further information
about Federal Express or the debt securities, you should refer to that
Registration Statement. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those
contracts and other documents.
The Registration Statement that we filed with the SEC relating to the
debt securities can be obtained from the SEC as described below under "Where
You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports with the SEC. These SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any such document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549, and in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms and copy
charges.
The SEC allows us to "incorporate by reference" the information we file
with it, which means:
o we can disclose important information to you by referring you to
those documents
o information incorporated by reference is considered to be part of
this prospectus, even though it is not repeated in this prospectus
or in any prospectus supplement, and
o information that we file with the SEC will automatically update and
supersede this prospectus and any prospectus supplement.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of the filing of this Registration Statement and
prior to its effectiveness, and until we complete our offering of debt
securities:
o Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
filed August 21, 1998
o Quarterly Reports on Form 10-Q for the fiscal quarters ended August
31, 1998, November 30, 1998 and February 28, 1999, filed October 13,
1998, January 13, 1999 and April 13, 1999, respectively
o Current Reports on Form 8-K dated June 30, July 8, July 15, August
27, September 21, September 22, October 22 and November 17, 1998,
respectively, filed July 15, July 14, August 5, September 10,
October 5, October 6, November 12 and December 1, 1998,
respectively.
You may obtain a copy of these filings, other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings, at
no cost by writing or telephoning us at the following address:
2
<PAGE>
Elizabeth R. Allen
Investor Relations
FDX Corporation
Box 727
Memphis, Tennessee 38194-1854
(901) 395-3478
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely
on it. We are not making an offer to sell any debt securities in any
jurisdiction where the offer or sale is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front page of those
documents. Also, you should not assume that there has been no change in the
affairs of Federal Express since the date of this prospectus or any prospectus
supplement.
FEDERAL EXPRESS CORPORATION
We are a wholly-owned subsidiary of FDX Corporation. We offer 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. Our corporate
headquarters are located at 2005 Corporate Avenue, Memphis, Tennessee 38132,
telephone (901) 369-3600.
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine Months
Ended
Year Ended May 31 February 28,
---------------------------------------- -------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges........... 1.7x 2.0x 1.9x 2.0x 2.1x 2.0x 1.9x
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, we may be more highly
leveraged than currently reflected in this table.
RISK FACTORS
You should consider carefully the factors described below before you
invest. You should read the information below together with the other
information in this prospectus and the accompanying prospectus supplement.
Our business is subject to risks and uncertainties
The operations and financial condition of our business are subject to
risks and uncertainties, including:
o economic conditions in the markets in which we operate can affect
demand for our services
o competition from other providers of express services with new or
improved services
3
<PAGE>
o changes in customer demand patterns
o increases in aviation and motor fuel prices
o strikes, work stoppages and slowdowns by our employees
o our ability to match aircraft, vehicle and sort capacity with
customer volume levels
o our ability to obtain aviation rights in important international
markets
o contributions to financial results from the sale of engine noise
reduction kits
o changes in government regulation, weather and technological change,
and
o availability of financing on terms acceptable to us.
The indenture does not limit the amount of debt we may incur or protect
against a highly leveraged transaction involving us
The Indenture does not limit the amount of secured or unsecured
indebtedness which we or our subsidiaries may incur. The Indenture does not
contain any debt covenants or provisions which would give protection to the
holders of the debt securities in the event of a highly leveraged transaction.
Other indebtedness of Federal Express ranking equally with the debt securities
have covenants that would give privileges to holders of such indebtedness in
the event of a change of control of Federal Express.
Rating agencies may change their rating on our debt securities at any time
The debt securities are expected to be assigned an "investment grade"
rating by one or more Rating Agencies. The prospectus supplement will indicate
the rating assigned to the debt securities being sold. A rating is not a
recommendation to purchase, hold or sell debt securities because a 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 so warrant. The rating of the debt
securities will be based primarily on the default risk of the debt securities
and is 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, unless we otherwise specify in a prospectus supplement.
A public market for the debt securities may not develop or continue
There was no public market for the debt securities of any series before
their issuance and there is no assurance that one will develop or continue. We
do not intend to apply for the listing of any debt securities on a national
securities exchange, unless we otherwise indicate in a prospectus supplement.
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
We intend to use the net proceeds from the sale of debt securities for
our general corporate purposes. If we decide to use the net proceeds from a
particular offering of debt securities for a specific purpose, we will
describe that in a prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
The following is a summary description of the material terms of the
Indenture and the debt securities. When we offer to sell a particular series
of debt securities, we will describe the specific terms of the Indenture and
the debt securities in a prospectus supplement.
The form of Indenture, which includes the form of debt securities, has
been filed as an exhibit to the Registration Statement of which this
prospectus is a part. You should read the Indenture and the form of debt
securities for provisions that may be important to you. In the following
description, we have included references to section numbers of the Indenture
so that you can easily locate those provisions.
Terms; Form and Denomination
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
under the Indenture and provides that debt securities may be issued under the
Indenture in one or more series.
The debt securities will be unsecured obligations of Federal Express and
will rank equally with all other unsecured and unsubordinated indebtedness of
Federal Express.
The Indenture does not contain any debt covenants or provisions which
would give protection to the holders of the debt securities in the event of a
highly leveraged transaction. Other indebtedness of Federal Express ranking
equally with the debt securities have covenants that would give privileges to
the holders of such indebtedness in the event of a change in control of
Federal Express.
A prospectus supplement will include some or all of the following terms:
o the title of the debt securities and the series in which the debt
securities will be included
o the authorized denominations and aggregate principal amount of the
debt securities
o whether the debt securities are to be issuable in global or
certificated form
o the date or dates on which the debt securities will mature
o the rate or rates, which may be fixed or variable, per annum at
which the debt securities will bear interest, if any, and if such
rate is variable, the manner of calculation of interest and the date
from which interest will accrue
o the place or places where the principal of and any premium and
interest on the debt securities will be payable
o the dates on which the interest will be payable and the corresponding
record dates
o any mandatory or optional sinking fund or purchase fund or analogous
provisions
o the terms and conditions of any redemption of the debt securities and
any redemption price
o the portion of the principal amount of the debt securities payable
upon declaration of acceleration of the Maturity of the debt
securities pursuant to Section 502 of the Indenture
o any provision for the defeasance of the debt securities
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o if the series is denominated other than in United States dollars,
the denomination in which the debt securities will be issued and the
currency in which the principal and any premium and interest on the
debt securities will be payable, which may be United States dollars
based upon the exchange rate for the other currency unit existing on
or about the time a payment is due
o whether Additional Amounts are payable on any debt securities
o any additional Events of Default or covenants applicable to the
series, and
o any other terms of the series which are not inconsistent with the
Indenture. (Indenture, Section 301).
Unless we otherwise indicate in a prospectus supplement, all outstanding
debt securities will be exchangeable and transfers of debt securities will be
registrable, and principal of and any premium and interest 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 our option, be made by check mailed to the address of the person
entitled to such payment 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 we otherwise indicate in a prospectus supplement, all debt
securities will be issued only in fully registered form without coupons in
denominations of $1,000 and any integral multiples of $1,000. We will not
impose any service charge for any transfer or exchange of a debt security;
however, we may ask you to pay any taxes or other governmental charges in
connection with a transfer or exchange of debt securities. (Indenture, Section
305) We may issue the debt securities in permanent global form. (Indenture,
Section 203) See "Permanent Global Securities."
The Indenture does not limit the amount of secured or unsecured
indebtedness which we may incur.
We may issue some of the debt securities at a substantial discount below
their stated principal amount because they bear no interest or bear interest
at below market rates. We will describe the United States federal income tax
consequences and any other special considerations relating to an investment in
discount securities in the 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 us as follows:
o 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
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o 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.
o DTC Participants include securities brokers and dealers, banks, trust
companies and clearing corporations.
o 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.
The DTC Participants will be responsible for distributions to Holders and
those distributions will be made in accordance with customary industry
practices. Although Holders will not have possession of the debt securities,
the rules of DTC provide a mechanism by which those Holders 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.
Federal Express, the Trustee or any other agent of Federal Express or the
Trustee will not be responsible or liable 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", for purposes of
the Indenture, will be Cede, as nominee of DTC, Holders will not be recognized
by the Trustee as "Holders", and Holders will be permitted to exercise the
rights of "Holders" only indirectly through DTC and DTC Participants. DTC has
advised us 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.
DTC has provided us with the following additional disclosure about its
Year 2000 efforts:
o DTC management is aware that some Systems that are dependent upon
calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its DTC
Participants and other members of the financial community that it
has developed and is implementing a program so that its Systems, as
the same relate to the timely payment of distributions, including
principal and income payments, to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
o However, DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers
and their agents, as well as third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC
relies for information or for the provision of services, including
telecommunication and electrical utility service providers, among
others. DTC has informed DTC Participants and other members of the
financial community that it is contacting, and will continue to
contact, third party vendors from whom DTC acquires services to
impress upon them the
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importance of such services being Year 2000 compliant and to
determine the extent of their efforts for Year 2000 remediation and
appropriate testing of their services. In addition, DTC is in the
process of developing such contingency plans as it deems
appropriate.
o According to DTC, the above information with respect to DTC has been
provided to the DTC Participants and other members of the financial
community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any
kind.
Same-Day Settlement and Payment. All payments we make 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.
Certificated Form. We will issue physical certificates to holders of a
global security, or their nominees, if:
o DTC advises the Trustee in writing that it is no longer willing,
able or eligible to discharge properly its responsibilities as
depository and we are unable to locate a qualified successor or
o We decide in our sole discretion 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. There will be no service charge
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
We have agreed not to consolidate or merge with or into any other person
or convey or transfer substantially all of our properties and assets as an
entirety, to any person, unless:
o the successor is a corporation organized and existing under the laws
of the United States of America, any State or the District of
Columbia and expressly assumes, by a supplemental indenture, the due
and punctual payment of the principal of and any premium and
interest on and any Additional Amounts with respect to all the debt
securities and the performance of every covenant of the Indenture
that we would otherwise have to perform
o immediately after giving effect to the merger, there will not be any
defaults under the Indenture, and
o we have delivered to the Trustee an Officers' Certificate or an
Opinion of Counsel, each stating that the merger and the
supplemental indenture comply with the Indenture. (Indenture,
Section 801)
We would be relieved of our obligations and covenants under the Indenture
and the debt securities when the successor has complied with the provisions
indicated above. (Indenture, Section 802)
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Modification, Amendment and Waiver
Federal Express and the Trustee may modify and amend the Indenture 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. However, no modification or amendment may, without the
consent of the Holder of each debt security affected thereby:
o change the Stated Maturity of the principal of, or any installment of
interest on, any debt security
o reduce the principal amount of, rate of interest on, or premium
payable upon the redemption of, any debt security
o change any place of payment where, or the currency in which, any debt
security or the interest or any premium is payable
o impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security on or after the
Stated Maturity, or, in the case of redemption, on or after the
Redemption Date, or
o 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 some
provisions of the Indenture or for waiver of some 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
When we use the term "Event of Default" in the Indenture, here are some
examples of what we mean.
Unless we indicate otherwise in a prospectus supplement, an Event of
Default with respect to a series of debt securities occurs if:
o we fail to pay interest when due on any debt security of that series
for 30 days
o we fail to pay the principal or any premium on any debt security of
that series when due
o we fail to perform any covenant in the Indenture and this failure
continues for 60 days after we receive written notice as provided in
the Indenture
o we fail to deposit any sinking fund payment when and as due by the
terms of a debt security of that series, or
o we or a court take certain actions relating to the bankruptcy,
insolvency or reorganization of our company for the benefit of our
creditors (Indenture, Section 5.01)
If an Event of Default with respect to all debt securities of any series
occurs and continues, the Trustee or the Holders of not less than 50% in
aggregate principal amount of the outstanding debt securities of that series
may, by a notice in writing to us (and to the Trustee if given by the
Holders), declare to be due and payable immediately the principal amount of
all debt securities of that series. The Holders of a majority in principal
amount of the outstanding debt securities of that series may rescind and annul
such acceleration if all Events of Default with
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respect to the debt securities of that 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."
Other than its duties in case of default, the Trustee is not obligated 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 that series, unless
the Holders offer to the Trustee reasonable indemnity. (Indenture Sections 601
and 603) If they provide this reasonable indemnity, the Holders of a majority
in principal amount of the outstanding debt securities of that series will
have the right, subject to certain limitations, 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 that 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 under
the Indenture unless:
o the Holder has previously given to the Trustee written notice of a
continuing Event of Default
o the Holders of at least 50% in principal amount of the outstanding
debt securities of that series has made written request, and offered
reasonable indemnity, to the Trustee to institute a proceeding as
trustee, and
o the Trustee has not received from the Holders of a majority in
principal amount of the outstanding debt securities of that series a
direction inconsistent with the request and the Trustee has failed
to institute a proceeding within 60 days. (Indenture, Section 507)
However, the Holder of any debt security will have an absolute right to
receive payment of the principal of and any premium and interest on the debt
security expressed in the 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)
We are required to furnish to the Trustee annually a statement as to the
absence of defaults under the Indenture. (Indenture Section 1005) 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 the
debt securities. (Indenture, Section 602)
Defeasance and Covenant Defeasance
When we use the term defeasance, we mean discharge from some or all of
our obligations under the Indenture. If we deposit with the Trustee sufficient
cash or government securities to pay the principal, interest, any premium and
any mandatory sinking fund or analogous payments due to the Stated Maturity or
a redemption date of the debt securities of a particular series, then at our
option:
o we will be discharged from our obligations with respect to the debt
securities of that series, or
o we will no longer be under any obligation to comply with certain
restrictive covenants under the Indenture, and certain Events of
Default will no longer apply to us.
If this happens, the holders of the debt securities of the affected
series will not be entitled to the benefits of the Indenture except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities. Those holders may look only to such
deposited funds or obligations for payment.
We must deliver to the Trustee an Opinion of Counsel to the effect that
the deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for Federal income tax purposes.
We must also deliver a ruling to such effect received from or published by the
United States Internal Revenue Service if we are discharged from our
obligations with respect to the debt securities.
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Concerning the Trustee
The Trustee acts as trustee under other indentures with respect to other
indebtedness of Federal Express which ranks equally with the debt securities.
We lease facilities financed with the proceeds of such indebtedness and our
obligations under the leases secure payment of such indebtedness. We also from
time to time borrow from, and maintain deposit accounts with, the Trustee.
PLAN OF DISTRIBUTION
We may sell the debt securities through underwriters or dealers, agents
or directly to one or more purchasers, through a specific bidding or auction
process or otherwise.
We may distribute the debt securities from time to time in one or more
transactions either:
o at a fixed price or prices, which may be changed
o at market prices prevailing at the time of sale
o at prices related to such prevailing market prices, and
o at negotiated prices.
In connection with the sale of debt securities, underwriters or agents
may receive compensation from us 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,
we will sell the debt securities to the dealer as principal. The dealer may
then resell the debt securities to the public at varying prices to be
determined by the 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 us and any profit on the resale of debt
securities by them may be deemed to be underwriting discounts and commissions,
under the Securities Act. We will identify any underwriters, dealers or
agents, and describe their compensation, in a prospectus supplement.
We may solicit offers to purchase our debt securities, and we may
directly sell our debt securities 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. We will describe the terms of our direct sales
in a prospectus supplement.
We may authorize underwriters, dealers or agents to solicit offers by
specified institutions to purchase debt securities from us 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. If we use delayed delivery contracts, they will be subject only to
those conditions set forth in the prospectus supplement and the prospectus
supplement will indicate the commission payable for the solicitation of these
contracts.
We may indemnify underwriters, dealers and agents who participate in the
distribution of debt securities against certain liabilities, including
liabilities under the Securities Act.
Unless we otherwise indicate in a prospectus supplement, we do 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
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market-making could be discontinued at any time at the sole discretion of the
underwriters. Accordingly, we cannot assure you as to the liquidity of, or
trading markets for, the debt securities of any series.
Underwriters, dealers or agents and their associates may be customers of,
engage in transactions with, and perform services for, us in the ordinary
course of business.
LEGAL MATTERS
Karen M. Clayborne, our Senior Vice President and General Counsel, will
issue an opinion about the legality of our debt securities. At June 1, 1999,
Ms. Clayborne owned 11,000 shares of FDX Corporation's shares of common stock
and had been granted options to purchase 66,800 shares of that common stock.
Of the options granted, 3,750 were vested at such date.
Any underwriters, dealers or agents will be advised about other issues
relating to any offering by their own legal counsel.
EXPERTS
Our consolidated financial statements and schedule are included or
incorporated by reference in our Annual Report on Form 10-K for the year ended
May 31, 1998 and incorporated by reference in this prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect to the consolidated financial statements and
schedule, and are incorporated by reference in this prospectus in reliance
upon the authority of Arthur Andersen LLP as experts in giving those reports.
With respect to the unaudited interim financial information for the
quarters ended August 31, 1998, November 30, 1998 and February 28, 1999,
included in our Quarterly Reports on Form 10-Q for those 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 on the unaudited interim
financial information 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.
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GLOSSARY OF TERMS
The following is a glossary of terms used in this prospectus. The
glossary may contain definitions which are different from definitions used in
the prospectus supplement. You should read the prospectus supplement in
conjunction with the glossary or other definition of terms contained in the
prospectus supplement.
"Additional Amounts" means any additional amounts which are required by
any debt security or related Indenture, under circumstances specified in the
debt security or related Indenture, to be paid by us in respect of taxes,
assessments or other governmental charges imposed on Holders specified in the
debt security or related Indenture 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.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participants of DTC.
"Debt securities" means unsecured debt securities (or their equivalent 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.
"Federal Express" means Federal Express Corporation.
"Foreign Currency" means any currency, currency unit or composite
currency, including, but not limited to, 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:
o direct obligations of the United States of America or such other
government or governments which issued the Foreign Currency in which
the principal of or any premium or interest on any debt security or
any Additional Amounts will be payable, in each case where the
payment or payments under any debt security or Additional Amounts are
supported by the full faith and credit of such government or
governments
o obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or such
other government or governments, in each case where the payment or
payments under any debt security or Additional Amounts are
unconditionally guaranteed as a full faith and credit obligation by
the United States of America or such other government or governments,
which, in either case, are not callable or redeemable at the option
of their issuer, and will also include a depository receipt issued by
a bank as custodian with respect to any Government Obligation or a
specific payment of principal of or interest on any 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.
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"Indenture" means an indenture agreement between the Trustee and Federal
Express 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, 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 Federal Express, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or of counsel to Federal Express, 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).
"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 of any
debt security to be redeemed, means the date fixed for such redemption by or
pursuant to the Indenture or the 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, we will provide for the registration of debt
securities and of transfers of debt securities.
"Stated Maturity" means, with respect to any debt security or any
installment of principal or interest 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.
"Systems" means computer applications, systems and the like for processing
data.
"Trustee" means The First National Bank of Chicago as trustee under the
related Indenture.
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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. $300,000,000
If given or made, such information or representation must
not be relied upon as having been authorized by Federal
Express or the Underwriters. This prospectus does not [COMPANY LOGO]
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 Federal
Express since the date of this prospectus. Debt Securities
------------------------------------
----------------------
PROSPECTUS
TABLE OF CONTENTS
------------------------------------
Page
----
About this Prospectus...............................2
Where You Can Find More Information.................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 June __, 1999
Experts............................................12
Glossary of Terms..................................13
============================================================ ============================================================
</TABLE>
<PAGE>
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............................................... $ 37,107
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
Miscellaneous...................................................... 5,000
--------
Total........................................................... $747,107
========
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.
II-1
<PAGE>
(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 June 1, 1999, between
Federal Express Corporation and The Bank of New York.
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
II-2
<PAGE>
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 Powell, Goldstein, Frazer & Murphy LLP, counsel for the
Pass Through Trustee
II-3
<PAGE>
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 Powell, Goldstein, Frazer & Murphy LLP, special
counsel for the Pass Through Trustee (included under the caption
"New York Taxes" in the Prospectus relating to Pass Through
Certificates)
12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit
12.1 to Registrant's Form 10-Q for the quarter ended February 28,
1999, and incorporated herein by reference)
15 Letters of Arthur Andersen LLP, independent public accountants
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 Powell, Goldstein, Frazer & Murphy LLP, 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 The First National Bank of Chicago, as
Trustee**
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as Indenture Trustee and
as Pass Through Trustee
- -------------------
* 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.
** To be separately filed by Registrant.
II-4
<PAGE>
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
II-5
<PAGE>
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.
II-6
<PAGE>
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
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Memphis, State of Tennessee, on this
4th day of June, 1999.
FEDERAL EXPRESS CORPORATION
By: s/ Michael W. Hillard
-------------------------------------
Name: Michael W. Hillard
Title: Vice President and Controller
(Principal Accounting Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Alan B. Graf, Jr. and Michael W. Hillard, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this registration statement and any related
registration statement filed pursuant to Rule 462(b), and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants to such
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
Signature Capacity Date
- ----------------------------- ------------------------------------- --------------
<S> <C> <C>
/s/ Frederick W. Smith
- ----------------------------- Chairman of the Board and Director June 4th, 1999
Frederick W. Smith
/s/ Alan B. Graf, Jr.
- ----------------------------- Director June 4th, 1999
Alan B. Graf, Jr.
/s/ Theodore L. Weise
- ----------------------------- President, Chief Executive Officer and June 4th, 1999
Theodore L. Weise Director (Principal Executive Officer)
/s/ Kenneth R. Masterson
- ----------------------------- Director June 4th, 1999
Kenneth R. Masterson
</TABLE>
II-7
<PAGE>
<TABLE>
Signature Capacity Date
- ----------------------------- ------------------------------------- --------------
<S> <C> <C>
/s/ T. Michael Glenn
- ----------------------------- Director June 4th, 1999
T. Michael Glenn
/s/ Dennis H. Jones
- ----------------------------- Director June 4th, 1999
Dennis H. Jones
/s/ David J. Bronczek Executive Vice President, Chief June 4th, 1999
- ----------------------------- Operating Officer and Director
David J. Bronczek
/s/ George W. Hearn
- ----------------------------- Director June 4th, 1999
George W. Hearn
/s/ Scott E. Hansen
- ----------------------------- Director June 4th, 1999
Scott E. Hansen
/s/ Michael W. Hillard
- ----------------------------- Vice President and Controller (Principal June 4th, 1999
Michael W. Hillard Accounting Officer)
/s/ Tracy G. Schmidt
- ----------------------------- Senior Vice President and Chief June 4th, 1999
Tracy G. Schmidt Financial Officer (Principal Financial
Officer)
</TABLE>
II-8
<PAGE>
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 June 1, 1999 between Federal
Express Corporation and The Bank of New York
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)*
1
<PAGE>
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 Powell, Goldstein, Frazer & Murphy LLP, counsel for the
Pass Through Trustee
5(c) Opinion of Bingham Dana LLP, counsel for the Owner Trustee
2
<PAGE>
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 Powell, Goldstein, Frazer & Murphy LLP, special
counsel for the Pass Through Trustee (included under the caption "New
York Taxes" in the Prospectus relating to Pass Through Certificates)
12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit
12.1 to Registrant's Form 10-Q for the quarter ended February 28,
1999, and incorporated herein by reference)
15 Letters of Arthur Andersen LLP, independent public accountants
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 Powell, Goldstein, Frazer & Murphy LLP, 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 The First National Bank of Chicago, as Trustee**
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as Indenture Trustee and as
Pass Through Trustee
- -------------------
* 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.
** To be separately filed by Registrant.
3
EXHIBIT 4(a)(1)
==============================================================================
PASS THROUGH TRUST AGREEMENT
Dated as of June 1, 1999
between
THE BANK OF NEW YORK,
as Pass Through Trustee
and
FEDERAL EXPRESS CORPORATION
==============================================================================
<PAGE>
CROSS REFERENCE SHEET
Between
Provisions of the Trust Indenture Act of 1939, as amended,
and the Pass Through Trust Agreement:
Section of
Section of the Act the Agreement
- ------------------ -------------
310(a)(1) and (2)...................................................10.02
310(a)(3)...........................................................10.05
310(a)(4)........................................................Art. VII
310(a)(5)...........................................................10.02
310(b)(i)-(iii)..............................................10.01, 10.03
310(b)(remainder).......................................................*
310(c).......................................................Inapplicable
311(a)..................................................................*
311(b)..............................................................10.06
311(c).......................................................Inapplicable
312(a).........................................................2.12, 4.01
312(b)..................................................................*
312(c)...............................................................4.02
313(a)...............................................................4.04
313(b)(1)...............................................................*
313(b)(2)...............................................................*
313(c)...............................................................4.04
313(d)..................................................................*
314(a)...............................................................4.03
314(b).......................................................Inapplicable
314(c)(1) and (2)...................................................13.07
314(c)(3)....................................................Inapplicable
314(d)(1)...............................................................*
314(d)(2)...............................................................*
314(d)(3)...............................................................*
314(e)..............................................................13.07
314(f).......................................................Inapplicable
315(a), (c) and (d).....................................................*
315(b)...............................................................7.11
315(e)..................................................................*
316(a)(1)......................................................7.09, 7.10
316(a)(2)...........................................................11.01
316(a)(last sentence)................................................6.04
316(b)...............................................................7.08
316(c)............................................................6.01(b)
317(a).........................................................7.03, 7.05
317(b)...............................................................3.04
318(a)..............................................................13.08
_____________
*Intentionally deleted.
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS................................................................... 1
ARTICLE I
DEFINITIONS
ARTICLE II
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF EQUIPMENT CERTIFICATES
Section 2.01. Amount Unlimited; Issuable in Series; Series
Supplements....................................... 12
Section 2.02. Acquisition of Equipment Certificates.............. 15
Section 2.03. Initial Certificateholders as Grantors............. 17
Section 2.04. Limitation of Powers............................... 17
Section 2.05. Execution of Pass Through Certificates............. 17
Section 2.06. Certificate of Authentication...................... 18
Section 2.07. Form and Denomination of Pass Through Certificates. 18
Section 2.08. Registration, Transfer and Exchange................ 19
Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass
Through Certificates.............................. 20
Section 2.10. Cancellation of Pass Through Certificates; Destruction
Thereof........................................... 21
Section 2.11. Temporary Pass Through Certificates................ 21
Section 2.12. Pass Through Certificates Issuable in the Form of a
Registered Global Certificate..................... 22
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Covenants of the Company........................... 24
Section 3.02. Offices for Payments; Registrar.................... 25
Section 3.03. Representations and Warranties of the Pass Through
Trustee........................................... 26
Section 3.04. Paying Agents...................................... 27
Section 3.05. No Representations or Warranties as to Documents... 28
Section 3.06. Payments from Trust Property Only.................. 28
Section 3.07. Limitation of the Company's Liability.............. 28
<PAGE>
ARTICLE IV
CERTIFICATEHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE PASS THROUGH TRUSTEE
Section 4.01. Certificateholder Lists; Ownership of Pass Through
Certificates...................................... 29
Section 4.02. Disclosure of Certificateholder Lists.............. 29
Section 4.03. Reports by the Company............................. 29
Section 4.04. Reports by the Pass Through Trustee................ 30
ARTICLE V
RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY
Section 5.01. Certificate Account and Special Payments Account... 30
Section 5.02. Distributions from Certificate Account and Special
Payments Account.................................. 31
Section 5.03. Statements to Certificateholders................... 33
Section 5.04. Investment of Special Payment Moneys............... 33
Section 5.05. Withholding Taxes.................................. 34
ARTICLE VI
CONCERNING THE CERTIFICATEHOLDERS
Section 6.01. Evidence of Action Taken by Certificateholders..... 35
Section 6.02. Proof of Execution of Instruments and of Holding of
Certificates...................................... 35
Section 6.03. Certificateholders to Be Treated as Owners......... 35
Section 6.04. Pass Through Certificates Owned by the Company and
Related Owner Trustees Deemed Not Outstanding..... 36
Section 6.05. Right of Revocation of Action Taken................ 37
Section 6.06. ERISA.............................................. 37
ARTICLE VII
REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS
Section 7.01. Events of Default.................................. 38
Section 7.02. Incidents of Sale of Equipment Certificates........ 40
Section 7.03. Pass Through Trustee May Prove Debt................ 41
Section 7.04. Remedies Cumulative................................ 42
<PAGE>
Section 7.05. Suits for Enforcement.............................. 42
Section 7.06. Discontinuance of Proceedings...................... 42
Section 7.07. Limitations on Suits by Certificateholders......... 43
Section 7.08. Unconditional Right of Certificateholders to Receive
Principal, Interest and Premium, and to Institute
Certain Suits..................................... 43
Section 7.09. Control by Certificateholders...................... 44
Section 7.10. Waiver of Past Events of Default................... 44
Section 7.11. Notice of Pass Through Defaults.................... 45
ARTICLE VIII
CONCERNING THE PASS THROUGH TRUSTEE
Section 8.01. Acceptance by Pass Through Trustee................. 46
Section 8.02. Pass Through Trustee's Liens....................... 46
Section 8.03. Certain Rights of the Pass Through Trustee......... 46
Section 8.04. Pass Through Trustee Not Responsible for Recitals.. 48
Section 8.05. Pass Through Trustee and Agents May Hold Pass
Through Certificates; Collections................. 48
Section 8.06. Moneys Held by Pass Through Trustee................ 48
Section 8.07. Right of Pass Through Trustee to Rely on Officer's
Certificate....................................... 49
Section 8.08. Compensation....................................... 49
ARTICLE IX
INDEMNIFICATION OF
PASS THROUGH TRUSTEE BY THE COMPANY
ARTICLE X
SUCCESSOR TRUSTEES
Section 10.01. Resignation and Removal of Pass Through Trustee;
Appointment of Successor.......................... 50
Section 10.02. Persons Eligible for Appointment as Pass Through
Trustee........................................... 52
Section 10.03. Acceptance of Appointment by Successor Trustee..... 53
Section 10.04. Merger, Conversion, Consolidation or Succession to
Business of Pass Through Trustee.................. 55
Section 10.05. Appointment of Separate Pass Through Trustees...... 55
Section 10.06. Preferential Claims................................ 57
<PAGE>
ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO THIS
PASS THROUGH AGREEMENT AND OTHER DOCUMENTS
Section 11.01. Supplemental Agreements Without Consent of
Certificateholders................................ 58
Section 11.02. Supplemental Agreements With Consent of
Certificateholders................................ 60
Section 11.03. Effect of Supplemental Agreements.................. 61
Section 11.04. Documents to Be Given to Trustee................... 61
Section 11.05. Notation on Pass Through Certificates in Respect of
Supplemental Agreements........................... 62
Section 11.06. Trust Indenture Act................................ 62
Section 11.07. Revocation and Effect of Consents.................. 62
Section 11.08. Amendments, Waivers, etc., of Related Indenture
Documents.......................................... 62
ARTICLE XII
TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS
Section 12.01. Termination of Pass Through Trusts................. 63
Section 12.02. Application by Pass Through Trustee of Funds
Deposited for Payment of Pass Through
Certificates...................................... 64
Section 12.03. Repayment of Moneys Held by Paying Agent........... 64
Section 12.04. Transfer of Moneys Held by Pass Through
Trustee and Paying Agent Unclaimed for Two Years
and Eleven Months................................. 64
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Capacity in Which Acting........................... 64
Section 13.02. No Legal Title to Trust Property in
Certificateholders................................ 65
Section 13.03. Certificates Nonassessable and Fully Paid.......... 65
Section 13.04. Pass Through Agreement for the Benefit of the
Company, the Pass Through Trustee and the
Certificateholders................................ 65
Section 13.05. Limitation on Rights of Certificateholders......... 65
Section 13.06. Notices............................................ 66
Section 13.07. Officer's Certificate and Opinion of Counsel;
<PAGE>
Statements to Be Contained Therein................ 67
Section 13.08. Conflict of Any Provision of Pass Through Agreement
with the Trust Indenture Act...................... 68
Section 13.09. Severability....................................... 68
Section 13.10. No Oral Modifications or Continuing Waivers........ 68
Section 13.11. Successors and Assigns............................. 68
Section 13.12. Headings........................................... 68
Section 13.13. Normal Commercial Relations........................ 68
Section 13.14. Governing Law; Counterpart Form.................... 69
Section 13.15. Distributions Due on Days Other than Business
Days.............................................. 69
Section 13.16. Registration of Equipment Certificates in Name of
Subordination Agent............................... 69
Exhibit A Form of Pass Through Certificate
Exhibit B Form of Series Supplement
<PAGE>
PASS THROUGH TRUST AGREEMENT
PASS THROUGH TRUST AGREEMENT dated as of June 1, 1999, between
FEDERAL EXPRESS CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "Company"), and THE BANK OF NEW YORK, a
state banking corporation, as Pass Through Trustee (together with any
successor hereunder or under any Pass Through Trust as herein provided, the
"Pass Through Trustee").
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, from time to time the Company will enter into a Series
Supplement with the Pass Through Trustee named therein in accordance with this
Pass Through Agreement pursuant to which the Pass Through Trustee will declare
the creation of a separate Pass Through Trust for the benefit of the
Certificateholders of the Series of Pass Through Certificates to be issued
pursuant to such Pass Through Trust, and the initial Certificateholders of
such Series, as the grantors of such Pass Through Trust, by their respective
acceptances of such Pass Through Certificates, will join in the creation of
such Pass Through Trust;
WHEREAS, the Pass Through Certificates of each Series will
evidence fractional undivided interests in the Pass Through Trust pursuant to
which they will be issued, and will have no rights, benefits or interest in
respect of any other separate Pass Through Trust or the Trust Property held in
any such other Pass Through Trust subject, however, to the provisions of any
Intercreditor Agreement to which one or more Pass Through Trusts may be a
party;
WHEREAS, for each Pass Through Trust, the Pass Through Trustee
will purchase one or more issues of Equipment Certificates of the same interest
rate and ranking in respect of priority of payment as, and final maturity
dates not later than the final scheduled Regular Distribution Date of, the
Series of Pass Through Certificates to be issued in respect of such Pass
Through Trust and will hold such Equipment Certificates in trust as Trust
Property for the benefit of the Certificateholders of such Series;
WHEREAS, to facilitate the sale of Equipment Certificates to,
and the purchase of Equipment Certificates by, the Pass Through Trustee on
behalf of each such Pass Through Trust, the Company has duly authorized the
execution and delivery of this Pass Through Agreement and each Series
Supplement as the "issuer," as such term is defined in and solely for purposes
of the Securities Act, of the Pass Through Certificates to be issued in
respect of each Pass Through
<PAGE>
Trust and as the "obligor," as such term is defined in and solely for
purposes of the Trust Indenture Act, with respect to all such Pass Through
Certificates and is undertaking to perform certain administrative duties
hereunder and to pay the fees and expenses of the Pass Through Trustee;
WHEREAS, this Pass Through Agreement, as amended or
supplemented from time to time, is subject to the provisions of the Trust
Indenture Act and shall, to the extent applicable, be governed by such
provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
The following terms (except as otherwise expressly provided or
unless the context otherwise clearly requires) for all purposes of this Pass
Through Agreement have the respective meanings specified in this Article I, as
amended or supplemented by the provisions of the Series Supplement for a
particular Series. All other terms used in this Pass Through Agreement that
are defined in the Trust Indenture Act or the definitions of which in the
Securities Act are referred to in the Trust Indenture Act (except as herein
otherwise expressly provided or unless the context otherwise clearly
requires), have the meanings assigned to such terms in the Trust Indenture Act
and in the Securities Act.
All accounting terms used and not expressly defined herein have
the meanings given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" means the
accounting principles that are generally accepted at the date or time of any
computation or otherwise at the date hereof.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Pass Through Agreement as a whole and not to any
particular Article, Section or other subdivision. References to designated
"Articles," "Sections," "subsections" and other subdivisions of this Pass
Through Agreement are to the designated Articles, Sections, subsections and
other subdivisions of this Pass Through Agreement. The terms defined in this
Article include the plural as well as the singular.
"Affiliate," has for any Person, the meaning specified in Rule
0-2 under the Trust Indenture Act.
<PAGE>
"Business Day" means, for any Series, any day other than
Saturday, Sunday or other day on which commercial banks in New York, New York
or Memphis, Tennessee, or any other city in which the Pass Through Trustee for
the Pass Through Trust for such Series maintains an office for the receipt or
disbursement of funds for the transactions contemplated herein are authorized
or required by law to close.
"Certificate Account" means, for any Pass Through Trust, the
account or accounts created and maintained for such Pass Through Trust
pursuant to Section 5.01(a) hereof and the related Series Supplement.
"Certificateholder" means, for any Series, the Person who is the
registered holder of any Pass Through Certificate as evidenced on the Register
for such Series.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission of the
United States, or if at any time after the execution and delivery of this Pass
Through Agreement such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body performing such
duties on such date.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of any Intercreditor Agreement.
"Corporate Trust Office" means the office of the Pass Through
Trustee identified in Section 13.06 hereof or such other office as the Pass
Through Trustee shall have specified by notice in writing to the Company and
the Certificateholders of each Series, or the office of any successor Pass
Through Trustee.
"Cut-off Date for Pass Through Trust" means, for any Pass
Through Trust, the date specified as such in the related Series Supplement.
"Delivery Date" means, for any Pass Through Trust, the date
specified in the related Series Supplement for the purchase of the related
Equipment Certificates, which date may be delayed for any such Equipment
Certificates as provided in Section 2.02 hereof.
"Delayed Delivery Notice" means, for any Pass Through Trust, a
certificate signed by a Responsible Officer of the Company (i) requesting that
the Pass Through Trustee temporarily delay purchase of any related Equipment
Certificates to a date later than the applicable Issuance Date, (ii) stating
the
<PAGE>
amount of the purchase price of each such Equipment Certificate and the
aggregate purchase price of all such Equipment Certificates, (iii) stating the
reasons for such delay and (iv) with respect to any Participation Agreement for
such delayed Equipment Certificates, either (1) setting or resetting the
Delivery Date (which shall be on or prior to the applicable Cut-off Date for
Pass Through Trust), or (2) indicating that such Delivery Date will be set by
subsequent written notice not less than one Business Day prior to such new
Delivery Date (which shall be on or prior to the applicable Cut-off Date for
Pass Through Trust).
"Delayed ECs" means, for any Pass Through Trust, any Equipment
Certificates that are the subject of a Delayed Delivery Notice.
"Deposit Trust" means a separate trust created pursuant to a
Deposit Trust Agreement.
"Deposit Trust Account" means, for any Deposit Trust, the
deposit account established and maintained for such Deposit Trust pursuant to
the related Deposit Trust Agreement.
"Deposit Trust Agreement" means an agreement in form and
substance reasonably satisfactory to the Company and the Pass Through Trustee
for the purposes described in Section 2.02 hereof, between the Company, as
depositor, the Pass Through Trustee and the Deposit Trustee.
"Deposit Trust Funds" means, for any Delayed ECs, an amount
equal to the purchase price of such Delayed ECs.
"Deposit Trustee" means, for any Deposit Trust, the Person,
acceptable to the Pass Through Trustee, defined as such in the related Deposit
Trust Agreement.
"Depository" means, for any Series, the depository of the
Registered Global Certificate, if any, representing the Pass Through
Certificates of such Series and any successor to such depository appointed by
the Company pursuant hereto. Such depository initially shall be The
Depository Trust Company, a New York corporation, or any successor thereto
registered under the Exchange Act or other applicable statute or regulation.
"Distribution Date" means, for any Series, any Regular
Distribution Date or Special Distribution Date or both for such Series.
"Dollars" and "$" mean lawful currency of the United States of
America.
<PAGE>
"Equipment Certificate" means, for any Pass Through Trust, any
of the Equipment Trust Certificates or Equipment Purchase Certificates, issued
pursuant to an Indenture and described in, or on a schedule attached to, the
Series Supplement for such Pass Through Trust.
"Equipment Purchase Certificate" means, for any Pass Through
Trust, any "Equipment Purchase Certificate," as such term is defined in the
related Indenture, issued by the Company pursuant to an Indenture and
described in, or on a schedule attached to, the Series Supplement for such
Pass Through Trust, which is to be held by the Pass Through Trustee as part of
the Trust Property of such Pass Through Trust.
"Equipment Trust Certificate" means, for any Pass Through
Trust, any "Equipment Trust Certificate," as such term is defined in the
related Indenture, issued by an Owner Trustee pursuant to such Indenture and
described in, or on a schedule attached to, the Series Supplement for such
Pass Through Trust, which is to be held by the Pass Through Trustee as part of
the Trust Property of such Pass Through Trust.
"Event of Default" has the meaning specified in Section 7.01
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fractional Undivided Interest" means, for any Pass Through
Certificate, the fractional undivided interest in the related Pass Through
Trust that is evidenced thereby.
"Government Obligations" means direct obligations of the United
States of America which are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture" means (i) for any Equipment Trust Certificate, the
trust indenture and security agreement among the Indenture Trustee, the Owner
Trustee and, if applicable, the Company pursuant to which such Equipment Trust
Certificate is issued and (ii) for any Equipment Purchase Certificate, the
trust indenture and security agreement between the Indenture Trustee and the
Company pursuant to which such Equipment Purchase Certificate is issued, in
each case as such agreement may be modified, supplemented or amended from time
to time in accordance with the related Indenture Documents.
"Indenture Default" means, for any Indenture, any event or
condition defined as a "Default" in such Indenture.
<PAGE>
"Indenture Documents" means (i) for any Equipment Trust
Certificate, the related Indenture, the related Trust Agreement and the
related Lease, in each case as defined in such Indenture, and the related
Participation Agreement and (ii) for any Equipment Purchase Certificate, the
related Indenture, the related Indenture Addendum, as defined in such
Indenture, and the related Participation Agreement.
"Indenture Event of Default" means, for any Indenture, any
event or condition defined as an "Indenture Event of Default" in such
Indenture.
"Indenture Trustee" means, for any Equipment Certificate, the
Person defined as such in the related Indenture.
"Initial Regular Distribution Date" means, for any Pass Through
Trust, the first Regular Distribution Date on which a Scheduled Payment is to
be made following the Issuance Date for such Pass Through Trust.
"Intercreditor Agreement" means any agreement by and among one
or more Pass Through Trusts, one or more Liquidity Providers and a
Subordination Agent providing for the distribution of payments made in respect
of Equipment Certificates held by such Pass Through Trusts.
"Issuance Date" means, for any Pass Through Trust, the date of
the issuance of the related Pass Through Certificates.
"Lease" means, for any Equipment Trust Certificate, the
agreement between the Company, as lessee, and an Owner Trustee, as lessor,
that is defined as the "Lease" in the related Indenture.
"Letter of Representations" means, for any Series, a letter
from the Company and the Pass Through Trustee to, and accepted by, the
Depository in form and substance satisfactory to the Company and the Pass
Through Trustee for the purposes of the related Series Supplement, as such
letter may be modified or supplemented, or any successor letter thereto.
"Lien" means any mortgage, pledge, lien, charge, disposition of
title, encumbrance, lease or security interest.
"Liquidity Facility" means, with respect to the Pass Through
Certificates of any Series, any revolving credit agreement or similar facility
or letter of credit relating to the Pass Through Certificates of such Series
between a Liquidity Provider and a Subordination Agent, as amended, replaced,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms of any Intercreditor Agreement.
<PAGE>
"Liquidity Provider" means, with respect to the Pass Through
Certificates of any Series, a bank or other financial institution that agrees
to provide Liquidity Facilities with respect to the Pass Through Certificates
of such Series for the benefit of the Certificateholders.
"Majority in Interest of Certificateholders" means, for any
Series at any time, Pass Through Certificates of such Series then Outstanding
(or the proxy therefor) representing in the aggregate not less than a majority
of the aggregate Fractional Undivided Interests of the Pass Through
Certificates then Outstanding under the related Pass Through Trust.
"Officer's Certificate" means a certificate signed by a
Responsible Officer of the Company, any Indenture Trustee or any Owner
Trustee, as the case may be, delivered to the Pass Through Trustee. Each such
certificate shall include the statements provided for in Section 13.07 hereof.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of counsel (a) for the Company may be (i) an attorney employed
by the Company who is generally empowered to deliver such written opinions, or
(ii) other counsel designated by the Company and reasonably satisfactory to
the Pass Through Trustee and (b) for any Owner Trustee or Indenture Trustee,
an attorney selected by such Person and reasonably satisfactory to the Pass
Through Trustee and the Company.
"Outstanding" means, when used with respect to Pass Through
Certificates of any Series, as of the date of determination and subject to the
provisions of Section 6.04 hereof, all Pass Through Certificates theretofore
authenticated and delivered for such Series, with the exception of the
following:
(i) Pass Through Certificates theretofore cancelled by
the Pass Through Trustee or delivered to the Pass Through
Trustee for cancellation pursuant to Section 2.10 hereof;
(ii) All Pass Through Certificates of such Series if
money in the amount required to make the final distribution
thereon in accordance with Section 12.01 hereof has been
theretofore deposited with the Pass Through Trustee in trust
for the Certificateholders of such Series pending such final
distribution; and
(iii) Pass Through Certificates in exchange for or in
lieu of which other Pass Through Certificates have been
authenticated and delivered pursuant to Article II hereof.
<PAGE>
"Overdue Scheduled Payment" means, for any Pass Through Trust,
any Scheduled Payment that is not received within seven Business Days after
the Regular Distribution Date applicable to such Scheduled Payment.
"Owner Participant" means, for any Equipment Trust Certificate,
the Person defined as such in the related Indenture.
"Owner Trustee" means, for any Equipment Trust Certificate,
the Person defined as such in the related Indenture.
"Participation Agreement" means (i) for any Equipment Trust
Certificate, the agreement among the Company, the Owner Participant, the
Owner Trustee, the Indenture Trustee, the Subordination Agent, if applicable,
the Pass Through Trustee and, if applicable, each Original Loan Participant
(as defined in such Participation Agreement), that is defined as the
"Participation Agreement" in the related Indenture and pursuant to which the
Pass Through Trustee agrees to purchase such Equipment Trust Certificate upon
the issuance thereof by such Owner Trustee and (ii) for any Equipment Purchase
Certificate, the agreement among the Company, the Indenture Trustee and the
Pass Through Trustee that is defined as the "Transfer Agreement" in the
related Indenture and pursuant to which the Pass Through Trustee agrees to
purchase such Equipment Purchase Certificate from the Banks (as defined in
such Participation Agreement).
"Pass Through Agreement," "this Pass Through Agreement"
and other like words mean this Pass Through Trust Agreement as the same may
be modified, supplemented or amended from time to time in accordance with the
provisions hereof, but does not include, unless otherwise specified, any
Series Supplement.
"Pass Through Certificate" means, for any Series, any of the
certificates executed, authenticated and delivered for such Series by the
Pass Through Trustee, in accordance with this Pass Through Agreement and
pursuant to the related Series Supplement.
"Pass Through Default" means, for any Pass Through Trust, an
Event of Default or an event or condition that, with the giving of notice
or the lapse of time or both, would become an Event of Default.
"Pass Through Trust" means a separate trust created in
accordance with this Pass Through Agreement by a Series Supplement
incorporating the provisions hereof, as such provisions may be amended or
supplemented thereby, the estate of which consists of the related Trust
Property.
<PAGE>
"Pass Through Trustee" means the institution executing this
Pass Through Agreement as Pass Through Trustee, or its successor in
interest, and any successor or other trustee appointed as provided herein;
provided that if the same institution is not acting as the Pass Through
Trustee in respect of all Series, the phrase "the Pass Through Trustee"
shall, unless the context otherwise requires, mean, as to any Series, the
institution named in the applicable Series Supplement as Pass Through
Trustee in respect of such Series, or its successor in interest and any
successor or other trustee appointed as provided herein.
"Paying Agent" has the meaning set forth in Section 3.04
hereof.
"Permitted Investments" means (a) direct obligations of the
United States of America or obligations fully guaranteed by the United
States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's
Ratings Group and Moody's Investors Service, Inc., respectively or, if such
ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers; and (d)
overnight repurchase agreements with respect to the securities described in
clause (a) above entered into with an office of a bank or trust company which
is located in the United States of America of any bank or trust company which
is organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500 million.
"Person" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, nonincorporated organization or government or any agency or political
subdivision thereof.
"Pool Balance" means, unless otherwise provided in the Series
Supplement, for any Pass Through Trust, as of any date of determination the
aggregate unpaid principal amount of the Equipment Certificates that
constitute Trust Property of such Pass Through Trust on such date plus the
amount of the principal payments on such Equipment Certificates held by the
Pass Through Trustee and not yet distributed plus the amount of any moneys
transferred to the Company and deposited in the related Deposit Trust
Account (other than earnings thereon and without giving effect to any
losses on investments thereof). The Pool Balance as of any Regular
Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, on such Equipment
Certificates and the distribution thereof being made on that date.
<PAGE>
"Pool Factor" means, unless otherwise provided in the Series
Supplement, for any Pass Through Trust, as of any date of determination
the quotient (rounded to the seventh decimal place) computed by dividing (i)
the Pool Balance by (ii) the aggregate original amount of the Pass Through
Certificates of the related Series. The Pool Factor as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on such Equipment Certificates and
the distribution thereof being made on that date.
"Principal Corporate Trust Office" means the office of the Pass
Through Trustee located at 101 Barclay Street, New York, New York 10286, or
the office designated as such by the Pass Through Trustee.
"PTC Event of Default," if applicable, has the meaning set
forth in the related Series Supplement.
"Record Date," for any Series, means, (i) for any Regular
Distribution Date, the date specified in the related Series Supplement as the
Record Date for such Regular Distribution Date and (ii) for any Special
Distribution Date, the 15th day preceding such Special Distribution Date, in
any event, whether or not such date is a Business Day.
"Register" has the meaning set forth in Section 3.02 hereof.
"Registered Global Certificate" means, for any Series,
each Pass Through Certificate, if any, issued to the Depository in accordance
with Article II hereof and bearing the legend prescribed in Section 2.12(a)
hereof.
"Registrar" has the meaning set forth in Section 3.02 hereof.
"Regular Distribution Date" means, for any Pass Through Trust,
any date specified in the related Series Supplement for the distribution of
any Scheduled Payment from such Pass Through Trust to the related
Certificateholders.
"Related Indenture Trustee" means, for any Pass Through
Trust, any Indenture Trustee under an Indenture relating to any Equipment
Certificate that constitutes Trust Property thereof, and "Related Indenture
Trustees" means all such Indenture Trustees for all such Equipment
Certificates constituting Trust Property thereof.
"Related Owner Participant" means, for any Pass Through Trust,
any Owner Participant under a Trust Agreement relating to any Equipment
Trust Certificate that constitutes Trust Property, and "Related Owner
Participants"
<PAGE>
means all such Owner Participants for all such Equipment Trust Certificates
constituting Trust Property thereof.
"Related Owner Trustee" means, for any Pass Through Trust,
any Owner Trustee under a Trust Agreement relating to any Equipment Trust
Certificate that constitutes Trust Property, and "Related Owner Trustees" means
all such Owner Trustees for all such Equipment Trust Certificates constituting
Trust Property thereof.
"Responsible Officer" means the president or any vice president;
or, in the case of the Pass Through Trustee, an officer or authorized agent
in its Corporate Trust Department.
"Scheduled Payment" means, for any Pass Through Trust, any
scheduled payment of principal of (whether by installment or redemption or
otherwise) and interest on any Equipment Certificate that constitutes Trust
Property thereof to be made in the amounts and on the date set forth for such
payment in such Equipment Certificate, but does not include any Overdue
Scheduled Payment.
"Securities Act" means the Securities Act of 1933, as amended.
"Series" means a separate series of Pass Through Certificates
issued pursuant to this Pass Through Agreement and a Series Supplement.
"Series Supplement" means an agreement executed and
delivered by the Company and the Pass Through Trustee in accordance with this
Pass Through Agreement, incorporating the provisions hereof, as amended or
supplemented thereby, and creating a separate Pass Through Trust for the
benefit of the Certificateholders of the Series of Pass Through Certificates
to be issued under such Pass Through Trust.
"Special Distribution Date" means, for any Pass Through
Trust, any date specified in the related Series Supplement for the
distribution of any Special Payment from such Pass Through Trust to the
related Certificateholders.
"Special Payment" means, for any Pass Through Trust, any
payment (including any Overdue Scheduled Payment) other than a Scheduled
Payment on any Equipment Certificate that constitutes Trust Property thereof,
any proceeds from the sale of such Equipment Certificate pursuant to Article
VII hereof or any payment by the Company pursuant to the last two paragraphs
of Section 2.02(b) hereof.
<PAGE>
"Special Payments Account" means, for any Pass Through Trust,
the account or accounts created and maintained for such Pass Through Trust
pursuant to Section 5.01(b) hereof and the related Series Supplement.
"Specified Investments" has, for any Deposit Trust, the
meaning set forth for such term in the related Deposit Trust Agreement.
"Subordination Agent" has the meaning specified therefor in
any Intercreditor Agreement.
"Triggering Event" has the meaning specified therefor in any
Intercreditor Agreement.
"Trust Agreement" means, for any Equipment Trust Certificate,
the agreement between an Owner Trustee and an Owner Participant
that is defined as the "Trust Agreement" in the related Indenture.
"Trust Indenture Act" means (except as otherwise provided in
Section 11.06) the Trust Indenture Act of 1939, as amended, as in force at
the date as of which this Pass Through Agreement was first qualified under
such Act.
"Trust Property" means, for any Pass Through Trust, (i) all
money, instruments, including the related Equipment Certificates, and other
property held as the property of such Pass Through Trust, including all
distributions thereon and proceeds thereof and (ii) all rights of the Pass
Through Trust and the Pass Through Trustee, on behalf of the Pass Through
Trust, under any Intercreditor Agreement or any Liquidity Facility,
including, without limitation, all rights to receive certain payments
thereunder, and all monies paid to the Pass Through Trustee on behalf of
the Pass Through Trust pursuant to any Intercreditor Agreement or any
Liquidity Facility.
ARTICLE II
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF EQUIPMENT CERTIFICATES
Section 2.01. Amount Unlimited; Issuable in Series; Series
Supplements. (a) The aggregate amount of Pass Through Certificates that may be
authenticated and delivered in accordance with this Pass Through Agreement is
unlimited.
The Pass Through Certificates may be issued from time to time
in one or more Series, each Series relating to a separate Pass Through Trust,
and shall be designated generally as the "Pass Through Certificates," with
further designations
<PAGE>
added or incorporated in the title for the Pass Through Certificates of any
Series as specified in the related Series Supplement. Each Pass Through
Certificate shall bear upon its face the designation so selected for the
Series to which it belongs. All Pass Through Certificates of the same
Series shall be substantially identical except as to denomination and as
may otherwise be provided in the related Series Supplement.
The Pass Through Certificates of each Series will evidence
fractional undivided interests in the separate Pass Through Trust formed by
the related Series Supplement, and, except as may be contained in any
Intercreditor Agreement, will have no rights, benefits or interest in respect
of any other separate Pass Through Trust or the Trust Property held in such
other Pass Through Trust. All Pass Through Certificates of the same Series
shall be in all respects equally and ratably entitled to the benefits of the
related Pass Through Trust without preference, priority, or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Pass Through Agreement and
the related Series Supplement.
(b) The following matters shall be established for the Pass
Through Certificates of each Series in a Series Supplement executed and
delivered by the Company and the Pass Through Trustee:
(1) the formation of the Pass Through Trust in which the
Pass Through Certificates of such Series evidence fractional
undivided interests and its designation (which designation
shall distinguish such Pass Through Trust from each other Pass
Through Trust);
(2) the specific title of the Pass Through Certificates
of such Series (which title shall distinguish the Pass Through
Certificates of the Series from each other Series);
(3) subject to Section 2.02(a) hereof, any limit upon the
aggregate amount of the Pass Through Certificates of such
Series that may be authenticated and delivered under this Pass
Through Agreement;
(4) the related Cut-off Date for the Pass Through Trust;
(5) the related Regular Distribution Dates;
(6) the related Special Distribution Dates;
(7) if other than as provided in Section 3.02 hereof, the
Registrar or the Paying Agent for such Series, including any
<PAGE>
Co-Registrar or additional Paying Agent;
(8) if other than as provided in Section 2.07 hereof, the
denominations in which the Pass Through Certificates of such
Series are issuable;
(9) the specific form of the Pass Through Certificates
of such Series and whether or not the Pass Through Certificates
of such Series are to be issued as one or more Registered
Global Certificates and if the Pass Through Certificates are to
be issued as one or more Registered Global Certificates, the
Depository for the Registered Global Certificates and the
Letter of Representations;
(10) a description of the Equipment Certificates to be
acquired by and held in the related Pass Through Trust and of
the related Indenture Documents;
(11) provisions with respect to the terms for which the
definitions set forth in Article I hereof permit or require
further specification in the related Series Supplement;
(12) whether the Pass Through Certificates are eligible
for purchase by ERISA Plans (as defined in Section 6.06 hereof)
and, if applicable, any restrictions on purchases of Pass
Through Certificates by ERISA Plans;
(13) the acceptance of appointment by the institution
named to act as Pass Through Trustee with respect to such
Series if different from the institution executing this Pass
Through Agreement or its successor;
(14) whether such series will be subject to an
Intercreditor Agreement and, if so, the specific designation of
such Intercreditor Agreement;
(15) any other terms of the Pass Through Certificates of
such Series (which terms shall not be inconsistent with the
provisions of the Trust Indenture Act as in effect at the time
of the execution and delivery of such Series Supplement or
adversely affect the interest of the Certificateholders of any
Series outstanding at the time), including any terms that may
be required or advisable under United States laws or
regulations or advisable in connection with the marketing of the
Series;
<PAGE>
(16) a description of any cross-default or
cross-collateralization provisions in the related Indenture; and
(17) a description of any subordination provisions among
the holders of Pass Through Certificates, including any
cross-subordination provisions among the holders of Pass Through
Certificates in separate Pass Through Trusts.
(c) At any time and from time to time after the execution and
delivery of this Pass Through Agreement, the Company and the Pass Through
Trustee may execute and deliver one or more Series Supplements, each forming a
separate Pass Through Trust and establishing the terms of the Pass Through
Certificates of the related Series, and pursuant to which the Pass Through
Certificates of such Series shall be executed, authenticated and delivered by
the Pass Through Trustee to the Person specified by the Company upon request
of the Company and upon satisfaction of any conditions precedent set forth in
the related Series Supplement on the Issuance Date for such Series.
Section 2.02. Acquisition of Equipment Certificates. (a) Pass
Through Certificates of a Series executed, authenticated and delivered by the
Pass Through Trustee upon request of the Company in accordance with Section
2.01(c) hereof shall equal the aggregate principal amount of the Equipment
Certificates to be purchased by the Pass Through Trustee pursuant to the
related Participation Agreements, and evidence the entire ownership of the
related Pass Through Trust. The Pass Through Trustee shall issue and sell
such Pass Through Certificates, in authorized denominations and in such
Fractional Undivided Interests, so as to result in the receipt of
consideration in an amount equal to the aggregate principal amount of such
Equipment Certificates and, concurrently therewith, the Pass Through Trustee
shall purchase, pursuant to the terms and conditions of the Participation
Agreements, the Equipment Certificates (except Delayed ECs, if any) at a
purchase price equal to the amount of such consideration so received. Except
as provided in Sections 2.08 and 2.09 hereof, the Pass Through Trustee shall
not execute, authenticate or deliver Pass Through Certificates of such Series
in excess of the aggregate amount determined in accordance with this
subsection (a). The provisions of this subsection (a) are subject to the
provisions of subsection (b) below.
(b) Unless otherwise specified in the Series Supplement, if,
on or prior to an Issuance Date, the Company delivers to the Pass Through
Trustee a Delayed Delivery Notice relating to one or more Delayed ECs, then
(i) the Pass Through Trustee shall postpone the purchase of the specified
Delayed ECs, (ii) the Company, the Pass Through Trustee and the Deposit
Trustee shall form a Deposit Trust, (iii) the Pass Through Trustee shall
transfer to the Company the Deposit Trust Funds relating to such Delayed ECs
and (iv) the Company shall deposit such
<PAGE>
Deposit Trust Funds into the Deposit Trust Account for such Deposit Trust.
The Deposit Trust Funds so deposited shall be invested pursuant to the
related Deposit Trust Agreement by the Deposit Trustee at the direction and
risk of, and for the benefit of, the Company in Specified Investments. The
Company agrees that withdrawals shall be made from any Deposit Trust
Account only as provided in the related Deposit Trust Agreement.
Upon notice from the Company on one or more occasions that any
Delayed ECs are available for purchase and upon the satisfaction of the closing
conditions specified in the applicable Participation Agreements and the related
Series Supplement on or prior to the related Cut-off Date for Pass Through
Trust, the Company shall cause the related Deposit Trust Funds to be withdrawn
from the related Deposit Trust Account and paid to the Pass Through Trustee,
free and clear of any Lien under the Deposit Trust Agreement, and the Pass
Through Trustee shall purchase the applicable Delayed ECs with such Deposit
Trust Funds. The purchase price for such Delayed ECs shall equal the
principal amount of such Delayed ECs.
On the Initial Regular Distribution Date for any Pass Through
Trust for which Delayed ECs are purchased pursuant to this subsection, the
Company shall pay, in immediately available funds, to the Pass Through Trustee
an amount equal to the interest that would have accrued on any Delayed ECs
purchased after the related Issuance Date as if such Delayed ECs had been
purchased on such Issuance Date, from such Issuance Date to, but not
including, the date of the purchase of such Delayed ECs for such Pass Through
Trust.
If the Company notifies the Pass Through Trustee prior to any
Cut-off Date for Pass Through Trust that any related Delayed ECs will not be
issued on or prior to such Cut-off Date for Pass Through Trust for any reason,
on the next Special Distribution Date for such Pass Through Trust occurring
more than 20 days following the date of such notice (i) the Company shall (A)
pay to the Pass Through Trustee for deposit in the related Special Payments
Account, in immediately available funds, an amount equal to the interest that
would have accrued on the Delayed ECs designated in such notice at a rate
equal to the interest rate applicable to the related Series from the related
Issuance Date to, but not including, such Special Distribution Date and (B)
cause an amount equal to the amount of Deposit Trust Funds that would have
been used to purchase such Delayed ECs to be withdrawn from the related
Deposit Trust Account and paid to the Pass Through Trustee, free and clear of
any Lien under the Deposit Trust Agreement, and (ii) the Pass Through Trustee
shall deposit in the related Special Payments Account, upon receipt from the
Deposit Trustee pursuant to the related Deposit Trust Agreement, the amount
received pursuant to clause (i)(B) above, and the amount paid by the Company
pursuant to clause (i)(A) above, and such amounts shall be distributed as a
Special Payment in accordance with the
<PAGE>
provisions hereof.
If, on the Cut-off Date for Pass Through Trust for any Pass
Through Trust, an amount equal to less than all of the Deposit Trust Funds
(other than Deposit Trust Funds referred to in the immediately preceding
paragraph) has been used to purchase related Delayed ECs, on the next Special
Distribution Date for such Pass Through Trust occurring more than 20 days
following such Cut-off Date for Pass Through Trust (i) the Company shall (A)
pay to the Pass Through Trustee for deposit in the related Special Payments
Account, in immediately available funds, an amount equal to the interest that
would have accrued on such Delayed ECs contemplated to be purchased with such
unused Deposit Trust Funds (other than any Deposit Trust Funds referred to in
the immediately preceding paragraph) but not so purchased at a rate equal to
the interest rate applicable to the related Series from the related Issuance
Date to, but not including, such Special Distribution Date and (B) cause such
unused Deposit Trust Funds to be withdrawn from the related Deposit Trust
Account and paid to the Pass Through Trustee, free and clear of any Lien under
the Deposit Trust Agreement, and (ii) the Pass Through Trustee shall deposit
in such Special Payments Account, upon receipt from the Deposit Trustee
pursuant to the related Deposit Trust Agreement, such unused Deposit Trust
Funds received pursuant to clause (i)(B) above, and the amount paid by the
Company pursuant to clause (i)(A) above, and such amounts shall be distributed
as a Special Payment in accordance with the provisions hereof.
Section 2.03. Initial Certificateholders as Grantors. By its
acceptance of any Pass Through Certificate of any Series issued to it under
the related Pass Through Trust, each initial Certificateholder of such Series
as grantor of such Pass Through Trust shall join in the creation and
declaration of such Pass Through Trust.
Section 2.04. Limitation of Powers. Each Pass Through Trust
shall be constituted solely for the purpose of making the investment in the
Equipment Certificates provided for in the related Series Supplement and,
except as set forth herein or in such Series Supplement, the Pass Through
Trustee shall not be authorized or empowered to acquire any other investments
or engage in any other activities and, in particular, the Pass Through Trustee
shall not be authorized or empowered to do anything that would cause such Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes (including as subject to this restriction, acquiring any Aircraft (as
defined in the respective related Indentures) by bidding such Equipment
Certificates or otherwise, or taking any action with respect to any such
Aircraft once acquired).
Section 2.05. Execution of Pass Through Certificates. The Pass
Through Certificates of each Series shall be signed on behalf of the Pass
Through Trustee by a Responsible Officer of the Pass Through Trustee. Such
signatures
<PAGE>
may be the manual or facsimile signatures of such officer and minor errors
or defects in any reproduction of any such signature shall not affect the
validity or enforceability of any Pass Through Certificate which has been
duly authenticated and delivered by the Pass Through Trustee.
If any Responsible Officer of the Pass Through Trustee who
signs any of the Pass Through Certificates subsequently ceases to be such
officer or authorized agent before the Pass Through Certificate so signed is
authenticated and delivered or disposed of by the Pass Through Trustee, such
Pass Through Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Pass Through Certificate had
not ceased to be such officer or authorized agent of the Pass Through Trustee;
and any Pass Through Certificate may be signed on behalf of the Pass Through
Trustee by such person or persons as, at the actual date of the execution of
such Pass Through Certificate, are the proper officers or authorized agents of
the Pass Through Trustee, although at the date of the execution and delivery
of the related Series Supplement any such person was not such officer.
Section 2.06. Certificate of Authentication. The Pass Through
Trustee shall duly authenticate and deliver Pass Through Certificates for each
Series in authorized denominations equaling the aggregate principal amount of
the Equipment Certificates to be purchased for the related Pass Through Trust
by the Pass Through Trustee pursuant to the related Participation Agreements,
and evidencing the entire ownership of the related Pass Through Trust. Only
such Pass Through Certificates of such Series as shall bear thereon a
certificate of authentication substantially in the form set forth in Exhibit
A, executed by the Pass Through Trustee by manual or facsimile signature of a
Responsible Officer, shall be entitled to the benefits of the related Pass
Through Trust or be valid or obligatory for any purpose. Such certificate of
authentication by the Pass Through Trustee upon any Pass Through Certificate
for such Series executed by the Pass Through Trustee shall be conclusive
evidence that the Pass Through Certificate so authenticated has been duly
authenticated and delivered hereunder and that the Certificateholder, as
evidenced on the Register for such Series, is entitled to the benefits of the
related Pass Through Trust.
Section 2.07. Form and Denomination of Pass Through
Certificates. The Pass Through Certificates of each Series shall be
substantially in the form set forth in Exhibit A hereto. The Pass Through
Certificates shall be issuable as registered securities without coupons and
shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as set forth in the related Series Supplement. The
Pass Through Certificates of each Series shall be issued in minimum
denominations of $1,000 and integral multiples thereof and shall be dated the
date of their authentication.
<PAGE>
The Pass Through Certificates of any Series may be issued with
appropriate insertions, omissions, substitutions and variations, and may have
imprinted or otherwise reproduced thereon such legend, not inconsistent with
the provisions of this Pass Through Agreement or the related Series
Supplement, as may be required to comply with any law or with any rules or
regulations pursuant thereto, or with the rules of the Depository or any
securities market in which such Pass Through Certificates are admitted to
trading, or to conform to general usage.
Section 2.08. Registration, Transfer and Exchange. The Pass
Through Trustee will keep at each office or agency to be maintained for any
Series for the purpose as provided in Section 3.02 hereof a Register in which,
subject to such reasonable regulations as it may prescribe, it will register,
and will register the transfer of, Pass Through Certificates of the related
Series as provided in this Article II. Such Register shall be in written form
in the English language.
Upon due presentation for registration of transfer of any Pass
Through Certificate of the related Series at any such office or agency, the
Pass Through Trustee shall execute, authenticate and deliver in the name of
the transferee or transferees a new Pass Through Certificate of such Series in
authorized denominations and for a like aggregate Fractional Undivided
Interest.
Subject to the provisions of Section 2.12 hereof, any Pass
Through Certificate or Pass Through Certificates may be exchanged for a Pass
Through Certificate or Pass Through Certificates of the same Series in other
authorized denominations and for a like aggregate Fractional Undivided
Interest. Pass Through Certificates to be exchanged shall be surrendered at
any office or agency to be maintained by the Pass Through Trustee for the
related Series for the purpose as provided in Section 3.02 hereof, and the
Pass Through Trustee shall execute, authenticate and deliver in exchange
therefor the Pass Through Certificate or Pass Through Certificates which the
Certificateholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously or previously outstanding.
All Pass Through Certificates presented for registration of
transfer, exchange, redemption or payment shall (if so required by the Pass
Through Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Pass Through
Trustee duly executed by, the Certificateholder or such Person's attorney duly
authorized in writing.
The Pass Through Trustee may require payment from the
Certificateholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any exchange or registration of
transfer of Pass Through Certificates. No service charge to the
Certificateholder shall be
<PAGE>
made for any such transaction.
All Pass Through Certificates issued upon any transfer or
exchange of Pass Through Certificates shall evidence ownership in the same
Pass Through Trust and be entitled to the same benefits under this Pass
Through Agreement and the applicable Series Supplement, as the Pass Through
Certificates surrendered upon such transfer or exchange.
Resales or other transfers of Pass Through Certificates
represented by a Registered Global Certificate will be conducted in accordance
with the provisions of this Pass Through Agreement, including without
limitation Section 6.06 hereof, and the rules and procedures of the Depository
applicable to U.S. corporate pass through certificates and without notice to,
or action by, the Pass Through Trustee.
Neither the Company nor the Pass Through Trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of a Registered
Global Certificate or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen
Pass Through Certificates. If any Pass Through Certificate becomes mutilated,
defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee
in its discretion may execute, authenticate and deliver a new Pass Through
Certificate of like Fractional Undivided Interest in the related Pass Through
Trust, bearing a number not contemporaneously or previously outstanding, in
exchange and substitution for the mutilated or defaced Pass Through
Certificate, or in lieu of and in substitution for the Pass Through
Certificate so apparently destroyed, lost or stolen. In every case the
applicant for a substitute Pass Through Certificate shall furnish to the Pass
Through Trustee and any agent of the Pass Through Trustee such security or
indemnity as may be required by them to indemnify and defend and to save each
of them harmless from any such substitution and, in every case of destruction,
loss or theft, evidence to their satisfaction of the apparent destruction,
loss or theft of such Pass Through Certificate and of the ownership thereof.
Upon the issuance of any substitute Pass Through Certificate,
the Pass Through Trustee may require payment from the Certificateholder of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
reasonable fees and expenses of the Pass Through Trustee) connected therewith.
If any Pass Through Certificate of a Pass Through Trust for which a notice of
termination has been or is about to be given pursuant to Section 12.01 hereof
becomes mutilated or defaced or is apparently destroyed, lost or stolen, the
Pass Through Trustee
<PAGE>
may, instead of issuing a substitute Pass Through Certificate, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Pass Through Certificate), if the applicant
for such payment furnishes to the Pass Through Trustee and any agent of the
Pass Through Trustee such security or indemnity as any of them may require
to save each of them harmless from all risks, however remote, resulting
from such payment and, in every case of apparent destruction, loss or
theft, the applicant shall also furnish to the Pass Through Trustee and any
agent of the Pass Through Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Pass Through Certificate and of
the ownership thereof.
Every substitute Pass Through Certificate issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Pass Through
Certificate is apparently destroyed, lost or stolen will constitute conclusive
evidence of the Fractional Undivided Interest in the applicable Pass Through
Trust evidenced by the Pass Through Certificate that it replaces, whether or
not the apparently destroyed, lost or stolen Pass Through Certificate may be
enforceable at any time by anyone and will be entitled to all the benefits of
(but will be subject to all the limitations of rights set forth in) the
applicable Pass Through Trust equally and proportionately with any and all
other Pass Through Certificates duly authenticated and delivered therefor.
All Pass Through Certificates will be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Pass Through Certificates and will
preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
Section 2.10. Cancellation of Pass Through Certificates;
Destruction Thereof. All Pass Through Certificates surrendered for payment,
redemption, registration of transfer or exchange, if surrendered to any agent
of the Pass Through Trustee, shall be delivered to the Pass Through Trustee
for cancellation or, if surrendered to the Pass Through Trustee, shall be
cancelled by it; and no Pass Through Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Pass
Through Agreement or the applicable Series Supplement. The Pass Through
Trustee shall destroy cancelled Pass Through Certificates held by it.
Section 2.11. Temporary Pass Through Certificates. Pending the
preparation of definitive Pass Through Certificates of any Series, the Pass
Through Trustee may execute, authenticate and deliver temporary Pass Through
Certificates for such Series (produced in a form satisfactory to the executing
officer or authorized agent of the Pass Through Trustee, as evidenced by such
<PAGE>
officer's or authorized agent's execution thereof). Such temporary Pass
Through Certificates shall be issuable as registered Pass Through Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Pass Through Certificates of such Series but with such
omissions, insertions and variations as may be appropriate for temporary Pass
Through Certificates, all as may be determined by the executing officer of the
Pass Through Trustee, as evidenced by such officer's or authorized agent's
execution thereof.
Temporary Pass Through Certificates may contain such reference
to any provisions of this Pass Through Agreement or the applicable Series
Supplement as may be appropriate. Every such temporary Pass Through
Certificate shall be executed and authenticated by the Pass Through Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Pass Through Certificates of such Series. Without
unreasonable delay the Company shall furnish definitive Pass Through
Certificates for such Series and thereupon temporary Pass Through Certificates
shall be surrendered in exchange therefor without charge at any office or
agency to be maintained by the Pass Through Trustee for the purpose pursuant
to Section 3.02 hereof, and the Pass Through Trustee shall execute,
authenticate and deliver in exchange for such temporary Pass Through
Certificates such definitive Pass Through Certificates evidencing a like
aggregate Fractional Undivided Interest in the applicable Pass Through Trust
in authorized denominations. Until so exchanged, temporary Pass Through
Certificates shall be entitled to the same benefits under the applicable Pass
Through Trust and this Pass Through Agreement as definitive Pass Through
Certificates of the applicable Series.
Section 2.12. Pass Through Certificates Issuable in the Form
of a Registered Global Certificate. For any Series, at the sole option of the
Company as set forth in the related Series Supplement, this Section 2.12 shall
apply to such Series or may be amended with respect to any Series. To the
extent that the provisions of this Section 2.12 conflict with any other
provisions of this Pass Through Agreement, the provisions of this Section 2.12
shall control.
(a) If the Company shall establish pursuant to Section
2.01(b)(9) hereof that the Pass Through Certificates of a particular Series
are to be issued in whole in the form of a Registered Global Certificate, then
the Pass Through Trustee shall, in accordance with this Article II, execute,
authenticate and deliver, one or more Registered Global Certificates which (i)
shall represent, and shall be denominated in an amount equal to, the aggregate
Fractional Undivided Interests of all of the Pass Through Certificates in the
related Pass Through Trust, (ii) shall be registered in the name of the
Depository or its nominee, (iii) shall be delivered by the Pass Through
Trustee to the Depository or pursuant to the Depository's instruction, and
(iv) shall bear a legend substantially to the following effect: "Unless this
Registered Global Certificate is presented by an authorized
<PAGE>
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Pass Through Trustee or its agent for registration of
transfer, exchange or payment, and any Registered Global Certificate issued
is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein."
No Person acquiring a beneficial interest in a Pass Through
Certificate will be entitled to receive a definitive Pass Through Certificate
representing such Person's interest in the Pass Through Trust, except as
provided in subsection (d) below.
(b) Notwithstanding any other provision of this Section 2.12
or of Section 2.08 hereof, the Registered Global Certificate for any Series
may be transferred, in whole but not in part and in the manner provided in
Section 2.08 hereof, by the Depository to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any such nominee to a successor Depository
selected or approved by the Company upon notice to the Pass Through Trustee or
to a nominee of such successor Depository.
(c) The Depository shall be an organization registered as a
clearing agency under the Exchange Act and any other applicable statute or
regulation.
(d) If at any time the Depository notifies the Company that it
is unwilling or unable to continue as Depository for such Series or if at any
time the Depository for such Series shall no longer be eligible under
subsection (c) above, and a successor Depository is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such condition, as the case may be, this Section 2.12 shall no longer be
applicable to the Pass Through Certificates of such Series and the Pass
Through Trustee will execute, authenticate and deliver Pass Through
Certificates of such Series in definitive registered form without coupons, in
authorized denominations, and in an aggregate Fractional Undivided Interest in
the related Pass Through Trust equal to the Fractional Undivided Interest in
the related Pass Through Trust of the Registered Global Certificate then
outstanding in exchange for such Registered Global Certificate.
The Company may at any time and in its sole discretion determine
that the Pass Through Certificates of any Series shall no longer be
represented by a Registered Global Certificate and that the provisions of this
Section 2.12 shall no longer apply to such Pass Through Certificates. In such
event the Pass Through
<PAGE>
Trustee, upon receipt of an Officer's Certificate evidencing such
determination by the Company, will notify the Depository of the
availability of such Pass Through Certificates in definitive form and will
execute, authenticate and deliver, Pass Through Certificates of such Series
in definitive registered form without coupons, in authorized denominations
and in an aggregate Fractional Undivided Interest in the related Pass
Through Trust equal to the Fractional Undivided Interest in the related
Pass Through Trust of the Registered Global Certificate then outstanding in
exchange for such Registered Global Certificate. Upon the exchange of the
Registered Global Certificate for such Pass Through Certificates in
definitive registered form, such Registered Global Certificate shall be
cancelled by the Pass Through Trustee. Such Pass Through Certificates in
definitive registered form issued in exchange for the Registered Global
Certificate pursuant to this subsection (d) shall be registered in such
names and in such authorized denominations as the Depository shall instruct
the Pass Through Trustee. The Pass Through Trustee shall deliver such Pass
Through Certificates to the Persons in whose names such Pass Through
Certificates are so registered. Upon the issuance of Pass Through
Certificates in definitive registered form without coupons, the Pass
Through Trustee shall recognize the Person in whose name such definitive
Pass Through Certificates are registered in the Register from time to time
as Certificateholders hereunder.
(e) As long as the Pass Through Certificates of a Series are
represented by a Registered Global Certificate, all distributions for such
Series shall be made to the holder of such Registered Global Certificate as
the Certificateholder of such Series, or to such Persons as such holder may
designate, by wire transfer of immediately available funds on the date such
distributions are due, and the Company shall or shall cause the Pass Through
Trustee to provide to the Depository any notices referred to in the related
Letter of Representations in accordance with such Letter of Representations.
ARTICLE III
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Covenants of the Company. (a) The Company will
preserve and maintain all of its rights, privileges and franchises necessary
in the normal conduct of its business; provided that the Company shall not be
required to preserve any right, privilege or franchise if the Company shall
reasonably determine that the loss thereof will not materially adversely
affect the Company's ability to perform its obligations hereunder or under any
Series Supplement.
(b) The Company shall not (i) consolidate with or merge into
any other corporation under circumstances in which the Company is not the
surviving corporation or (ii) convey, transfer or lease all or substantially
all of its assets as an
<PAGE>
entirety to any Person, unless the corporation formed by such consolidation
or into which the Company is merged or the Person which acquired by
conveyance, transfer or lease substantially all of the assets of the
Company as an entirety shall be a corporation organized and existing under
the laws of the United States of America or any State or the District of
Columbia, and shall execute and deliver to the Pass Through Trustee an
agreement reasonably satisfactory in form and substance to the Pass Through
Trustee containing an effective assumption by such successor corporation of
the due and punctual performance and observance of each covenant and
condition to be performed or observed by the Company hereunder and under
each Series Supplement.
(c) Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all the assets of the Company as an
entirety in accordance with this Section 3.01, the successor corporation
formed by such consolidation or the Person into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
hereunder and under each Series Supplement with the same effect as if such
successor corporation or such Person, as the case may be, had been named as
the Company herein and therein. No such conveyance, transfer or lease of
substantially all of the assets of the Company as an entirety shall have the
effect of releasing the Company or any successor corporation which shall
theretofore have become such in the manner prescribed in this Section 3.01
from its liability hereunder or under any Series Supplement.
(d) The Pass Through Trustee shall receive an Opinion of
Counsel of the Company as conclusive evidence that any consolidation, merger,
sale, lease or conveyance, and any assumption complies with the provisions of
this Section 3.01 and the Pass Through Trustee shall be entitled to rely upon
the same for all purposes hereof.
Section 3.02. Offices for Payments; Registrar. So long as any
Pass Through Certificates of a Series remain outstanding, the Pass Through
Trustee will maintain the following for such Series: (a) an office or agency
where such Pass Through Certificates may be presented for payment and (b) a
facility or agency in New York, New York where such Pass Through Certificates
may be presented or surrendered for registration of transfer and for exchange
and for redemption as provided in this Pass Through Agreement (the
"Registrar"). Written notice of the location of each such other office or
agency and of any change of location thereof shall be given by the Pass
Through Trustee to the Company, any Owner Trustees, the Indenture Trustees and
the Certificateholders of such Series. In the event that no such office or
agency shall be maintained or no such notice of location or of change of
location shall be given, presentations and demands may be made and notices may
be served at the Principal Corporate Trust Office of the Pass Through Trustee.
The Registrar shall keep a register ("Register") with respect to the Pass
<PAGE>
Through Certificates of each Series and their transfer and exchange. The Pass
Through Trustee may appoint one or more co-registrars ("Co-Registrars") for any
Series and may terminate any such appointment at any time upon written notice.
The term "Registrar" includes any Co-Registrar.
Any Registrar shall be a bank or trust company organized and
doing business under the laws of the United States or any state, with a
combined capital and surplus of at least $100,000,000, or a direct or indirect
subsidiary of such an entity, or a member of a bank holding company group,
having a combined capital and surplus of at least $100,000,000 and such
subsidiary or member itself having a capital and surplus of at least
$10,000,000.
The Pass Through Trustee shall initially act as Registrar and
shall initially serve as an office where Pass Through Certificates can be
presented for payment.
Section 3.03. Representations and Warranties of the Pass
Through Trustee. (a) The Pass Through Trustee, in its individual capacity
(except with respect to clause (iv) below), represents, warrants and agrees
that:
(i) it is a validly existing national banking
association or a bank or trust company organized or chartered
under the laws of a State of the United States of America and
duly organized under the laws of the United States of America
or such State, as the case may be, holding a valid certificate
to do business as a national banking association or a bank or
trust company under the State of the United States of America
where it is organized or chartered, as the case may be, with
banking and trust powers and has the corporate power and
authority to enter into and perform its obligations under this
Pass Through Agreement and any Intercreditor Agreement;
(ii) each of this Pass Through Agreement and any
Intercreditor Agreement has been duly authorized by all
necessary corporate action on its part, and neither the
execution and delivery hereof or thereof nor its performance of
any of the terms and provisions hereof or thereof will violate
any federal law or the law of the State of the United States of
America where it is located or regulation relating to its
banking or trust powers or any judgment or order applicable to
or binding on the Pass Through Trustee and will not contravene
or result in any breach of, or constitute any default under its
charter or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or
by which it or its properties may be bound or affected;
<PAGE>
(iii) the execution, delivery and performance by the Pass
Through Trustee of this Pass Through Agreement or any
Intercreditor Agreement will not require the authorization,
consent, or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action in respect
of, any governmental authority or agency of the United States
of America or the State of the United States of America where
it is located regulating the banking and corporate trust
activities of the Pass Through Trustee other than (i) the
registration of the Pass Through Certificates under the
Securities Act and under the securities laws of any state in
which the Pass Through Certificates may be offered for sale if
the laws of such state require such action and (ii) the
qualification of the Pass Through Agreement under the Trust
Indenture Act pursuant to an order of the Securities and
Exchange Commission;
(iv) each of this Pass Through Agreement and any
Intercreditor Agreement has been duly executed and delivered by
it and, assuming that such documents are the legal, valid and
binding obligation of the other parties thereto, is the legal,
valid and binding obligation of the Pass Through Trustee,
enforceable against the Pass Through Trustee in accordance with
its terms except as may be limited by bankruptcy, insolvency,
moratorium, reorganization, receivership, fraudulent conveyance
or similar laws or equitable principles of general application
to or affecting the enforcement of creditors' rights and
remedies generally from time to time in effect, regardless of
whether such enforceability is considered in a proceeding in
equity or at law; and
(v) each Series Supplement executed by such Pass Through
Trustee will be, upon the date of execution and delivery of such
Series Supplement, executed and delivered by one of its
officers or authorized agents duly authorized to execute and
deliver such Series Supplement on its behalf.
(b) The representations and warranties set forth in subsection
(a) above shall be deemed to be made by the applicable Pass Through Trustee on
each Issuance Date, except as otherwise provided in the applicable Series
Supplement.
Section 3.04. Paying Agents. Whenever the Pass Through
Trustee in its sole discretion shall appoint a paying agent (the "Paying
Agent") for any Pass Through Trust, it will cause the Paying Agent to execute
and deliver an instrument in which the Paying Agent shall agree with the Pass
Through Trustee, subject to the provisions of this Section 3.04,
<PAGE>
(a) that it will hold all sums received by it as such
agent for distribution to the Certificateholders of the related
Series (whether such sums have been paid to it by the Pass
Through Trustee or the Related Owner Trustee or Indenture
Trustee) in trust for the benefit of the Certificateholders of
the related Series or of the Pass Through Trustee, and
(b) that it will notify the Pass Through Trustee if the
principal of or interest or premium on the Equipment
Certificates that constitute Trust Property of such Pass
Through Trust is not paid when the same is due and payable.
Anything in this Section 3.04 to the contrary notwithstanding,
the agreements to hold sums in trust as provided in this Section 3.04 are
subject to the provisions of Sections 12.03 and 12.04 hereof.
Section 3.05. No Representations or Warranties as to
Documents. The Pass Through Trustee neither makes nor shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of any Series Supplement, any related Pass Through
Certificates, any Intercreditor Agreement or any related Indenture Documents
or as to the correctness of any statement contained in any thereof, except for
the representations and warranties of the Pass Through Trustee made in its
individual capacity under this Pass Through Agreement, in any Series
Supplement, in any related Participation Agreement or in any Intercreditor
Agreement.
Section 3.06. Payments from Trust Property Only. For any Pass
Through Trust, all payments or distributions to be made to Certificateholders
of any Series under the related Series Supplement by the Pass Through Trustee
under such Pass Through Trust shall be made only from the income and the
proceeds from the related Trust Property and only to the extent that the Pass
Through Trustee shall have received sufficient income or proceeds from such
Trust Property to enable the Pass Through Trustee to make distributions of the
amounts due in respect of the Pass Through Certificates thereunder.
Each Certificateholder of such Series by its acceptance of a
related Pass Through Certificate agrees that it will look solely to the income
and proceeds from the related Trust Property to the extent available for
distribution to it as provided herein and in the related Series Supplement and
that the Pass Through Trustee is not personally or individually liable to such
Certificateholder for any amounts payable under such Pass Through Trust except
as expressly provided herein.
Section 3.07. Limitation of the Company's Liability. The
Company is
<PAGE>
a party to this Pass Through Agreement solely for purposes of meeting the
requirements of the Trust Indenture Act, and therefore shall not be liable
hereunder, except as otherwise expressly provided herein, or under the
terms of any Series Supplement or any Pass Through Certificates, except as
otherwise expressly provided therein.
ARTICLE IV
CERTIFICATEHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE PASS THROUGH TRUSTEE
Section 4.01. Certificateholder Lists; Ownership of Pass
Through Certificates. (a) For each Series, the Pass Through Trustee shall
preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of the Certificateholders of
such Series. If the Pass Through Trustee is not the Registrar for such
Series, the Company shall cause the Registrar to furnish to the Pass Through
Trustee semi-annually not more than 15 days after each Record Date, as of such
Record Date, or at such other times as the Pass Through Trustee may request in
writing, a list, in such form and as of such date as the Pass Through Trustee
may reasonably require, containing all the information in the possession or
control of the Registrar as to the names and addresses of the
Certificateholders of such Series and the amounts of the Pass Through
Certificates held by such Certificateholders.
(b) For each Series, ownership of the Pass Through
Certificates shall be proved by the Register for such Series kept by the
Registrar.
Section 4.02. Disclosure of Certificateholder Lists. Each and
every Certificateholder, by receiving and holding such Pass Through
Certificate, agrees with the Company and the Pass Through Trustee that neither
the Company, the Pass Through Trustee, the Pass Through Trustee in its
individual capacity nor any agent of any of the foregoing shall be held
accountable by reason of the disclosure of any such information as to the
names and addresses of any Certificateholders in accordance with the
provisions of Section 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, and that the Pass Through Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under Section 312(b) of the Trust Indenture Act.
Section 4.03. Reports by the Company. The Company covenants:
(a) to file with the Pass Through Trustee, within 30 days
after the Company is required to file the same with the Commission, copies of
the reports and documents, which the Company is required to file with the
Commission
<PAGE>
pursuant to Section 13 or 15(d) of the Exchange Act;
(b) to file with the Pass Through Trustee and the Commission,
in accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with respect to
compliance by the Company with the conditions and covenants provided for in
this Pass Through Agreement as may be required from time to time by such rules
and regulations;
(c) to transmit to the Certificateholders of each Series in
the manner and to the extent required by Section 313(c) of the Trust Indenture
Act, within 30 days after the filing thereof with the Pass Through Trustee,
such summaries of any information, documents and reports required to be filed
by the Company pursuant to subsections (a) and (b) of this Section 4.03 as may
be required by rules and regulations prescribed from time to time by the
Commission; and
(d) furnish to the Pass Through Trustee, on or before each
March 15, a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer of the Company as to his or
her knowledge of the Company's compliance with all conditions and covenants
under this Pass Through Agreement and each Series Supplement. For purposes of
this subsection (d), such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Pass Through
Agreement or any Series Supplement.
Section 4.04. Reports by the Pass Through Trustee. For each
Series, on or before each May 15, the Pass Through Trustee in respect of such
Series shall transmit, in the manner and to the extent required by Section
313(c) of the Trust Indenture Act, any report required by Section 313(b) of
the Trust Indenture Act to be transmitted by the Pass Through Trustee to the
related Certificateholders.
ARTICLE V
RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY
Section 5.01. Certificate Account and Special Payments
Account. (a) The Pass Through Trustee shall establish and maintain for each
Pass Through Trust, on behalf of the related Certificateholders of each
Series, a Certificate Account as one or more non-interest bearing accounts.
In each case, the Pass Through Trustee shall hold such Certificate Account in
trust for the benefit of such Certificateholders, respectively, and shall make
or permit withdrawals therefrom only as provided in this Pass Through
Agreement, the related Series Supplement or
<PAGE>
any Intercreditor Agreement. Upon receipt of any Scheduled Payment, the
Pass Through Trustee shall immediately deposit such Scheduled Payment in
the applicable Certificate Account.
(b) The Pass Through Trustee shall establish and maintain, as
and when required, for each Pass Through Trust, on behalf of the related
Certificateholders of each Series, a Special Payments Account as one or more
accounts, which shall be non-interest bearing except as provided in Section
5.04 hereof. In each case, the Pass Through Trustee shall hold such Special
Payments Account in trust for the benefit of such Certificateholders,
respectively, and shall make or permit withdrawals therefrom only as provided
in this Pass Through Agreement, the related Series Supplement or any
Intercreditor Agreement. Upon receipt of any Special Payment, the Pass
Through Trustee shall immediately deposit such Special Payment in the
applicable Special Payments Account.
Section 5.02. Distributions from Certificate Account and
Special Payments Account. (a) Subject to any Intercreditor Agreement, for
each Pass Through Trust, on each related Regular Distribution Date, or as soon
thereafter as the Pass Through Trustee has confirmed receipt of any Scheduled
Payment due on the related Equipment Certificates on such Regular Distribution
Date, the Pass Through Trustee shall distribute out of the applicable
Certificate Account the entire amount deposited therein pursuant to Section
5.01(a) hereof by paying to each Certificateholder of the related Series of
record at the close of business on the Record Date for such Regular
Distribution Date (except as provided in Section 12.01 hereof concerning the
final distribution), at the address for such Certificateholder appearing in
the related Register, such Certificateholder's pro rata share (based on the
aggregate Fractional Undivided Interest in the related Pass Through Trust held
by such Certificateholder) of the aggregate amount in the applicable
Certificate Account.
(b) Subject to any Intercreditor Agreement, for each Pass
Through Trust, on each related Special Distribution Date, or as soon
thereafter as the Pass Through Trustee has confirmed receipt of any Special
Payment due on the related Equipment Certificates or realized upon the sale of
any such Equipment Certificates, the Pass Through Trustee shall distribute out
of the applicable Special Payments Account the entire amount of such Special
Payment deposited therein pursuant to Section 5.01(b) hereof by paying to each
Certificateholder of the related Series of record at the close of business on
the Record Date for such Special Distribution Date (except as provided in
Section 12.01 hereof concerning the final distribution), at the address for
such Certificateholder appearing in the related Register, such
Certificateholder's pro rata share (based on the aggregate Fractional
Undivided Interest in the related Pass Through Trust held by such
Certificateholder) of the aggregate amount in the applicable Special Payments
Account on account of such Special Payment.
<PAGE>
(c) For each Pass Through Trust, the Pass Through Trustee
shall at the expense of the Company notify each Certificateholder of the
related Series by mail at its address as it appears in the related Register of
each related Special Payment for such Series. If the related Equipment
Certificates are to be redeemed or purchased in whole prior to their
respective maturities, or if a Special Payment is to be made pursuant to
either of the last two paragraphs of Section 2.02(b) hereof or if the Pass
Through Trustee receives sufficient notice of such Special Payment, such
notice shall be mailed not less than 15 days prior to the date any such
Special Payment is scheduled to be distributed. For any other Special
Payment, such notice shall be mailed as soon as practicable after the Pass
Through Trustee has received funds for or notice of such Special Payment. Such
notices of Special Payments shall set forth:
(i) the Special Distribution Date and the Record Date
therefor (except as otherwise provided in Section 12.01 hereof);
(ii) the amount of the Special Payment for each $1,000
face amount Pass Through Certificate and the amount thereof
constituting principal, premium, if any, and interest on the
related Equipment Certificates;
(iii) the reason for the Special Payment; and
(iv) if the Special Distribution Date is the same date
as a Regular Distribution Date for such Series, the total
amount to be received on such date for each $1,000 face amount
Pass Through Certificate.
If the amount of premium, if any, payable upon the redemption or purchase in
whole of an Equipment Certificate has not been calculated at the time that the
Pass Through Trustee mails the notice of the related Special Payment, it shall
be sufficient if the notice sets forth the other amounts to be distributed and
states that any premium received will also be distributed.
If, for any Pass Through Trust, any cancelable redemption of the
related Equipment Certificates is cancelled, the Pass Through Trustee, as soon
as possible after learning thereof, shall notify by mail each
Certificateholder of the related Series at its address as it appears on the
related Register.
(d) At such time, if ever, as the Pass Through Certificates
are issued in certificated form, for each Pass Through Trust, any Scheduled
Payment or Special Payment to be distributed pursuant to this Article V shall
be payable at the Corporate Trust Office of the Pass Through Trustee or at any
office or agency maintained for such purpose for the related Series pursuant
to Section 3.02
<PAGE>
hereof, provided that any Scheduled Payment or Special Payment may be
payable at the option of the Pass Through Trustee or its Paying Agent for
the related Series by mailing checks for such Scheduled Payment or Special
Payment payable to or upon the written order of the related
Certificateholders entitled thereto as they appear on the related Register.
(e) The Pass Through Trustee shall present any Equipment
Certificate to the applicable Related Indenture Trustee on the date of its
stated final maturity, or on such earlier date as such Equipment Certificate
is to be redeemed or purchased in whole pursuant to the relevant Indenture.
Section 5.03. Statements to Certificateholders. (a) On each
Regular Distribution Date and Special Distribution Date, the Pass Through
Trustee shall mail to Certificateholders of the related Series a statement,
giving effect to such distribution to be made on such Regular Distribution
Date or Special Distribution Date, as the case may be, setting forth the
following information (as to (i) and (ii) below, for each $1,000 face amount
Pass Through Certificate):
(i) the amount of such distribution allocable to
principal and the amount allocable to premium, if any, on the
related Equipment Certificates;
(ii) the amount of such distribution allocable to
interest on the related Equipment Certificates; and
(iii) the Pool Balance and the Pool Factor of the related
Pass Through Trust.
(b) For each Series, within a reasonable period of time after
the end of each calendar year but not later than the latest date permitted by
law, the Pass Through Trustee shall furnish to each Person who at any time
during such calendar year was a Certificateholder of such Series a statement
containing the sum of the amounts determined pursuant to clauses (a)(i) and
(a)(ii) of this Section 5.03 for the related Pass Through Trust for such
calendar year or, in the event such Person was a Certificateholder of such
Series during a portion of such calendar year, for the applicable portion of
such year.
Section 5.04. Investment of Special Payment Moneys. Any money
received by the Pass Through Trustee pursuant to Section 5.01(b) hereof
representing a Special Payment that is not to be promptly distributed shall,
to the extent practicable, be invested by the Pass Through Trustee in Permitted
Investments selected by the Company by written notice to the Pass Through
Trustee pending distribution of such Special Payment pursuant to Section 5.02
hereof. Any investment made pursuant to this Section 5.04 shall be in such
<PAGE>
Permitted Investments having maturities not later than the date that such
moneys are required to be used to make the payment required under Section 5.02
hereof on the applicable Special Distribution Date and the Pass Through
Trustee shall hold any such Permitted Investments until maturity. The
proceeds upon maturity of any Permitted Investment shall not be reinvested
pending distribution. The Pass Through Trustee shall have no liability with
respect to any investment made pursuant to this Section 5.04, other than by
reason of the willful misconduct or negligence of the Pass Through Trustee.
All income and earnings from such investments shall be distributed on such
Special Distribution Date as part of such Special Payment.
Section 5.05. Withholding Taxes. The Pass Through Trustee
shall withhold any taxes required to be withheld on payments to any
Certificateholder of any Series, except to the extent that such
Certificateholder has furnished evidence reasonably satisfactory to the Pass
Through Trustee of any exemption from withholding claimed by such
Certificateholder, and under no circumstances shall the failure of any such
Certificateholder to receive any amounts so withheld constitute an Event of
Default. The Pass Through Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any taxes or similar charges are
required to be withheld with respect to any amounts payable in respect of the
Pass Through Certificates of such Series, to withhold such amounts and timely
pay the same to the appropriate authority in the name of and on behalf of the
Certificateholders of such Series, that it will file any necessary withholding
tax returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as any such Certificateholder of such Series may
reasonably request from time to time. The Pass Through Trustee agrees to file
any other information reports as it may be required to file under law.
Notwithstanding any provision to the contrary herein, if the
Company is required to pay any withholding tax or any interest or penalty
thereon, or to indemnify an Owner Participant or Owner Trustee pursuant to
Section 8.01(c) of any related Participation Agreement with respect to the
Pass Through Trustee's failure to withhold with respect to any
Certificateholder, the Pass Through Trustee shall be entitled to retain any
payments otherwise distributable to such Certificateholder that was subject to
such withholding until such amounts shall have been recovered in full by the
Pass Through Trustee.
<PAGE>
ARTICLE VI
CONCERNING THE CERTIFICATEHOLDERS
Section 6.01. Evidence of Action Taken by Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Pass Through Agreement to be given or taken by
Certificateholders of any Series may be embodied in and evidenced by one or
more substantially similar instruments signed by such Certificateholders in
person or by an agent duly appointed in writing, and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to the Pass Through Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Pass Through Agreement and (subject to
Sections 8.02 and 8.03 hereof) conclusive in favor of the Pass Through
Trustee, if made in the manner provided in this Article VI.
(b) For the purpose of determining the Certificateholders of
any Series entitled to vote or consent to any direction, waiver or other
action of such Certificateholders under Section 7.10 or 7.11 hereof, the
Company may set a record date for such vote or consent by specifying such
record date in an Officer's Certificate delivered to the Pass Through Trustee.
Notwithstanding Section 316(c) of the Trust Indenture Act, such record date
shall be a date not more than 15 days prior to the first solicitation of such
vote or consent.
Section 6.02. Proof of Execution of Instruments and of Holding
of Certificates. Subject to Sections 8.02 and 8.03 hereof, the execution of
any instrument by a Certificateholder or its, his or her agent or proxy may be
proved in accordance with such reasonable rules and regulations as may be
prescribed by the Pass Through Trustee. The holding of Pass Through
Certificates shall be proved by the Register or by a certificate of the
Registrar.
Section 6.03. Certificateholders to Be Treated as Owners.
Prior to due presentment for registration of transfer of any Pass Through
Certificate, each related Indenture Trustee, the Pass Through Trustee, any
agent of any such related Indenture Trustee or the Pass Through Trustee, the
Paying Agent, if any, the Registrar and the Company may deem and treat the
Person in whose name such Pass Through Certificate shall be registered upon
the Register as the absolute owner of such Pass Through Certificate (whether
or not such Pass Through Certificate shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment on account of the principal payable with respect to and, subject to
the provisions of this Pass Through Agreement, interest payable with respect
to such Pass Through Certificate and for all other purposes; and neither any
such related Indenture Trustee nor the Pass Through Trustee (nor any agent of
any such related Indenture
<PAGE>
Trustee or the Pass Through Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Company shall be affected by any notice to the contrary.
All such payments so made to any such Person, or upon such Person's order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Pass
Through Certificate.
Section 6.04. Pass Through Certificates Owned by the Company
and Related Owner Trustees Deemed Not Outstanding. In determining whether the
Certificateholders of the requisite aggregate Fractional Undivided Interest of
Pass Through Certificates of any Series have concurred in any direction,
consent or waiver under this Pass Through Agreement, Pass Through Certificates
of such Series that are owned by the Company, any Related Owner Trustee or
Related Owner Participant or any obligor on such Pass Through Certificates or
by any Affiliate of the Company, any such Related Owner Trustee or Related
Owner Participant or any obligor on such Pass Through Certificates shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the Pass
Through Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Pass Through Trustee has
actual knowledge that certain Pass Through Certificates are so owned shall
such Pass Through Certificates be so disregarded; and provided further that if
all Pass Through Certificates of such Series that would be deemed Outstanding
in the absence of the foregoing provision are owned by the Company, any
Related Owner Trustee or Related Owner Participant or any obligor on such Pass
Through Certificates or by any Affiliate of the Company, any such Related
Owner Trustee or Related Owner Participant or any obligor on such Pass Through
Certificates, then such Pass Through Certificates shall be deemed Outstanding
for the purpose of any such determination. Pass Through Certificates so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Pass Through Trustee the
pledgee's right so to act with respect to such Pass Through Certificates and
that the pledgee is not the Company, any Related Owner Trustee or Related
Owner Participant or any obligor upon the Pass Through Certificates or any
Affiliate of the Company, any Related Owner Trustee or Related Owner
Participant or any obligor on such Pass Through Certificates. In case of a
dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Pass Through Trustee in accordance with
such advice.
For any Series, upon request of the Pass Through Trustee, the
Company, the Related Owner Trustees and the Related Owner Participants
promptly shall furnish to the Pass Through Trustee an Officer's Certificate
listing and identifying all Pass Through Certificates of such Series, if any,
known by the Company or any such Related Owner Trustee or Related Owner
Participant to be owned or held by or for the account of any of the
above-described persons; and
<PAGE>
the Pass Through Trustee shall be entitled to accept such Officer's
Certificate as conclusive evidence of the facts set forth therein and of
the fact that all Pass Through Certificates of such Series not listed
therein are Outstanding for the purpose of any such determination. For the
purpose of determining whether Pass Through Certificates of a Series are
Outstanding as described in this Section 6.04, an "obligor" on such Pass
Through Certificates shall include any obligor or any Affiliate of any such
obligor on any Equipment Certificates that constitute Trust Property of the
related Pass Through Trust.
Section 6.05. Right of Revocation of Action Taken. For any
Series, at any time prior to (but not after) the evidencing to the Pass
Through Trustee, as provided in Section 6.01 hereof, of any action taken by
the related Certificateholders of the percentage in aggregate of Fractional
Undivided Interests in the related Pass Through Trust specified in this Pass
Through Agreement in connection with such action, any Certificateholder of a
Pass Through Certificate of such Series, the serial number of which is shown
by the evidence to be included among the outstanding serial numbers of the
Pass Through Certificates of such Series, the Certificateholders of which have
consented to such action, may, by filing written notice at the Corporate Trust
Office and upon proof of holding as provided in this Article VI, revoke such
action so far as concerns such Pass Through Certificate. Except as aforesaid,
any such action taken shall be conclusive and binding upon such
Certificateholder for such Pass Through Certificate and upon all future
Certificateholders and owners of such Pass Through Certificate and of any Pass
Through Certificates issued in exchange or substitution therefor, irrespective
of whether or not any notation in regard thereto is made upon any such Pass
Through Certificate or otherwise. Any action taken by such Certificateholders
of the percentage in aggregate of Fractional Undivided Interests in the
related Pass Through Trust specified in this Pass Through Agreement in
connection with such action shall be conclusively binding upon the Pass Through
Trustee and all the Certificateholders of such Series.
Section 6.06. ERISA. Unless otherwise specified in the
applicable Series Supplement, no employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
individual retirement account or plan subject to Section 4975 of the Code
(hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold
any of the Pass Through Certificates. If the Pass Through Certificates are
not described in the applicable Series Supplement as being eligible for
purchase by ERISA Plans, the purchase by any person of any Pass Through
Certificate constitutes a representation by such person to the Company, the
Related Owner Participants, the Related Owner Trustees, the Related Indenture
Trustees and the Pass Through Trustee that such person is not an ERISA Plan
and that such person is not acquiring, and has not acquired, such Pass Through
Certificate with assets of an ERISA Plan.
<PAGE>
ARTICLE VII
REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS
Section 7.01. Events of Default. (a) Exercise of Remedies.
If, for any Pass Through Trust, an Indenture Event of Default under an
Indenture relating to any Equipment Certificate that constitutes Trust
Property of such Pass Through Trust (an "Event of Default") shall occur and be
continuing, then, subject to the provisions of any Intercreditor Agreement,
the Pass Through Trustee may vote all of the Equipment Certificates under such
Indenture held by such Pass Through Trust, and upon the direction of the
Majority In Interest of Certificateholders of the related Series, the Pass
Through Trustee shall vote a corresponding majority of such Equipment
Certificates in favor of directing the applicable Related Indenture Trustee to
declare the unpaid principal of such Equipment Certificates then outstanding,
together with interest accrued but unpaid thereon and all other amounts due
under such Equipment Certificates and the related Indenture, to be due and
payable under, and in accordance with the provisions of, such Indenture. In
addition, if such Event of Default shall have occurred and be continuing,
subject to the provisions of any Intercreditor Agreement, the Pass Through
Trustee may in accordance with such related Indenture vote such Equipment
Certificates to direct the applicable Related Indenture Trustee regarding the
exercise of remedies provided in such Indenture.
If, for any Pass Through Trust, an Event of Default shall have
occurred and be continuing, subject to the provisions of any Intercreditor
Agreement, the Pass Through Trustee may, and upon the direction of the Majority
In Interest of Certificateholders of the related Series shall, by such officer
or agent as it may appoint, sell, convey, transfer and deliver any Equipment
Certificates held in such Pass Through Trust that are subject to the
corresponding Indenture Event of Default, without recourse to or warranty by
the Pass Through Trustee or any Certificateholder of such Series, to any
Person. In any such case, the Pass Through Trustee shall sell, assign,
contract to sell or otherwise dispose of and deliver any such Equipment
Certificates in one or more parcels at public or private sale or sales, at any
location or locations at the option of the Pass Through Trustee, all upon such
terms and conditions as it may reasonably deem advisable and at such prices as
it may reasonably deem advisable, for cash.
If the Pass Through Trustee so decides or is required to sell or
otherwise dispose of any Equipment Certificates pursuant to this Section 7.01,
the Pass Through Trustee shall take such of the actions described above as it
may reasonably deem most effective to complete the sale or other disposition
of such Equipment Certificates, so as to provide for the payment in full of
all amounts due on such Equipment Certificates with respect to the related
Series. Notwithstanding the foregoing, any action taken by the Pass Through
Trustee
<PAGE>
under this Section 7.01 shall not, in the reasonable judgment of the Pass
Through Trustee, be adverse to the best interests of the Certificateholders
of such Series.
If an Intercreditor Agreement is applicable and the Pass Through
Trustee is the Controlling Party thereunder, the Pass Through Trustee upon the
occurrence of an Indenture Event of Default may direct the exercise of
remedies in connection therewith.
(b) Purchase Rights of Certificateholders. If an Intercreditor
Agreement is applicable, by acceptance of its Pass Through Certificate, each
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, with ten days' written notice to the Pass
Through Trustee and each other Certificateholder of the same class, each
Certificateholder of Pass Through Certificates of a Series will have certain
rights, the exercise of which will be specified in the applicable Series
Supplement, to purchase all, but not less than all, of the class of Pass
Through Certificates senior to the Pass Through Certificates held by the
purchasing Certificateholder. The purchase price with respect to the Pass
Through Certificates of any series shall be equal to the Pool Balance of the
Pass Through Certificates of such series, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then due and payable to the Certificateholders under this
Pass Through Agreement, any Intercreditor Agreement or any other Indenture
Document or on or in respect of the Pass Through Certificate of such Series;
provided, however, that no such purchase of Pass Through Certificates of such
Series shall be effective unless the purchaser shall certify to the Pass
Through Trustee that contemporaneously with such purchase, such purchaser is
purchasing, pursuant to the terms of this Pass Through Agreement and the other
Agreements, if any, relating to Pass Through Certificates of a series that are
subject to the same Intercreditor Agreement (such other Agreements, the "Other
Agreements"), the Pass Through Certificates of each such series that is senior
to the Pass Through Certificates held by such purchaser.
If prior to the end of the ten-day period, any other
Certificateholder of the same class notifies the purchasing Certificateholder
that the other Certificateholder wants to participate in such purchase, then
such other Certificateholder may join with the purchasing Certificateholder to
purchase the Pass Through Certificates pro rata based on the interest in the
Pass Through Trust held by each Certificateholder.
Each payment of the purchase price of the Pass Through
Certificates of any Series shall be made to an account or accounts designated
by the Pass Through Trustee and each such purchase shall be subject to the
terms of this Section. Each Certificateholder of any Series agrees by its
acceptance of Pass
<PAGE>
Through Certificates of such Series that it will, upon payment from any
such Certificateholders of Pass Through Certificates with a lower seniority
of the purchase price specified herein, forthwith sell, assign, transfer
and convey to the purchaser thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in this Pass Through
Agreement, any Intercreditor Agreement, the Liquidity Facility, the
Indenture Documents and all Pass Through Certificates of such Series held
by such Certificateholder (excluding all right, title and interest under
any of the foregoing to the extent such right, title or interest is with
respect to an obligation not then due and payable as respects any action or
inaction or state of affairs occurring prior to such sale) and the
purchaser shall assume all of such Certificateholder's obligations under
this Pass Through Agreement, any Intercreditor Agreement, the Liquidity
Facility and the Indenture Documents. The Pass Through Certificates of
such Series will be deemed to be purchased on the date of payment of the
purchase price is made notwithstanding the failure of the
Certificateholders to delivery any Pass Through Certificates of such Series
and, upon such a purchase, (i) the only rights of the Certificateholders
will be to deliver the Pass Through Certificates to the purchaser and
receive the purchase price for such Pass Through Certificates of such
series and (ii) if the purchaser shall so request, such Certificateholder
will comply with all of the provisions of Section 2.08 hereof to enable new
Pass Through Certificates of such Series to be issued to the purchaser in
such denominations as it shall request. All charges and expenses in
connection with the issuance of any such new Pass Through Certificates
shall be borne by the purchaser thereof.
Section 7.02. Incidents of Sale of Equipment Certificates.
Upon any sale of all or any part of the Equipment Certificates held in any
Pass Through Trust made either under the power of sale given under this Pass
Through Agreement or the related Series Supplement or otherwise for the
enforcement of this Pass Through Agreement and the related Series Supplement,
the following shall be applicable:
(1) Certificateholders and Pass Through Trustee May
Purchase Equipment Certificates. Any Certificateholder of the
related Series, the Pass Through Trustee in its individual or
any other capacity or any other Person may bid for and purchase
any of such Equipment Certificates, and upon compliance with
the terms of sale, may hold, retain, possess and dispose of
such Equipment Certificates in its or their own absolute right
without further accountability.
(2) Receipt of Pass Through Trustee Shall Discharge
Purchaser. The receipt of the Pass Through Trustee or of the
officer making such sale shall be a sufficient discharge to any
purchaser for its, his or her purchase money, and, after paying
such purchase
<PAGE>
money and receiving such receipt, such purchaser or its, his
or her personal representative or assigns shall not be
obliged to see to the application of such purchase money, or
be in any way answerable for any loss, misapplication or
non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Pass Through Trustee upon any sale made either
under the power of sale given by this Pass Through Agreement or
the related Series Supplement or otherwise for the enforcement
of the related Pass Through Trust, shall be deposited and
distributed as a Special Payment as provided in Article V
hereof.
Section 7.03. Pass Through Trustee May Prove Debt. If any
amount payable under any Equipment Certificate held by any Pass Through Trust
is not paid when due and payable, the Pass Through Trustee, in its own name
and as trustee of an express trust, as holder of such Equipment Certificate
shall be, to the extent permitted by and in accordance with the terms of the
related Indenture Documents and any Intercreditor Agreement, entitled and
empowered to institute any action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the applicable Owner Trustee, in the case of an Equipment
Trust Certificate, or the Company, in the case of an Equipment Purchase
Certificate, or other obligor upon such Equipment Certificate and collect in
the manner provided by law out of the property of such Owner Trustee, or the
Company or such other obligor upon such Equipment Certificate, as the case may
be, wherever situated, the moneys adjudged or decreed to be payable.
All rights of action and of asserting claims under this Pass
Through Agreement, or under any of the Pass Through Certificates, may be
prosecuted and enforced by the Pass Through Trustee without the possession of
any of such Pass Through Certificates or the production thereof in any trial
or other proceedings relative thereto, and any such action or proceedings
instituted by the Pass Through Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Pass Through
Trustee, each predecessor Pass Through Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Certificateholders of the
related Series.
In any proceedings brought by the Pass Through Trustee (and also
any proceedings involving the interpretation of any provision of this Pass
Through Agreement, any Series Supplement or any Intercreditor Agreement to
which the Pass Through Trustee shall be a party) the Pass Through Trustee
shall be held to represent all the Certificateholders of the related Series,
and it shall not be
<PAGE>
necessary to make any such Certificateholders parties to any such proceedings.
Section 7.04. Remedies Cumulative. Each and every right, power
and remedy given to the Pass Through Trustee or to any of the
Certificateholders of any Series specifically or otherwise under any Pass
Through Trust shall be cumulative and shall be in addition to every other
right, power and remedy specifically given thereunder or now or hereafter
existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically given thereunder or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Pass Through Trustee or the Certificateholders of the related
Series, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or
omission by the Pass Through Trustee or of any such Certificateholder in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of the applicable Owner Trustee, if any, or the Company,
as the case may be, or to be an acquiescence therein.
Section 7.05. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Pass Through
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.07 and 8.03 and Article IX hereof, to the
extent permitted by and in accordance with any Intercreditor Agreement and the
Indenture Documents, proceed to protect and enforce its rights and rights of
the Certificateholders of the related Series by such appropriate judicial
proceedings as the Pass Through Trustee shall deem most effectual to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
under the related Pass Through Trust or in aid of the exercise of any power
granted thereunder or to enforce any other legal or equitable right vested in
the Pass Through Trustee or the Certificateholders under such Pass Through
Trust or by law; provided that any sale of any portion of the related Trust
Property shall be made in accordance with Section 7.02 hereof.
Section 7.06. Discontinuance of Proceedings. If the Pass
Through Trustee or any Certificateholder of any Series institutes any
proceeding to enforce any right, power or remedy under the related Pass
Through Trust, and such proceeding is discontinued or abandoned for any reason
or is determined adversely to the Pass Through Trustee or such
Certificateholder, then and in every such case the applicable Owner Trustee,
if any, and the applicable Indenture Trustee, the Pass Through Trustee, the
Certificateholders of such Series and the Company shall, subject to any
determination in such proceeding, be restored to their former positions and
rights under such Pass Through Trust with respect to the Trust Property and
all rights, remedies and powers of the Pass Through Trustee and
<PAGE>
such Certificateholders shall continue as if no such proceeding had been
instituted.
Section 7.07. Limitations on Suits by Certificateholders. No
Certificateholder of any Series shall have any right by virtue or by availing
of any provision of the related Pass Through Trust to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to such Pass Through Trust, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar official or for any other
remedy thereunder, unless such Certificateholder previously has notified the
Pass Through Trustee in writing of an Event of Default under such Pass Through
Trust and of the continuance thereof, as provided herein, and the
Certificateholders of the related Pass Through Certificates then Outstanding
(or the proxy therefor) representing in the aggregate not less than 50% of the
Fractional Undivided Interests of Pass Through Certificates then Outstanding
under such Pass Through Trust have requested in writing that the Pass Through
Trustee institute such action or proceedings in its own name as trustee under
such Pass Through Trust and have offered to the Pass Through Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Pass Through Trustee for
60 days after its receipt of such notice, request and offer of indemnity has
failed to institute any such action or proceedings and no direction
inconsistent with such written request has been given to the Pass Through
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by such Certificateholder with every other
Certificateholder of such Series and the Pass Through Trustee, that no one or
more Certificateholders of such Series shall have any right in any manner
whatever to affect, disturb or prejudice the rights of any other
Certificateholder of such Series or to obtain or seek to obtain priority over
or preference to any other Certificateholder of such Series or to enforce any
right under the related Pass Through Trust, except in the manner provided
therein and for the equal, ratable and common benefit of all
Certificateholders of such Series. For the protection and enforcement of the
provisions of this Section 7.07, each and every Certificateholder of the
related Series and the Pass Through Trustee shall be entitled to such relief
as can be given either at law or in equity.
Section 7.08. Unconditional Right of Certificateholders to
Receive Principal, Interest and Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Pass Through Agreement, any Series
Supplement or any Pass Through Certificate issued pursuant to such Series
Supplement, but subject to any Intercreditor Agreement, the right of any
Certificateholder of the related Series to receive distributions on such Pass
Through Certificate of Scheduled Payments or Special Payments pursuant to
Article V hereof on or after the respective due dates set forth in such Series
Supplement, or, subject to Section 7.07 hereof, to institute suit for the
enforcement of any such distribution on or after such respective dates as
provided herein or therein, shall not be impaired or affected without the
consent of such Certificateholder. The purchase by any
<PAGE>
Certificateholder of any Pass Through Certificate constitutes the consent
of such Certificateholder to the retention by the Pass Through Trustee of
certain amounts otherwise distributable to such Certificateholder in
accordance with Section 5.05 hereof.
Section 7.09. Control by Certificateholders. Subject to any
Intercreditor Agreement, a Majority In Interest of Certificateholders of any
Series has the right with respect to the related Pass Through Trust to direct
the Pass Through Trustee as to the time, method, and place of conducting any
proceeding for any remedy available to the Pass Through Trustee with respect
to such Pass Through Trust or pursuant to the terms of any Intercreditor
Agreement, or exercising any trust or power conferred on the Pass Through
Trustee under this Pass Through Agreement or any Intercreditor Agreement,
including any right of the Pass Through Trustee as Controlling Party under any
Intercreditor Agreement or as holder of the Equipment Certificates; provided
that such direction is not otherwise than in accordance with law and the
provisions of such Pass Through Trust and the Pass Through Trustee has
received, to the extent provided in Sections 7.07 and 8.03 and Article IX
hereof, such reasonable indemnification as it may require against the costs,
expenses and liabilities to be incurred by the Pass Through Trustee; and
provided further that the Pass Through Trustee has the right to decline to
follow any such direction if the Pass Through Trustee, being advised by
counsel, determines that the action or proceeding so directed may not lawfully
be taken or if the Pass Through Trustee in good faith by its board of
directors, the executive committee, or a trust committee of directors or
Responsible Officers of the Pass Through Trustee determines that the action or
proceedings so directed would involve the Pass Through Trustee in personal
liability or if the Pass Through Trustee in good faith so determines that the
actions or forebearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of the Certificateholders of such Series
not joining in the giving of said direction, it being understood that the Pass
Through Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Certificateholders.
Nothing in this Pass Through Agreement or any Series Supplement
shall impair the right of the Pass Through Trustee in its discretion to take
any action deemed proper by the Pass Through Trustee with respect to the
related Pass Through Trust and which is not inconsistent with such direction by
Certificateholders of the related Series.
Section 7.10. Waiver of Past Events of Default. Subject to any
Intercreditor Agreement, the Majority in Interest of Certificateholders of any
Series (i) may on behalf of all of the Certificateholders waive any past Event
of Default under the related Pass Through Trust or the related Series
Supplement and its consequences or (ii) if the Pass Through Trustee is the
Controlling Party, may
<PAGE>
direct the Pass Through Trustee to instruct the applicable Indenture
Trustee to waive, any past Indenture Default under any Indenture and its
consequences, and thereby annul any direction given by such
Certificateholders or the Pass Through Trustee to such Indenture Trustee
with respect thereto. Upon such waiver such Event of Default will cease to
exist and any Event of Default arising therefrom will be deemed to have
been cured for every purpose of such Pass Through Trust, but no such waiver
will extend to any subsequent or other Event of Default thereunder or
impair any right consequent thereon; provided that any such waiver will be
effective to waive any such past Event of Default and its consequences as
described above if, but only if, the correlative Indenture Event of Default
has been waived under the related Indenture by the requisite holders of the
Equipment Certificates outstanding thereunder; and provided further that in
the absence of written instructions from all Certificateholders of any
Series (or the proxy therefor), the Pass Through Trustee shall not waive
any Event of Default (i) consisting of the failure to pay any principal of,
or premium (if any), or interest on, or other amounts due under, any
Equipment Certificate held by the related Pass Through Trust and the
consequent failure to distribute any related Scheduled Payment or Special
Payment pursuant to Article V hereof on or after the respective due date
therefor set forth in the related Series Supplement or (ii) in respect of a
covenant or provision under any Pass Through Trust that, under Article XI
hereof or the related Series Supplement, cannot be modified or amended
without the consent of each Certificateholder of the related Series (or the
proxy therefor).
Section 7.11. Notice of Pass Through Defaults. The Pass
Through Trustee shall, in the manner and to the extent required by Section
313(c) of the Trust Indenture Act, notify the Certificateholders of any Series
of all Pass Through Defaults under the related Pass Through Trust known to a
Responsible Officer of the Pass Through Trustee, unless such Pass Through
Defaults have been cured before the giving of such notice; provided that under
no circumstances shall the Pass Through Trustee give such notice until the
earlier of the time at which such Pass Through Default becomes an Event of
Default or the expiration of a period of 60 days from the occurrence of such
Pass Through Default; and provided further that, except in the case of the
failure to pay any principal of or interest on or any other amount due under
any of the Equipment Certificates held by any Pass Through Trust and the
consequent failure to distribute any related Scheduled Payment or Special
Payment pursuant to Article V hereof on or after the respective due date
therefor set forth in the related Series Supplement, the Pass Through Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors or
trustees or Responsible Officers of the Pass Through Trustee in good faith
determines that the withholding of such notice is in the interests of the
Certificateholders of the related Series.
<PAGE>
ARTICLE VIII
CONCERNING THE PASS THROUGH TRUSTEE
Section 8.01. Acceptance by Pass Through Trustee. The Pass
Through Trustee, upon the execution and delivery of a Series Supplement
creating a Pass Through Trust and providing for the issuance of a Series of
Pass Through Certificates, shall acknowledge its acceptance of all right,
title and interest in and to the Equipment Certificates to be acquired as
Trust Property of such Pass Through Trust pursuant to the applicable
Participation Agreements and Section 2.02 hereof, and shall declare that the
Pass Through Trustee holds and will hold such right, title, and interest,
together with all other property constituting the Trust Property of such Pass
Through Trust, for the benefit of all then present and future
Certificateholders of such Series, upon the trusts set forth in such Pass
Through Trust.
Section 8.02. Pass Through Trustee's Liens. The Pass Through
Trustee agrees that it will, in its individual capacity and at its own cost and
expense (without any right of indemnity in respect of any such cost or expense
under Article IX hereof) promptly take such action as may be necessary to duly
discharge all Liens on any part of the Trust Property of any Pass Through Trust
that result from claims (i) against it in its individual capacity not related
to the administration of such Trust Property or any other transaction pursuant
to this Pass Through Agreement, the related Series Supplement, the
Participation Agreement or any Intercreditor Agreement, or (ii) against it as
Pass Through Trustee hereunder or in its individual capacity which arise out
of the negligence or willful misconduct of the Pass Through Trustee as such
negligence or willful misconduct shall be determined by a final decision of a
court of competent jurisdiction.
Section 8.03. Certain Rights of the Pass Through Trustee.
Subject to the Trust Indenture Act:
(a) the Pass Through Trustee may rely and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or
other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request of any Related Indenture Trustee or
Related Owner Trustee in connection with any Pass Through Trust
shall be sufficiently evidenced by an Officer's Certificate
(unless other evidence in respect thereof is specifically
prescribed herein) upon
<PAGE>
which the Pass Through Trustee may rely to prove or
establish a matter set forth therein;
(c) the Pass Through Trustee in the administration of
this Pass Through Agreement or any Intercreditor Agreement may
consult with counsel and any advice or Opinion of Counsel shall
be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Pass Through Trustee shall not be obligated to
exercise any of the trusts or powers vested in it under any
Pass Through Trust or any Intercreditor Agreement at the
request, order or direction of the Certificateholders of the
related Series in accordance with the provisions thereof,
unless such Certificateholders have offered to the Pass Through
Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred therein or
thereby;
(e) the Pass Through Trustee shall not be liable for any
action taken or omitted by it in good faith and believed by it
to be authorized or within the discretion, rights or powers
conferred upon it under any Pass Through Trust, under this Pass
Through Agreement or under any Intercreditor Agreement;
(f) prior to the occurrence of an Event of Default under
any Pass Through Trust and after the curing or waiving of all
Events of Default thereunder, the Pass Through Trustee shall
not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, appraisal, bond, debenture, note, security, or other
paper or document unless requested in writing to do so by the
Majority in Interest of Certificateholders of the related
Series; provided that if the payment within a reasonable time
to the Pass Through Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Pass Through Trustee,
not reasonably assured to the Pass Through Trustee by the
security afforded to it by the terms of such Pass Through
Trust, the Pass Through Trustee may require reasonable
indemnity from the Certificateholders against such expenses or
liabilities as a condition to proceeding; subject to (h) below,
the reasonable expenses of every such examination shall be paid
by the Pass Through Trustee or any predecessor trustee, and
shall be repaid by the Company upon demand or indemnification
by the
<PAGE>
Certificateholders;
(g) the Pass Through Trustee may execute any of the
trusts or powers under any Pass Through Trust or any
Intercreditor Agreement or perform any duties hereunder or
thereunder either directly or by or through agents or attorneys
not regularly in its employ and the Pass Through Trustee shall
not be responsible for any misconduct or negligence on the part
of any such agent or attorney appointed by it with due care
under this Pass Through Agreement or any Intercreditor
Agreement; and
(h) the Pass Through Trustee shall not be required to
expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers under any Pass
Through Trust, if the Pass Through Trustee has determined in
good faith that the repayment of such funds or adequate
indemnity against such liability is not reasonably assured to
it.
Section 8.04. Pass Through Trustee Not Responsible for
Recitals. The Pass Through Trustee assumes no responsibility for the
correctness of the recitals contained herein or in any Pass Through
Certificates, except for the execution and authentication of such Pass Through
Certificates by the Pass Through Trustee in accordance with Sections 2.05 and
2.06 hereof, respectively.
Section 8.05. Pass Through Trustee and Agents May Hold Pass
Through Certificates; Collections. The Pass Through Trustee and any agent of
the Pass Through Trustee, in its individual or any other capacity, may become
the owner or pledgee of Pass Through Certificates with the same rights it
would have if it were not the Pass Through Trustee or such agent and, subject
to the applicable provisions of the Trust Indenture Act, may otherwise deal
with the Company, any Related Indenture Trustee or Related Owner Trustee and
receive, collect, hold and retain collections therefrom with the same rights
it would have if it were not the Pass Through Trustee or such agent.
Section 8.06. Moneys Held by Pass Through Trustee. Subject to
Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through Trustee
shall, until used or applied as provided herein, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Subject
to Section 5.04 hereof, neither the Pass Through Trustee nor any agent thereof
shall be under any liability for interest on any moneys received by it
hereunder.
Section 8.07. Right of Pass Through Trustee to Rely on
Officer's
<PAGE>
Certificate. Subject to Section 8.03 hereof, whenever in the
administration of any Pass Through Trust the Pass Through Trustee shall
deem it necessary or desirable that a matter be proved or established prior
to taking or suffering or omitting any action thereunder, such matter
(unless other evidence in respect thereof is specifically prescribed
herein) may, in the absence of bad faith on the part of the Pass Through
Trustee, be deemed to be conclusively proved and established by an
Officer's Certificate delivered to the Pass Through Trustee by the Company,
any Related Indenture Trustee or any Related Owner Trustee, as the case may
be, and such certificate, in the absence of bad faith on the part of the
Pass Through Trustee, shall be full warrant to the Pass Through Trustee for
any action taken, suffered or omitted by it under the provisions of this
Pass Through Agreement upon the faith thereof.
Section 8.08. Compensation. The Company agrees to pay, and the
Pass Through Trustee shall be entitled to receive, reasonable compensation and
payment or reimbursement for its reasonable advances, expenses and
disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) incurred in connection with its services rendered hereunder or in any
way relating to or arising out of the administration of any Pass Through Trust
or the related Trust Property, except any such advance, expense or
disbursement attributable to the Pass Through Trustee's negligence, willful
misconduct or bad faith or incurred as a result of the breach of its
representation, warranty or covenant set forth in Sections 3.03(iv) and 8.02
hereof, and shall have a priority claim on such Trust Property for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Company.
In addition, the Pass Through Trustee shall be entitled to
reimbursement from, and shall have a priority claim on, all property and funds
held or collected by the Pass Through Trustee with respect to any Series or
the related Pass Through Trust in its capacity as Pass Through Trustee for any
tax incurred without negligence, bad faith or willful misconduct on its part,
arising out of or in connection with the acceptance or administration of such
Pass Through Trust (excluding any taxes payable by the Pass Through Trustee on
or measured by any compensation received by the Pass Through Trustee for its
services under this Pass Through Agreement), including any costs and expenses
incurred in contesting the imposition of any such tax. If the Pass Through
Trustee reimburses itself from the Trust Property of such Pass Through Trust
for any such tax it shall within 20 days mail a brief report setting forth the
circumstances thereof to all Certificateholders of the related Series as their
names and addresses appear in the related Register.
<PAGE>
ARTICLE IX
INDEMNIFICATION OF
PASS THROUGH TRUSTEE BY THE COMPANY
The Company hereby agrees to assume liability for, and does
hereby indemnify, save and keep harmless the Pass Through Trustee, in its
individual capacity, and its successors, assigns, agents and servants, with
respect to the claims of the Pass Through Trustee for payment or reimbursement
under Section 8.08 hereof and from and against any and all liabilities,
losses, damages, penalties, taxes (excluding any taxes payable by the Pass
Through Trustee on or measured by any compensation received by the Pass
Through Trustee for its services under this Pass Through Agreement), claims,
actions, suits, costs, expenses or disbursements (including legal fees and
expenses) of any kind and nature whatsoever which may be imposed on, or
incurred by, the Pass Through Trustee in its individual capacity in any way
relating to or arising out of this Pass Through Agreement, or any Series
Supplement or the enforcement of any of the terms of any thereof, or in any
way relating to or arising out of the administration of any Pass Through Trust
or the related Trust Property or the action or inaction of the Pass Through
Trustee hereunder, except only (i) in the case of negligence, willful
misconduct or bad faith of the Pass Through Trustee in the performance of its
duties hereunder or under any Series Supplement, (ii) as may result from the
inaccuracy of any representation or warranty of the Pass Through Trustee herein
or in any Participation Agreement or (iii) as otherwise provided in Section
8.02 hereof.
The Pass Through Trustee in its individual capacity shall be
entitled to indemnification, from the related Trust Property, for any
liability, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement indemnified against pursuant to this Article IX to the extent not
reimbursed by the Company or others, but without releasing any of them from
their respective agreements of reimbursement; and to secure the same the Pass
Through Trustee shall have a prior Lien on such Trust Property. The
indemnities contained in this Article IX shall survive the termination of this
Pass Through Agreement or any Pass Through Trust and the resignation or
removal of the Pass Through Trustee hereunder or thereunder.
ARTICLE X
SUCCESSOR TRUSTEES
Section 10.01. Resignation and Removal of Pass Through Trustee;
Appointment of Successor. (a) The Pass Through Trustee may resign at any time
as trustee of any Pass Through Trust without cause by giving at least 45 days
<PAGE>
prior written notice to the Company, the Related Indenture Trustees and the
Related Owner Trustees, if any, such resignation to be effective upon the
acceptance of the trusteeship by a successor Pass Through Trustee. In
addition, a Majority in Interest of Certificateholders of any Series or the
Company may at any time remove the related Pass Through Trustee without cause
by an instrument in writing delivered to the Company (in the case of removal
by a Majority in Interest of Certificateholders of any Series), the Related
Owner Trustees, if any, the Related Indenture Trustees and the Pass Through
Trustee, and the Pass Through Trustee shall promptly notify each
Certificateholder of such Series of such removal in writing, such removal to
be effective upon the acceptance of the trusteeship by a successor Pass
Through Trustee.
In the case of the resignation or removal of the Pass Through
Trustee, the Company or a Majority in Interest of Certificateholders of the
related Series may appoint a successor Pass Through Trustee by an instrument
signed by the Company or such Certificateholders, as the case may be.
If a successor Pass Through Trustee shall not have been
appointed within 90 days after such notice of resignation or removal, the Pass
Through Trustee, the Company or any Certificateholder of the related Series
may apply to any court of competent jurisdiction to appoint a successor Pass
Through Trustee to act until such time, if any, as a successor shall have been
appointed as provided above. The successor Pass Through Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Pass Through Trustee appointed by the Company or a Majority in
Interest of Certificateholders as provided above within one year from the date
of the appointment by such court.
(b) If at any time any of the following occurs with respect to
any Pass Through Trust:
(i) the Pass Through Trustee fails to comply with the
requirements of Section 310(G) of the Trust Indenture Act after
written request for such compliance by any Certificateholder of
the related Series who has been a bona fide Certificateholder
of such Series for at least six months;
(ii) the Pass Through Trustee ceases to be eligible in
accordance with the provisions of Section 10.02 hereof to act as
trustee for such Pass Through Trust and fails to resign after
written request for such resignation by the Company or by any
such bona fide Certificateholder; or
(iii) the Pass Through Trustee becomes incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a
receiver or liquidator
<PAGE>
of the Pass Through Trustee or of its property shall be
appointed, or any public officer takes charge or control of
the Pass Through Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation;
then the Company may remove the Pass Through Trustee and appoint a successor
trustee by written instrument, one copy of which instrument shall be delivered
to the Pass Through Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 315(e) of the Trust Indenture Act, any
Certificateholder of the related Series who has been a bona fide
Certificateholder of such Series for at least six months may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Pass Through Trustee and the appointment
of a successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, remove the Pass Through Trustee and
appoint a successor trustee, which removal and appointment shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 10.03 hereof. The successor Pass Through Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Pass Through Trustee appointed by the Company or the
Certificateholders of the related Series as provided in subsection (a) above
within one year from the date of appointment by such court.
(c) If a Responsible Officer of the Pass Through Trustee shall
obtain actual knowledge of an Avoidable Tax (as hereinafter defined) in
respect of any Pass Through Trust which has been or is likely to be asserted,
the Pass Through Trustee shall promptly notify the Company and shall, within
30 days of such notification, resign as Pass Through Trustee of such Pass
Through Trust hereunder unless within such 30-day period the Pass Through
Trustee shall have received notice that the Company has agreed to pay such
tax. The Company shall promptly appoint a successor Pass Through Trustee of
such Pass Through Trust in a jurisdiction where there are no Avoidable Taxes.
As used herein, an "Avoidable Tax" in respect of such Pass Through Trust means
a state or local tax: (i) upon (w) such Pass Through Trust, (x) such Trust
Property, (y) Certificateholders of such Pass Through Trust or (z) the Pass
Through Trustee for which the Pass Through Trustee is entitled to seek
reimbursement from the Trust Property of such Pass Through Trust, and (ii)
which would be avoided if the Pass Through Trustee were located in another
state, or jurisdiction within a state, within the United States. A tax shall
not be an Avoidable Tax in respect of any Pass Through Trust if the Company or
any Owner Trustee shall agree to pay, and shall pay, such tax.
Section 10.02. Persons Eligible for Appointment as Pass Through
Trustee. Each Pass Through Trust shall at all times have a Pass Through
Trustee which shall be a Person eligible to act as trustee under Section
310(a) of the Trust Indenture Act and shall be a corporation organized and
doing business under the
<PAGE>
laws of the United States of America or of any State or the District of
Columbia having a combined capital and surplus of at least $100,000,000, or
a direct or indirect subsidiary of such a corporation, or a member of a
bank holding company group, having a combined capital and surplus of at
least $100,000,000 and such subsidiary or member itself having a capital
and surplus of at least $10,000,000, which corporate trustee shall be a
citizen of the United States of America as defined under Title 49 of the
United States Code, as amended, and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision of
examination by federal, State or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 10.02, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
If at any time the Pass Through Trustee ceases to be eligible in
accordance with the provisions of this Section 10.02 to act as trustee for any
Pass Through Trust, the Pass Through Trustee shall resign immediately as Pass
Through Trustee for such Pass Through Trust in the manner and with the effect
specified in Section 10.01 hereof.
Section 10.03. Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 10.01 hereof for any
Pass Through Trust shall execute and deliver to the Company and to its
predecessor trustee an instrument accepting such appointment with respect to
such Pass Through Trust, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor with respect to such Pass
Through Trust, as if such successor trustee was originally named as trustee of
such Pass Through Trust.
Notwithstanding the foregoing, on the written request of the
Company or the successor trustee, the trustee ceasing to act shall, upon
payment of its charges then unpaid and subject to Section 12.04 hereof, pay
over to the successor trustee all moneys at the time held by it with respect
to such Pass Through Trust and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee with respect to
such Pass Through Trust to secure any amounts then due it pursuant to the
provisions of Article IX hereof.
<PAGE>
If a successor trustee is appointed with respect to one or more
(but not all) of the Pass Through Trusts created pursuant to this Pass Through
Agreement, the predecessor trustee and each successor trustee with respect to
such Pass Through Trusts shall execute and deliver a supplemental agreement
hereto which shall be sufficient with respect to each such Pass Through Trust
to effect the removal of any predecessor trustee retiring and to vest the
successor trustee with all rights, powers, duties and obligations of its
predecessor under each such Pass Through Trust as to which the predecessor
Pass Through Trustee is retiring, as if such successor trustee was originally
named as Pass Through Trustee hereunder or under the applicable Series
Supplement, and shall add to or change any of the provisions of this Pass
Through Agreement and the applicable Series Supplement as shall be necessary
to provide for or facilitate the administration of such Pass Through Trust
hereunder by more than one Pass Through Trustee.
An institution satisfying the criteria specified in Section
10.02 hereof may be appointed, including pursuant to the relevant Series
Supplement, as the Pass Through Trustee in respect of any Series issued or
proposed to be issued if such institution shall execute and deliver to the
Company with respect to the relevant Pass Through Trust an instrument (which
may be the relevant Series Supplement) accepting such appointment and shall
thereupon become vested with all the rights, powers, trusts and duties of the
Pass Through Trustee in respect of such Pass Through Trust.
It is understood that except as provided in Section 10.05 hereof
nothing herein or in any supplemental agreement or Series Supplement shall
constitute any Pass Through Trustee a co-trustee of any Pass Through Trustee
and that each Pass Through Trustee may be the Pass Through Trustee of one or
more separate Pass Through Trusts.
No institution shall accept appointment as a Pass Through
Trustee as provided in this Section 10.03 unless at the time of such
acceptance such institution shall be eligible under the provisions of Article
X hereof to act as trustee of the relevant Pass Through Trust.
Upon acceptance of appointment by a successor trustee as
provided in this Section 10.03, the successor trustee shall notify the
Certificateholders of the related Series of such appointment by first-class
mail at their last addresses as they shall appear in the Register, and shall
mail a copy of such notice to the Company, the Related Indenture Trustees and
the Related Owner Trustees, if any. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by
Section 10.01 hereof.
<PAGE>
Section 10.04. Merger, Conversion, Consolidation or Succession
to Business of Pass Through Trustee. Any corporation into which the Pass
Through Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Pass Through Trustee is a party, or any corporation
succeeding to the corporate trust business of the Pass Through Trustee, shall
be the successor to the Pass Through Trustee hereunder, provided that,
anything herein to the contrary notwithstanding, such corporation shall be
eligible under the provisions of Section 10.02 hereof to act as trustee
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
If, with respect to any Pass Through Trusts at the time of such
succession to the Pass Through Trustee, any of the Pass Through Certificates of
the related Series have been authenticated but not delivered, such successor
may adopt the certificate of authentication of any such predecessor Pass
Through Trustee and deliver such Pass Through Certificates so authenticated;
and, if at that time any of such Pass Through Certificates have not been
authenticated, such successor may authenticate such Pass Through Certificates
either in the name of any of its predecessor or in its own name as the
successor Pass Through Trustee; and in all such cases such certificate of
authentication shall have the full force of the certificate of authentication
of the Pass Through Trustee set forth in Section 2.01 hereof; provided that
the right to adopt the certificate of authentication of any predecessor Pass
Through Trustee or to authenticate Pass Through Certificates in the name of
any predecessor Pass Through Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 10.05. Appointment of Separate Pass Through Trustees.
(a) At any time or times, for the purpose of meeting any legal requirements
of any jurisdiction in which any part of the Trust Property of any Pass
Through Trust may at the time be located or in which any action of the Pass
Through Trustee may be required to be performed or taken, the Pass Through
Trustee, by an instrument in writing signed by it, may appoint one or more
individuals or corporations to act as separate trustee or separate trustees or
co-trustee, acting jointly with the Pass Through Trustee, of all or any part
of such Trust Property, to the full extent that local law makes it necessary
for such separate trustee or separate trustees or co-trustee, acting jointly
with the Pass Through Trustee, to act.
(b) The Pass Through Trustee and, at the request of the Pass
Through Trustee, the Company, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it,
<PAGE>
he, she or they shall be vested with such title to such Trust Property or
any part thereof, and with such rights, powers, duties and obligations, as
shall be specified in the instrument of appointment, and such rights,
powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Pass Through Trustee, or the Pass Through
Trustee and such separate trustee or separate trustees or co-trustee
jointly with the Pass Through Trustee subject to all the terms of this Pass
Through Agreement, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Pass Through Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
shall be exercised and performed by such separate trustee or separate
trustees or co-trustee, as the case may be.
Any separate trustee or separate trustees or co-trustee may, at
any time by an instrument in writing, constitute the Pass Through Trustee its,
her or his attorney-in-fact and agent with full power and authority to do all
acts and things and to exercise all discretion on its, her or his behalf and
in its, her or his name. In case any such separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, the title to any
Trust Property and all assets, property, rights, powers, duties and
obligations and duties of such separate trustee or co-trustee shall, so far as
permitted by law, vest in and be exercised by the Pass Through Trustee,
without the appointment of a successor to such separate trustee or co-trustee
unless and until a successor is appointed.
(c) All provisions of this Pass Through Agreement which are
for the benefit of the Pass Through Trustee (including without limitation
Article IX hereof) shall extend to and apply to each separate trustee or
co-trustee appointed pursuant to the foregoing provisions of this Section
10.06.
(d) For any Pass Through Trust, every additional trustee and
separate trustee hereunder shall, to the extent permitted by law, be appointed
and act and the Pass Through Trustee shall act, subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights
conferred upon the Pass Through Trustee in respect of the
receipt, custody, investment and payment of moneys shall be
exercised solely by the Pass Through Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Pass Through Trustee shall be
conferred or imposed and exercised or performed by the Pass
Through Trustee and such additional trustee or trustees and
separate trustee or trustees jointly except to the extent that
under any law of any jurisdiction in
<PAGE>
which any particular act or acts are to be performed, the
Pass Through Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of
title to the Trust Property in any such jurisdiction) shall
be exercised and performed by such additional trustee or
trustees or separate trustee or trustees;
(iii) no power hereby given to, or exercisable by, any
such additional trustee or separate trustee shall be exercised
hereunder by such additional trustee or separate trustee except
jointly with, or with the consent of, the Pass Through Trustee;
and
(iv) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.
If at any time the Pass Through Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Pass Through Trustee shall
execute and deliver all instruments and agreements necessary or proper to
remove any additional trustee or separate trustee.
(e) Any request, approval or consent in writing by the Pass
Through Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 10.06,
the powers of any additional trustee or separate trustee shall not exceed
those of the Pass Through Trustee hereunder.
Section 10.06. Preferential Claims. Reference is made to
Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4) and
(6) of such Act:
(a) "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated
or incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares
or merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds
<PAGE>
arising from the sale of the goods, wares or merchandise
previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO THIS
PASS THROUGH AGREEMENT AND OTHER DOCUMENTS
Section 11.01. Supplemental Agreements Without Consent of
Certificateholders. The Company and the Pass Through Trustee may enter into an
agreement or agreements supplemental hereto or to any applicable Intercreditor
Agreement or Liquidity Facility for one or more of the following purposes:
(a) to provide for the formation of any Pass Through
Trust, the issuance of the related Series and the other matters
contemplated by Section 2.01(b) hereof;
(b) to evidence the succession of another corporation to
the Company, or successive successions, and the assumption by
the successor corporation of the covenants, agreements and
obligations of the Company herein and in each Series Supplement;
(c) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as the Pass
Through Trustee shall consider to be for the protection of the
Certificateholders of any Series;
(d) to surrender any right or power conferred upon the
Company herein or in any Series Supplement;
(e) to cure any ambiguity or to correct any mistake or
supplement any provision contained herein or in any Series
Supplement, any Intercreditor Agreement or any Liquidity
Facility that may be defective or inconsistent with any other
provision contained herein or in such Series Supplement,
Intercreditor Agreement or Liquidity Facility;
(f) to modify any other provisions in regard to matters
or questions arising under this Pass Through Agreement or under
any Series Supplement, any Intercreditor Agreement and any
Liquidity Facility as the Company may deem necessary or
desirable and that
<PAGE>
will not adversely affect the interests of the related
Certificateholders;
(g) to correct or amplify the description of any
property at any time that constitutes Trust Property or better
to assure, convey and confirm unto the Pass Through Trustee any
such property to be included in any such Trust Property;
(h) to evidence and provide for the acceptance and
appointment under this Pass Through Agreement by the Pass
Through Trustee or a successor trustee with respect to one or
more Pass Through Trusts and to add to or change any of the
provisions hereof as may be necessary to provide for or
facilitate the administration of one or more Pass Through
Trusts by more than one trustee, pursuant to the requirements
of Section 10.03 hereof;
(i) to modify, eliminate or add to the provisions of
this Pass Through Agreement or any Series Supplement to the
extent necessary to continue the qualification of this Pass
Through Agreement or such Series Supplement (including any
supplemental agreement) under the Trust Indenture Act, or under
any similar federal statute enacted after the date hereof, and
to add to this Pass Through Agreement or any Series Supplement
such other provisions as may be expressly permitted by the
Trust Indenture Act, excluding, however, the provisions
referred to in Section 316(a)(2) of the Trust Indenture Act as
in effect on the date hereof or any corresponding provision in
any similar federal statute enacted after the date hereof;
(j) to make any other amendments or modifications to this
Pass Through Agreement, provided such amendments or
modifications shall only apply to one or more Series to be
issued after the date of such amendment or modification; or
(k) to add, eliminate or change any provision hereunder
so long as such action shall not adversely affect the interests
of the Certificateholders of any Series;
provided that no such supplemental agreement shall cause any Pass Through Trust
to become taxable as an association for U.S. federal income tax purposes.
The Pass Through Trustee is hereby authorized to join in the
execution of any such supplemental agreement, to make any further appropriate
agreements and stipulations that may be contained therein and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Pass Through Trustee shall not be obligated to enter into
any such supplemental
<PAGE>
agreement that adversely affects the Pass Through Trustee's own rights,
duties or immunities under this Pass Through Agreement, any Series
Supplement or otherwise, whether in its official or individual capacity.
Any supplemental agreement contemplated by this Section 11.01
may be executed without the consent of the Certificateholders of the
Outstanding Pass Through Certificates of any Series, notwithstanding any of
the provisions of Section 11.02 hereof.
Section 11.02. Supplemental Agreements With Consent of
Certificateholders. With the consent (evidenced as provided in Article VI) of
the Majority in Interest of Certificateholders of any Series, the Company and
the Pass Through Trustee may, from time to time and at any time, enter into an
agreement or agreements supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Pass Through Agreement or of the related Series Supplement, any
Intercreditor Agreement or any Liquidity Facility or of modifying in any
manner the rights of the related Certificateholders; provided, that no such
supplemental agreement shall cause any Pass Through Trust to become taxable as
an association for U.S. federal income tax purposes; and provided further
that, without the consent of each Certificateholder of such Series (or the
proxy therefor), no such amendment of or supplement to this Pass Through
Agreement or such related Series Supplement, or modification of the terms of,
or consent under, any thereof, shall:
(a) modify any of the provisions of Section 7.10 or this
Section 11.02,
(b) reduce the amount or extend the time of payment of
any amount owing or payable on the related Equipment
Certificates or distributions to be made on any related Pass
Through Certificate pursuant to Article V, or alter the
currency in which any amount payable under any such Pass
Through Certificate is to be paid, or impair the right of any
related Pass Through Certificateholder to commence legal
proceedings to enforce a right to receive payment hereunder,
(c) reduce, modify or amend any indemnities in favor of
any Certificateholder (except as consented to by each such
Certificateholder adversely affected thereby (or the proxy
therefor)), or
(d) create or permit the creation of any Lien on the
related Trust Property or any part thereof, or deprive any
related Certificateholder of the benefit of the related Pass
Through Trust with respect to the related Trust Property,
whether by disposition of such
<PAGE>
Trust Property or otherwise, except as provided in Section
7.02 or in connection with the exercise of remedies under
Article VII.
(e) waive, amend or modify the priority of distributions
of any Intercreditor Agreement in a manner adverse to the
Certificateholder.
Upon the request of the Company and upon the filing with the
Pass Through Trustee of evidence of the consent of the applicable
Certificateholders required under this Section 11.02 and other documents, if
any, required by Section 6.01, the Pass Through Trustee shall join with the
Company in the execution of such supplemental agreement unless such
supplemental agreement affects the Pass Through Trustee's own rights, duties
or immunities under this Pass Through Agreement or the related Series
Supplement or otherwise, in which case the Pass Through Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
agreement.
It shall not be necessary for the consent of the
Certificateholders of any Series under this Section 11.02 to approve the
particular form of any proposed supplemental agreement, but it shall be
sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Pass Through
Trustee of any supplemental agreement relating to any Pass Through Trust
pursuant to the provisions of this Section 11.02, the Pass Through Trustee
shall mail a notice thereof by first-class mail to the related
Certificateholders at their addresses as they shall appear on the related
Register, setting forth in general terms the substance of such supplemental
agreement. Any failure of the Pass Through Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental agreement.
Section 11.03. Effect of Supplemental Agreements. Upon the
execution of any supplemental agreement pursuant to the provisions hereof and
of any applicable Series Supplement, this Pass Through Agreement and such
Series Supplement shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities hereunder and under the related Pass
Through Trust of the Pass Through Trustee, the Company and the related
Certificateholders shall thereafter be determined, exercised and enforced
hereunder and thereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
agreement shall be and be deemed to be part of the terms and conditions of
this Pass Through Agreement and such Pass Through Trust for any and all
purposes.
Section 11.04. Documents to Be Given to Trustee. The Pass
<PAGE>
Through Trustee, subject to the provisions of Sections 8.02 and 8.03 hereof,
may receive and rely upon an Opinion of Counsel as conclusive evidence that
any such supplemental agreement complies with the applicable provisions of
this Pass Through Agreement and any applicable Series Supplement.
Section 11.05. Notation on Pass Through Certificates in
Respect of Supplemental Agreements. Pass Through Certificates of any Series
authenticated and delivered after the execution of any supplemental agreement
relating to such Series pursuant to the provisions of this Article XI may bear
a notation in form approved by the Pass Through Trustee as to any matter
provided for by such supplemental agreement. If the Company or the Pass
Through Trustee shall so determine, new Pass Through Certificates for such
Series so modified as to conform, in the opinion of the Company and the Pass
Through Trustee, to any modification of this Pass Through Agreement contained
in any such supplemental agreement may be provided by the Company, executed
and authenticated by the Pass Through Trustee and delivered in exchange for
the Outstanding Pass Through Certificates of such Series.
Section 11.06. Trust Indenture Act. Any supplemental agreement
executed pursuant to the terms of this Article XI shall on the date of the
execution thereof conform to the provisions of the Trust Indenture Act as in
force on such date.
Section 11.07. Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a Certificateholder
is a continuing consent by such Certificateholder and every subsequent
Certificateholder of the related Pass Through Certificate, even if notation of
the consent is not made on such Pass Through Certificate. However, any such
Certificateholder or subsequent Certificateholder may revoke the consent as to
its, his or her Pass Through Certificate if the Pass Through Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall bind
every Certificateholder affected by such amendment or waiver.
Section 11.08. Amendments, Waivers, etc., of Related Indenture
Documents. If the Pass Through Trustee, as holder of any Equipment
Certificate in trust for the benefit of the Certificateholders of any Series
or as Controlling Party, receives a request for a consent to any modification,
amendment or supplement to any related Indenture or other related Indenture
Document or to give any consent, waiver, authorization or approval under such
related Indenture or such other related Indenture Documents, the Pass Through
Trustee shall forthwith notify each Certificateholder of such Series, as shown
on the related Register as of such date, of such request. Such notice shall
request instructions from such Certificateholders with respect to such
request. Subject to Section 7.10 hereof,
<PAGE>
the Pass Through Trustee shall, as the holder of such Equipment
Certificate, consent or vote with respect thereto in the same proportion as
so instructed by the respective Certificateholders of the related Pass
Through Certificates. Notwithstanding the foregoing, but subject to
Section 7.09 hereof and any Intercreditor Agreement, if an Event of Default
shall have occurred and be continuing, the Pass Through Trustee may, in its
own discretion and at its own direction, consent and notify the Related
Indenture Trustee of such consent to any modification, amendment,
supplement or waiver under any related Indenture Document.
ARTICLE XII
TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS
Section 12.01. Termination of Pass Through Trusts. For any
Pass Through Trust created by this Pass Through Agreement as supplemented by a
related Series Supplement, such Pass Through Trust and the respective
obligations and responsibilities of the Company and the Pass Through Trustee
under such Pass Through Trust shall terminate upon the distribution to all
Certificateholders of the related Series and the Pass Through Trustee of all
amounts required to be distributed to them pursuant to this Pass Through
Agreement and the related Series Supplement and the disposition of all
property held as part of the Trust Property of such Pass Through Trust;
provided that in no event shall such Pass Through Trust continue beyond the
final expiration date determined as provided in such Series Supplement.
Notice of termination of any Pass Through Trust, specifying the
applicable Distribution Date upon which the Certificateholders of the related
Series may surrender their Pass Through Certificates to the Pass Through
Trustee for payment of the final distribution and cancellation thereof, shall
be mailed promptly by the Pass Through Trustee to such Certificateholders not
earlier than the 60th day and not later than the 20th day next preceding such
final distribution specifying (i) the Distribution Date upon which such final
distribution will be made and that such distribution will be made only upon
presentation and surrender of the related Pass Through Certificates at the
office or agency of the Pass Through Trustee specified therein, (ii) the
amount of any such final distribution, and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable. The Pass
Through Trustee shall notify the related Registrar at the time such
Certificateholders are notified of such final distribution. Upon presentation
and surrender of the Pass Through Certificates of such Series, the Pass Through
Trustee shall distribute all amounts distributable on such Pass Through
Certificates on such Distribution Date pursuant to Section 5.02 hereof.
<PAGE>
Section 12.02. Application by Pass Through Trustee of Funds
Deposited for Payment of Pass Through Certificates. Subject to Section 12.04
hereof, all moneys deposited with the Pass Through Trustee for payment pursuant
to Section 12.01 hereof shall be held in trust and applied by it to the prompt
payment, either directly or through any Paying Agent, to the
Certificateholders of the particular Pass Through Certificates for the payment
or redemption of which such moneys have been deposited with the Pass Through
Trustee, of all sums due and to become due thereon; but such money need not be
segregated from other funds except to the extent required by law.
In the event that all of the Certificateholders of such Series
shall not surrender their Certificates for cancellation within six months
after the date specified in the above-mentioned written notice, the Pass
Through Trustee shall give a second written notice to the remaining
Certificateholders of such Series to surrender their Certificates for
cancellation and to receive the final distribution with respect thereto.
Section 12.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of any Pass Through Trust, all
moneys then held by any Paying Agent for such Pass Through Trust shall, upon
demand of the Pass Through Trustee, be repaid to it and thereupon such Paying
Agent shall be released from all further liability with respect to such
moneys.
Section 12.04. Transfer of Moneys Held by Pass Through Trustee
and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys
deposited with or paid to the Pass Through Trustee or any Paying Agent to be
distributed on any Pass Through Certificate and not applied but remaining
unclaimed for two years and eleven months after the date upon which such
amount has become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to the applicable Related Indenture Trustees by the Pass Through
Trustee or such Paying Agent and the applicable Certificateholder shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to such Related Indenture
Trustees for any payment which such Certificateholder may be entitled to
collect, and all liability of the Pass Through Trustee, or any Paying Agent
with respect to such moneys shall thereupon cease.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Capacity in Which Acting. The Pass Through
Trustee acts hereunder and under any Pass Through Trust not in its individual
capacity but
<PAGE>
solely as trustee except as expressly provided herein or in the related
Series Supplement.
Section 13.02. No Legal Title to Trust Property in
Certificateholders. No Certificateholder of any Series shall have legal title
to any part of the Trust Property of the related Pass Through Trust. No
transfer, by operation of law or otherwise, of any Pass Through Certificate or
other right, title and interest of any Certificateholder in and to such Trust
Property or under the related Pass Through Trust shall operate to terminate
such Pass Through Trust or entitle such Certificateholder or any successor or
transferee of such Certificateholder to an accounting or to the transfer to it
of legal title to any part of such Trust Property.
Section 13.03. Certificates Nonassessable and Fully Paid. No
Certificateholder of any Series shall be personally liable for obligations of
the related Pass Through Trust, the Fractional Undivided Interests represented
by the Pass Through Certificates of such Series shall be nonassessable for any
losses or expenses of such Pass Through Trust or for any reason whatsoever,
other than indemnity obligations hereunder, and upon authentication of such
Pass Through Certificates by the Pass Through Trustee pursuant to Section 3.02
hereof, such Pass Through Certificates will be and shall be deemed fully paid.
No Certificateholder of such Series shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the operation and
management of the related Trust Property, the related Pass Through Trust, or
the obligations of the parties hereto, nor shall anything set forth herein, in
the related Series Supplement or in the related Pass Through Certificates be
construed so as to constitute the Certificateholders of such Series from time
to time as partners or members of an association.
Section 13.04. Pass Through Agreement for the Benefit of the
Company, the Pass Through Trustee and the Certificateholders. Nothing in this
Pass Through Agreement, in any Series Supplement or in any Pass Through
Certificate, whether express or implied, shall be construed to give to any
person other than the Company, the Pass Through Trustee, as trustee and in its
individual capacity, and the Certificateholders of the respective related
Series any legal or equitable right, remedy or claim under or in respect of
this Pass Through Agreement, any Pass Through Trust or any such Pass Through
Certificate.
Section 13.05. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder of any Series shall not
operate to terminate this Pass Through Agreement or the related Pass Through
Trust, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of such Pass Through Trust, nor otherwise
affect the rights, obligations, and liabilities of the parties hereto or any
of them. No Certificateholder of any Series
<PAGE>
shall be entitled to revoke the related Pass Through Trust.
Section 13.06. Notices. Unless otherwise expressly specified
or permitted by the terms hereof or the applicable Series Supplement with
respect to any Pass Through Trust, all notices, requests, demands,
authorizations, directions, consents, waivers or documents provided or
permitted by this Pass Through Agreement or such Series Supplement to be made,
given, furnished or filed with respect to such Pass Through Trust shall be in
writing, mailed by certified mail, postage prepaid, or by confirmed facsimile,
and (i) if to The Bank of New York, as Pass Through Trustee, at its Principal
Corporate Trust Office (facsimile (212) 815-5915), Attention: Corporate Trust
Administration DM-GEO with a copy to the Corporate Trust Office at 100 Ashford
Center North, Suite 520, Atlanta, Georgia 30338, Attention: Corporate Trust
Department (facsimile (770) 698-5195 or (ii) if to the Company, addressed to
it at its office at 2007 Corporate Avenue, Memphis, Tennessee 38132 (facsimile
(901) 395-4758), Attention: Vice President and Treasurer, with a copy to
Executive Vice President and General Counsel at 1980 Nonconnah Drive, Memphis,
Tennessee 38132 (facsimile (901) 395-4758), and as to any Series, as otherwise
specified in the Series Supplement related thereto. The Company or the Pass
Through Trustee as to any Series, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other party to this Pass Through
Agreement.
Where this Pass Through Agreement or any Series Supplement
provides for notice to Certificateholders of any Series, such notice shall be
sufficiently given (unless otherwise expressly provided herein) if in writing
and mailed, first-class postage prepaid, to each such Certificateholder
entitled thereto, at his or her last address as it appears in the related
Register. In any case where notice to Certificateholders of any Series is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Certificateholder shall affect the
sufficiency of such notice with respect to other Certificateholders of such
Series. Where this Pass Through Agreement or any Series Supplement provides
for notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by
Certificateholders shall be filed with the Pass Through Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to any
Certificateholders when such notice is required to be given pursuant to any
provision of this Pass Through Agreement or any related Series Supplement,
then any manner of giving such
<PAGE>
notice as shall be satisfactory to the Pass Through Trustee shall be deemed
to be a sufficient giving of such notice.
Section 13.07. Officer's Certificate and Opinion of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Pass Through Trustee to take any action, the Company shall
furnish to the Pass Through Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Pass Through Agreement
and the applicable Series Supplement relating to the proposed action have been
complied with and that the proposed action is in conformity with the
requirements of this Pass Through Agreement and such Series Supplement, or
(ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Pass Through
Agreement or such Series Supplement relating to such particular application or
demand, no additional certificate or opinion need be furnished.
Each certificate or opinion required by this Pass Through
Agreement or any Series Supplement and delivered to the Pass Through Trustee
with respect to compliance with a condition or covenant provided for in this
Pass Through Agreement or such Series Supplement, except for the certificate
required by Section 4.03(d) hereof shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition,
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with and (d) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Company, upon the certificate, statement or opinion
of or representations by an officer or officers of the Company unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his or her certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the
Company or of counsel thereto may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of
<PAGE>
accountants employed by the Company unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which such certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Pass Through Trustee shall contain a statement that
such firm is independent.
Section 13.08. Conflict of Any Provision of Pass Through
Agreement with the Trust Indenture Act. If and to the extent that any
provision of this Pass Through Agreement limits, qualifies or conflicts with
another provision included in this Pass Through Agreement by operation of
Sections 310 to 317, inclusive, of the Trust Indenture Act (an "incorporated
provision"), such incorporated provision shall control.
Section 13.09. Severability. Any provision of this Pass
Through Agreement or any Series Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 13.10. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Pass Through Agreement, any Series Supplement, or
any Pass Through Certificates may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other
person against whom enforcement of the change, waiver, discharge or
termination is sought; and any waiver of the terms hereof or thereof shall be
effective only in the specific instance and for the specific purpose given.
Section 13.11. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
each of the parties hereto and the successors and permitted assigns of each,
all as herein provided. Any request, notice, direction, consent, waiver or
other instrument or action by any Certificateholder shall bind the successors
and assigns of such Certificateholder.
Section 13.12. Headings. The headings of the various Articles
and Sections herein and in the table of contents hereto are for the
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
Section 13.13. Normal Commercial Relations. Anything
contained in
<PAGE>
this Pass Through Agreement to the contrary notwithstanding, the Pass
Through Trustee and any Certificateholder, or any bank or other affiliate
of any such party, may conduct any banking or other financial transactions,
and have banking or other commercial relationships, with the Company fully
to the same extent as if this Pass Through Agreement were not in effect,
including without limitation the making of loans or other extensions of
credit to the Company for any purpose whatsoever, whether related to any of
the transactions contemplated hereby or otherwise.
Section 13.14. Governing Law; Counterpart Form. THIS PASS
THROUGH AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass Through Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 13.15. Distributions Due on Days Other than Business
Days. If, for any Pass Through Trust, any Distribution Date is not a Business
Day, then such distribution need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the applicable Distribution Date, and no interest shall accrue for the
intervening period.
Section 13.16. Registration of Equipment Certificates in Name
of Subordination Agent. If a Pass Through Trust is party to an Intercreditor
Agreement, the Pass Through Trustee agrees that all Equipment Certificates to
be purchased by such Pass Through Trust shall be issued in the name of the
Subordination Agent under such Intercreditor Agreement or its nominee and held
by such Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, such Subordination Agent or its
nominee shall be reflected as the owner of such Equipment Certificates in the
register of the issuer of such Equipment Certificates.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pass
Through Agreement to be duly executed this 4th day of June, 1999 by their
respective officers or authorized agents thereunto duly authorized, and
acknowledge that this Pass Through Agreement has been made and delivered in
the City of New York, and this Pass Through Agreement shall be effective only
upon such execution and delivery.
THE BANK OF NEW YORK,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Pass Through Trustee
By: /s/ STEFAN VICTORY
_______________________________________________
Name: Stefan Victory
Title: Authorized Agent
FEDERAL EXPRESS CORPORATION
By: /s/ ROBERT D. HENNING
_______________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
<PAGE>
Exhibit A
to
Pass Through Agreement
FORM OF PASS THROUGH CERTIFICATE
[THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
Unless this pass through certificate is presented by an
authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Pass Through Trustee or its agent for registration
or transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.](1)
- ---------------
(1) This paragraph is required only if the Pass Through Certificates are to
be represented by the Registered Global Certificate.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__ - __
199_ Pass Through Certificate, Class ___
CUSIP ______
Final Regular Distribution Date: _______
evidencing a fractional undivided interest in a pass through trust.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 199__ - _____: ____%.
$___________ Fractional Undivided Interest representing _______ of the Pass
Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ______________, for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional Undivided
<PAGE>
Interest in the Federal Express Corporation Pass Through Trust, 199_-_ (the
"Pass Through Trust") created and declared by ___________________________, as
pass through trustee (the "Pass Through Trustee"), pursuant to the Pass
Through Trust Agreement dated as of __________, _____ (the "Pass Through
Agreement"), as supplemented by Series Supplement __ thereto dated __________,
199_ (the "Series Supplement") between the Pass Through Trustee and Federal
Express Corporation, a Delaware corporation (the "Company"), a summary of
certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Pass Through Agreement and the Series
Supplement.
This Pass Through Certificate is one of the duly authorized Pass
Through Certificates designated as "Federal Express Corporation 199_ Pass
Through Certificates, Class _______." This Pass Through Certificate is issued
under and is subject to the terms, provisions, and conditions of the Pass
Through Agreement, the Series Supplement, any Intercreditor Agreement or any
Liquidity Facility, to which the Certificateholder of this Pass Through
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Pass Through Trust includes
(i) the Equipment Certificates held in such Pass Through Trust, (ii) the
rights of such Pass Through Trust under any Intercreditor Agreement (including
all monies receivable in respect of such rights), (iii) all monies receivable
under any Liquidity Facility for such Pass Through Trust, and (iv) funds from
time to time deposited with the Pass Through Trustee in accounts relating to
such Pass Through Trust (the "Trust Property"). Equipment Certificates of
each series are secured by a security interest in (A) an aircraft leased to or
owned by the Company and, in the case of a leased aircraft, an assignment of
the rights of the Related Owner Trustee with respect to such aircraft,
including the right to receive rent and other amounts payable under the
related Lease or Indenture with respect to such aircraft or (B) a collateral
account containing the proceeds of the sale of such series of Equipment
Certificates, which shall be invested in Specified Investments pursuant to the
related Indenture. Each of the Pass Through Certificates represents a
Fractional Undivided Interest in the Pass Through Trust and the Trust
Property, and has no rights, benefits or interests in respect of any other
separate trust established pursuant to the terms of the Pass Through Agreement
for any other class of Pass Through Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity
Facility, from funds then available to the Pass Through Trustee, there will be
distributed on each ______ and _____ (a "Regular Distribution Date"),
commencing on _______, __, to the Person in whose name this Pass Through
Certificate is registered at the close of business on the 15th day preceding
the applicable Regular Distribution Date, an amount in respect of the
Scheduled Payments on the
<PAGE>
Equipment Certificates due on such Regular Distribution Date, equal to the
product of the percentage interest in the Pass Through Trust evidenced by
this Pass Through Certificate and an amount equal to the sum of such
Scheduled Payments so received.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, if Special
Payments on the Equipment Certificates are received by the Pass Through
Trustee, from funds then available to the Pass Through Trustee, there shall be
distributed on the applicable Special Distribution Date, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding such Special Distribution Date, an amount
in respect of such Special Payments on the Equipment Certificates, equal to
the product of the percentage interest in the Pass Through Trust evidenced by
this Pass Through Certificate and an amount equal to the sum of such Special
Payments so received.
If a Distribution Date is not a Business Day, distribution
shall be made on the immediately following Business Day with the same force
and effect as if made on such Distribution Date and no interest shall accrue
during the intervening period. The Special Distribution Date shall be any
Business Day on which a Special Payment is to be distributed.
Distributions on this Pass Through Certificate will be made by
the Pass Through Trustee to the Person entitled thereto, without the
presentation or surrender of this Pass Through Certificate or the making of
any notation hereon. Except as otherwise provided in the Pass Through
Agreement and notwithstanding the above, the final distribution on this Pass
Through Certificate will be made after notice is mailed by the Pass Through
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Pass Through Certificate at the office or agency of the Pass
Through Trustee specified in such notice.
[NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL
RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA"
PLAN), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE
BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY
SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS,
THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH
TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON
IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT
ACQUIRED, SUCH PASS THROUGH CERTIFICATE
<PAGE>
WITH ASSETS OF AN ERISA PLAN.]**
- ---------------
** Subject to revision as set forth in Section 6.06 hereof.
THIS PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Pass Through Trustee, by manual signature, this Pass Through
Certificate shall not be entitled to any benefit under the related Pass
Through Trust or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Pass Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, SERIES 199__-__
By: __________________________,
as Pass Through Trustee
By: _______________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and related Series Supplement.
_________________________,
as Pass Through Trustee
By: ______________________
Authorized Signatory
<PAGE>
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct
obligation of, or an obligation guaranteed by, or an interest in, the Company
or the Pass Through Trustee or any affiliate thereof. The Pass Through
Certificates are limited in right of payment, all as more specifically set
forth on the face hereof and in the Pass Through Agreement, any Intercreditor
Agreement, any Liquidity Facility and the Series Supplement. Subject to the
Intercreditor Agreement, all payments or distributions made to
Certificateholders under the Pass Through Agreement shall be made only from
the Trust Property and only to the extent that the Pass Through Trustee shall
have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Pass Through Agreement and the
Series Supplement. Each Certificateholder of this Pass Through Certificate, by
its acceptance hereof, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for distribution to
such Certificateholder as provided in the Pass Through Agreement, any
Intercreditor Agreement, any Liquidity Facility and the Series Supplement.
In connection with withholding taxes, under certain
circumstances the Pass Through Trustee may retain certain amounts otherwise
distributable to a Certificateholder. The purchase by any Certificateholder
of any Pass Through Certificate constitutes the consent of such
Certificateholder to such retention in accordance with the terms of the Pass
Through Agreement.
This Pass Through Certificate does not purport to summarize the
Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility
and the Series Supplement and reference is made to the Pass Through Agreement,
any Intercreditor Agreement, any Liquidity Facility and the Series Supplement
for information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby. A copy of the Pass Through Agreement,
any Intercreditor Agreement, any Liquidity Facility and the Series Supplement
may be examined by any Certificateholder upon request during normal business
hours at the Principal Corporate Trust Office of the Pass Through Trustee, and
at such other places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment or default in respect of payment on the Equipment
Certificates shall occur and assuming there will be no change in the payment
terms of the Equipment Certificates, the aggregate scheduled repayments of
principal on the Equipment Certificates for the Pass Through Trust and the
resulting Pool Factors for the Pass Through Trust after taking into account
each such repayment are set forth below:
<PAGE>
Pass Through Trust, 199__-___
Scheduled Principal
Regular Payments on
Distribution Date Equipment Certificates Pool Factor
$ 0.0000000
The Pass Through Agreement, any Intercreditor Agreement, any
Liquidity Facility and the Series Supplement permit, with certain exceptions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Pass Through Trust at any time by the Company and the Pass Through Trustee
with the consent of the Majority In Interest of Certificateholders in the Pass
Through Trust. Any such consent by the Certificateholder of this Pass Through
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Pass Through Certificate and of any Pass
Through Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this Pass
Through Certificate. The Pass Through Agreement, any Intercreditor Agreement,
any Liquidity Facility and the Series Supplement also permit the amendment
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series
Supplement and subject to certain limitations set forth therein, the transfer
of this Pass Through Certificate is registrable in the Register upon surrender
of this Pass Through Certificate for registration of transfer to the Pass
Through Trustee in its capacity as Registrar, or by any successor Registrar,
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered
Pass Through Certificates without coupons in minimum denominations of $1,000
fractional undivided interests and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by
<PAGE>
the Certificateholder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Pass Through Trustee may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the
Pass Through Trustee or the Registrar may treat the person in whose name this
Pass Through Certificate is registered as the owner hereof for all purposes,
and neither the Pass Through Trustee, the Registrar, nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement, any
Intercreditor Agreement, any Liquidity Facility and the Series Supplement and
the disposition of all property held as part of the Trust Property.
<PAGE>
Exhibit B
to
Pass Through Agreement
__________________________________________
SERIES SUPPLEMENT 199__-___
Dated __________, 199__
Between
___________________________________
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
to
PASS THROUGH TRUST AGREEMENT
Dated as of _________, ____
$__________________
Federal Express Corporation
Pass Through Trust, 199__-___
Federal Express Corporation
199__ Pass Through Certificates,
Series ___
__________________________________________
<PAGE>
SERIES SUPPLEMENT 199__-___
SERIES SUPPLEMENT 199__-___, dated _________, 199__ (this
"Series Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware
corporation (together with its permitted successors and assigns, the "Company")
and ______________________________________, a _____________________ company,
as Pass Through Trustee (the "Pass Through Trustee"), to the Pass Through Trust
Agreement, dated as of ________, ____ (the "Pass Through Agreement"), between
the Company and ___________________________________, a
___________________________.
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agreement provides,
among other things, that the Company and the Pass Through Trustee may execute
and deliver one or more series supplements, each for the purpose of forming a
separate pass through trust for the benefit of the certificateholders of the
series of pass through certificates to be issued pursuant to such pass through
trust, appointing an institution to act as Pass Through Trustee if different
from the institution executing the Pass Through Agreement, establishing
certain terms of such pass through certificates, and pursuant to which the
pass through certificates of such series shall be executed and authenticated
by the Pass Through Trustee and delivered as directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company
has agreed to cause the Equipment Certificates to be issued and sold to the
Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the
Equipment Certificates, which will be held in trust as Trust Property for the
benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has
agreed, pursuant to the Underwriting Agreement, to cause the Pass Through
Trustee to issue and sell the Pass Through Certificates to the Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms of
this Series Supplement, the Pass Through Trustee will execute, authenticate and
deliver the Pass Through Certificates to the Underwriters upon receipt by the
Pass Through Trustee of the purchase price therefor, which will be applied in
accordance with this Series Supplement to purchase the Equipment Certificates;
<PAGE>
WHEREAS, the Pass Through Trustee hereby declares the creation
of this Pass Through Trust for the benefit of the Certificateholders, and the
initial Certificateholders of such Pass Through Certificates, as the grantors
of such Pass Through Trust, by their respective acceptances of such Pass
Through Certificates, join in the creation of such Pass Through Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates
to, and the purchase of the Equipment Certificates by, the Pass Through
Trustee on behalf of this Pass Through Trust, the Company has duly authorized
the execution and delivery of this Series Supplement as the "issuer," as such
term is defined in and solely for purposes of the Securities Act, of the Pass
Through Certificates and as the "obligor," as such term is defined in and
solely for purposes of the Trust Indenture Act, with respect to all such Pass
Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in
the Pass Through Agreement, either directly or by reference therein, have the
meanings assigned to them therein as supplemented by this Article I, if
applicable, except to the extent the context requires otherwise. Any such
defined term that is defined in the Pass Through Agreement as relating to a
particular Pass Through Trust or Series rather than to any Pass Through Trust
or Series generally shall, when used in this Series Supplement, relate solely
to the Federal Express Corporation Pass Through Trust, 199__-___, or the
Federal Express Corporation 199__ Pass Through Certificates, Series ___, as
the case may be, whether or not expressly so stated herein.
"Aircraft" means ___________________________ aircraft ,
including the Engines (as such term is defined in the related Participation
Agreement) relating thereto, (i) leased or to be leased by the Owner Trustee
to the Company pursuant to a Lease or (ii) to be purchased by the Company as
provided, and under the circumstances specified, in Section 3.07 hereof) and,
collectively, means all of the foregoing.
"Authenticating Agent" has the meaning set forth in Section
3.06 hereof.
<PAGE>
"Certificate Account" means the Certificate Account specified
in Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series
of Pass Through Certificates designated in Section 2.01 hereof.
"Collateral Account" means the Collateral Account established
pursuant to the Indenture for Federal Express Corporation Trust No. N_____FE
into which the proceeds of sale of the related Equipment Certificates will be
deposited.
"Cut-off Date for Pass Through Trust" is inapplicable.
"Delivery Date" means, for any Equipment Certificates, the
Refunding Date or the Pass Through Closing Date (as such term is defined in
the related Participation Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Certificates
listed in Schedule I hereto.
"Intercreditor Agreement" has the meaning defined in Article I
of the Pass Through Agreement.
"Issuance Date" means the date defined as the Closing Time in
the Underwriting Agreement.
"Liquidity Facility" has the meaning defined in Article I of
the Pass Through Agreement.
"Liquidity Provider" means _______________________________.
"Participation Agreements" means those Participation Agreements
listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through Certificates
designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other like
words means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section
3.06 hereof.
"Record Date" means any Record Date specified in Section 3.02
hereof.
<PAGE>
"Registrar" means the Person specified as such in Section 3.06
hereof.
"Regular Distribution Date" means any Regular Distribution Date
specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment, the
Special Distribution Date for such Special Payment specified in Section 3.01
hereof.
"Special Payments Account" means the Special Payments Account
specified in Section 3.03 hereof.
"Subordination Agent" means ___________________________.
"Trust Property" means (i) all money, instruments, including the
Equipment Certificates that have been issued by the related Owner Trustee and
delivered to and accepted by the Pass Through Trustee for the benefit of the
Certificateholders, and other property held as the property of this Pass
Through Trust, including all distributions thereon and proceeds thereof and
(ii) all rights of the Pass Through Trust and the Pass Through Trustee, on
behalf of the Pass Through Trust, under any Intercreditor Agreement and the
Liquidity Facility, including, without limitation, all rights to receive
certain payments thereunder, and all monies paid to the Pass Through Trustee
on behalf of the Pass Through Trust pursuant to any Intercreditor Agreement or
the Liquidity Facility.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
_________, 199__ among the Company and ____________________________.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
Section 2.01. Designations; Aggregate Amount. The Pass Through
Trust created hereby shall be designated Federal Express Corporation Pass
Through Trust, 199__-___ (herein sometimes called this "Pass Through Trust").
The Pass Through Certificates evidencing Fractional Undivided Interests in
such Pass Through Trust shall be designated as the Federal Express Corporation
199__ Pass Through Certificates, Series ___ (herein sometimes called the
"Series ___ Pass Through Certificates"). The Series ___ Pass Through
Certificates shall be the only instruments evidencing a fractional undivided
interest in such Pass Through Trust.
<PAGE>
Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass
Through Agreement, the aggregate amount of Series ___ Pass Through
Certificates that may be authenticated, delivered and outstanding under this
Series Supplement is limited to $_________________.
Section 2.02. Declaration of Trust; Authorization. Each
initial Certificateholder, by its acceptance of any Series ___ Pass Through
Certificate is hereby deemed (1) as grantor, to join in the creation and
declaration of this Pass Through Trust and (2) as beneficiary of such Pass
Through Trust, to authorize and direct the Pass Through Trustee to execute and
deliver all documents to which the Pass Through Trustee is a party that may be
necessary or desirable to consummate the transactions contemplated hereby and
to exercise its rights and perform its duties under the Participation
Agreements, the Indentures, the Pass Through Agreement, the Intercreditor
Agreement and this Series Supplement.
The Pass Through Trustee hereby acknowledges and accepts this
grant of trust and declares that it will hold the Trust Property as Pass
Through Trustee of this Pass Through Trust for the use and benefit of the
Certificateholders.
Section 2.03. Issuance of Pass Through Certificates. Subject
to the terms set forth herein, on the Issuance Date (i) the Company shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Series
___ Pass Through Certificates and (ii) the Pass Through Trustee shall deliver
the Series ___ Pass Through Certificates to the Underwriters as provided in
the Underwriting Agreement upon receipt by the Pass Through Trustee of such
proceeds.
Section 2.04. Purchase of Equipment Certificates. On the
Issuance Date, the Pass Through Trustee shall purchase, in accordance with
Section 2.02 of the Pass Through Agreement, each of the Equipment Certificates
upon the satisfaction or waiver of the conditions for such purchase by the
Pass Through Trustee set forth in the related Participation Agreement.
Section 2.05. Representations and Warranties of the Company.
All of the representations and warranties of the Company set forth or
incorporated by reference in Section 1 of the Underwriting Agreement are
incorporated by reference in this Series Supplement as if set forth herein and
the Company represents and warrants that such representations and warranties
are true and correct on the date hereof, except to the extent that such
representations and warranties expressly relate solely to an earlier date or
later date (in which case such representations and warranties were correct on
and as of such earlier date or will be correct on and as of such later date,
as the case may be).
<PAGE>
Section 2.06. The Intercreditor Agreement. The Pass Through
Trustee is hereby directed to execute and deliver the Intercreditor Agreement
on or prior to the Issuance Date in the form delivered to the Pass Through
Trustee by the Company. The Pass Through Trustee represents and warrants that
the Intercreditor Agreement will be duly executed and delivered by one of its
officers or authorized agents who is duly authorized to execute and deliver
such document on its behalf.
Section 2.07. Conditions Precedent. The obligations of the
Pass Through Trustee to participate in the transactions described in Sections
2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of
a certificate of the Company to the same effect as the certificate of the
Company delivered to the Underwriters pursuant to Section 5(c) of the
Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for
the purchase by the Underwriters of the Pass Through Certificates set forth in
Section 5 of the Underwriting Agreement, which satisfaction or waiver for the
purposes hereof shall be conclusively demonstrated by the receipt by the Pass
Through Trustee of the total proceeds payable by such Underwriters pursuant to
the Underwriting Agreement with respect to the Series ___ Pass Through
Certificates.
Section 2.08. Acceptance of Appointment of Pass Through
Trustee. __________________________ represents and warrants that it is
qualified to serve as Pass Through Trustee and satisfies the criteria
specified in Section 10.02 of the Pass Through Agreement for eligibility as a
Pass Through Trustee. _______________________________ hereby agrees to serve
as Pass Through Trustee for the Pass Through Certificates and acknowledges its
appointment as Pass Through Trustee in accordance with the provisions of, and
subject to all of the terms and conditions set forth in, the Pass Through
Agreement and this related Series Supplement upon the execution and delivery
of this Series Supplement.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS;
CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND
THE CERTIFICATEHOLDERS
Section 3.01. Distribution Dates. The Regular Distribution
Dates are each _____________ and ____________, commencing on ____________,
199__. The Special Distribution Date is any Business Day on which a Special
Payment is to be distributed.
<PAGE>
Section 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are __________ and ___________, respectively, and the
Record Date for any Special Distribution Date is the fifteenth day preceding
such Special Distribution Date, in any event, whether or not such date is a
Business Day.
Section 3.03. Certificate Account and Special Payments
Account. In accordance with Section 5.01(a) of the Pass Through Agreement and
upon receipt of any Scheduled Payment, the Pass Through Trustee shall
immediately deposit such Scheduled Payment into the Certificate Account, a
separate and non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose. In accordance with Section 5.01(b) of
the Pass Through Agreement and upon receipt of any Special Payment, the Pass
Through Trustee shall immediately deposit such Special Payment into the
Special Payments Account, a separate and, except as provided in Section 5.04
of the Pass Through Agreement, non-interest bearing account designated by the
Pass Through Trustee to be used for such purpose.
Section 3.04. Form of Pass Through Certificates. Subject to
Section 2.07 of the Pass Through Agreement, each of the Series ___ Pass Through
Certificates will be substantially in the form of Exhibit A hereto. The
Series ___ Pass Through Certificates will be issued pursuant to a book-entry
system in the form of one Registered Global Certificate and subject to the
conditions set forth in the Letter of Representations among the Company, the
Pass Through Trustee and The Depository Trust Company.
Section 3.05. Indenture Documents. The related Indenture
Documents are listed in Schedule I hereto.
Section 3.06. Appointment of Authenticating Agent; Paying
Agent and Registrar. (a) The Pass Through Trustee may appoint an
authenticating agent (the "Authenticating Agent") with respect to the Pass
Through Certificates which shall be authorized to act on behalf of the Pass
Through Trustee to authenticate the Pass Through Certificates issued upon
original issue and upon exchange or registration of transfer thereof or
pursuant to Section 2.09 of the Pass Through Agreement. Pass Through
Certificates so authenticated shall be entitled to the benefits of the Pass
Through Agreement and this Series Supplement and shall be valid and obligatory
for all purposes as if authenticated by the Pass Through Trustee. Whenever
reference is made in the Pass Through Agreement or this Series Supplement to
the authentication and delivery of Pass Through Certificates by the Pass
Through Trustee or the Pass Through Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on
behalf of the Pass Through Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Pass Through Trustee
by an Authenticating Agent.
<PAGE>
(b) The Paying Agent, Registrar and Authenticating Agent for
the Series ___ Pass Through Certificates initially shall be
___________________________________. ________________________________________
hereby represents and warrants to the Company that it is qualified to serve as
Paying Agent, Registrar and Authenticating Agent under the provisions of, and
subject to all of the terms and conditions set forth in, the Pass Through
Agreement and this related Series Supplement.
Section 3.07. Predelivery Funding. During the period between
the date of issuance of Equipment Certificates by the Owner Trustee in respect
of Federal Express Corporation Trust No. N_____FE and the delivery date of the
related Aircraft, such Equipment Certificates will not be secured by such
Aircraft or the related Lease, but will be secured by the Collateral Account.
Pursuant to the related Indenture, the Owner Trustee will deposit the proceeds
from the sale of the related Equipment Certificates into the Collateral
Account for the benefit of the related Indenture Trustee.
Sums deposited in the Collateral Account will be invested as
set forth in the Related Indenture.
Section 3.08. ERISA. [Any Person who is, or who in acquiring
a Pass Through Certificate is or may be using the assets of, an employee
benefit plan subject to Title I of The Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or an individual retirement account or plan
subject to Section 4975 of the Code, or any trust established under any such
plan or account, may acquire or hold any of the Pass Through Certificates, if
such Person determines either that an administrative or a statutory exemption
from the prohibited transaction rules under Section 406 of ERISA and Section
4975 of the Code is applicable to its purchase and holding of a Pass Through
Certificate or that its purchase and holding of a Pass Through Certificate
will not result in a prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code.]*
Section 3.09. Registered Global Certificate. The Series ___
Pass Through Certificates are to be issued in whole in the form of a
Registered Global Certificate, and Section 2.12 of the Pass Through Agreement
shall, accordingly, be applicable. The Depository for the Registered Global
Certificate and the Letter of Representations is The Depository Trust Company.
- ---------------
* Subject to revision as set forth in Section 6.06 of The Pass Through
Agreement.
<PAGE>
ARTICLE IV
MISCELLANEOUS
Section 4.01. Governing Law; Counterpart Form. AS PROVIDED IN
SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH
SERIES ___ PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 4.02. Reports by the Company. In addition to the
reports required to be provided by the Company pursuant to Section 4.03 of the
Pass Through Agreement, the Company agrees to furnish to the Pass Through
Trustee from time to time, such other financial information as the Pass
Through Trustee may reasonably request.
Section 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Series Supplement as if
set forth in full herein, and is in all respects ratified and confirmed, as
supplemented and modified by this Series Supplement.
Section 4.04. Termination. In no event shall this Pass
Through Trust continue beyond the expiration of 21 years after the death of
the last survivor of George Pataki, Governor of New York State, living on the
date of this Series Supplement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers or authorized agents thereunto duly
authorized, all on the day and year first above written.
___________________________________,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Pass Through Trustee
By:
_______________________________________________
Name:
Title:
FEDERAL EXPRESS CORPORATION
By:
_______________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
<PAGE>
Exhibit A
to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
[THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN
SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT.
Unless this pass through certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Pass Through Trustee or its agent for registration or
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]*
- ---------------
* This paragraph is required only if the Pass Through Certificates are to
be represented by the Registered Global Certificate.
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__ - __
199_ Pass Through Certificate, Class ___
CUSIP ______
Final Regular Distribution Date: _______
evidencing a fractional undivided interest in a pass through trust.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 199__ - _____: ____%.
$___________ Fractional Undivided Interest representing _______ of the Pass
Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ______________, for value received, is the
registered
<PAGE>
owner of a $_________ (_____________ dollars) Fractional Undivided Interest
in the Federal Express Corporation Pass Through Trust, 199_-_ (the "Pass
Through Trust") created and declared by _________________________________, as
pass through trustee (the "Pass Through Trustee"), pursuant to the Pass
Through Trust Agreement dated as of __________, _____ (the "Pass Through
Agreement"), as supplemented by Series Supplement __ thereto dated _________,
199_ (the "Series Supplement") between the Pass Through Trustee and Federal
Express Corporation, a Delaware corporation (the "Company"), a summary of
certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Pass Through Agreement and the Series
Supplement.
This Pass Through Certificate is one of the duly authorized Pass
Through Certificates designated as "Federal Express Corporation 199_ Pass
Through Certificates, Class _______." This Pass Through Certificate is issued
under and is subject to the terms, provisions, and conditions of the Pass
Through Agreement, the Series Supplement, any Intercreditor Agreement or any
Liquidity Facility, to which the Certificateholder of this Pass Through
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Pass Through Trust includes
(i) the Equipment Certificates held in such Pass Through Trust, (ii) the
rights of such Pass Through Trust under any Intercreditor Agreement (including
all monies receivable in respect of such rights), (iii) all monies receivable
under any Liquidity Facility for such Pass Through Trust, and (iv) funds from
time to time deposited with the Pass Through Trustee in accounts relating to
such Pass Through Trust (the "Trust Property"). Equipment Certificates of
each series are secured by a security interest in (A) an aircraft leased to or
owned by the Company and, in the case of a leased aircraft, an assignment of
the rights of the Related Owner Trustee with respect to such aircraft,
including the right to receive rent and other amounts payable under the
related Lease or Indenture with respect to such aircraft or (B) a collateral
account containing the proceeds of the sale of such series of Equipment
Certificates, which shall be invested in Specified Investments pursuant to the
related Indenture. Each of the Pass Through Certificates represents a
Fractional Undivided Interest in the Pass Through Trust and the Trust
Property, and has no rights, benefits or interests in respect of any other
separate trust established pursuant to the terms of the Pass Through Agreement
for any other class of Pass Through Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity
Facility, from funds then available to the Pass Through Trustee, there will be
distributed on each ______ and _____ (a "Regular Distribution Date"),
commencing on _______, __, to the Person in whose name this Pass Through
Certificate is registered at the close of business on the 15th day preceding
the applicable Regular Distribution Date, an amount in respect of the
Scheduled Payments on the Equipment Certificates due on such
<PAGE>
Regular Distribution Date, equal to the product of the percentage interest
in the Pass Through Trust evidenced by this Pass Through Certificate and an
amount equal to the sum of such Scheduled Payments so received.
Subject to and in accordance with the terms of the Pass Through
Agreement, the Series Supplement and any Intercreditor Agreement, if Special
Payments on the Equipment Certificates are received by the Pass Through
Trustee, from funds then available to the Pass Through Trustee, there shall be
distributed on the applicable Special Distribution Date, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding such Special Distribution Date, an amount
in respect of such Special Payments on the Equipment Certificates, equal to
the product of the percentage interest in the Pass Through Trust evidenced by
this Pass Through Certificate and an amount equal to the sum of such Special
Payments so received.
If a Distribution Date is not a Business Day, distribution shall be
made on the immediately following Business Day with the same force and effect
as if made on such Distribution Date and no interest shall accrue during the
intervening period. The Special Distribution Date shall be any Business Day
on which a Special Payment is to be distributed.
Distributions on this Pass Through Certificate will be made by the
Pass Through Trustee to the Person entitled thereto, without the presentation
or surrender of this Pass Through Certificate or the making of any notation
hereon. Except as otherwise provided in the Pass Through Agreement and
notwithstanding the above, the final distribution on this Pass Through
Certificate will be made after notice is mailed by the Pass Through Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Pass Through Certificate at the office or agency of the Pass Through
Trustee specified in such notice.
[Any Person who is, or who in acquiring this Pass Through Certificate
is or may be using the assets of, an employee benefit plan subject to Title I
of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or an individual retirement account or plan subject to Section 4975 of the
Code, or any trust established under any such plan or account, may acquire or
hold any of the Pass Through Certificates, if such Person determines either
that an administrative or a statutory exemption from the prohibited
transaction rules under Section 406 of ERISA and Section 4975 of the Code is
applicable to its purchase and holding of this Pass Through Certificate or
that its purchase and holding of this Pass Through Certificate will not result
in a prohibited transaction under Section 406 of ERISA and Section 4975 of the
Code.]**
- ---------------
** Subject to revision as set forth in Section 6.06 of The Pass Through
Agreement.
<PAGE>
THIS PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Pass Through Certificate
shall not be entitled to any benefit under the related Pass Through Trust or
be valid for any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, SERIES 199__-__
By: __________________________,
as Pass Through Trustee
By: _______________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and related Series Supplement.
_________________________,
as Pass Through Trustee
By: ______________________
Authorized Signatory
<PAGE>
[Reverse of Pass Through Certificate]
The Pass Through Certificates do not represent a direct obligation
of, or an obligation guaranteed by, or an interest in, the Company or the Pass
Through Trustee or any affiliate thereof. The Pass Through Certificates are
limited in right of payment, all as more specifically set forth on the face
hereof and in the Pass Through Agreement, any Intercreditor Agreement, any
Liquidity Facility and the Series Supplement. Subject to the Intercreditor
Agreement, all payments or distributions made to Certificateholders under the
Pass Through Agreement shall be made only from the Trust Property and only to
the extent that the Pass Through Trustee shall have sufficient income or
proceeds from the Trust Property to make such payments in accordance with the
terms of the Pass Through Agreement and the Series Supplement. Each
Certificateholder of this Pass Through Certificate, by its acceptance hereof,
agrees that it will look solely to the income and proceeds from the Trust
Property to the extent available for distribution to such Certificateholder as
provided in the Pass Through Agreement, any Intercreditor Agreement, any
Liquidity Facility and the Series Supplement.
In connection with withholding taxes, under certain circumstances the
Pass Through Trustee may retain certain amounts otherwise distributable to a
Certificateholder. The purchase by any Certificateholder of any Pass Through
Certificate constitutes the consent of such Certificateholder to such
retention in accordance with the terms of the Pass Through Agreement.
This Pass Through Certificate does not purport to summarize the Pass
Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the
Series Supplement and reference is made to the Pass Through Agreement, any
Intercreditor Agreement, any Liquidity Facility and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby. A copy of the Pass Through Agreement,
any Intercreditor Agreement, any Liquidity Facility and the Series Supplement
may be examined by any Certificateholder upon request during normal business
hours at the Principal Corporate Trust Office of the Pass Through Trustee, and
at such other places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment or default in respect of payment on the Equipment
Certificates shall occur and assuming there will be no change in the payment
terms of the Equipment Certificates, the aggregate scheduled repayments of
principal on the Equipment Certificates for the Pass Through Trust and the
resulting Pool Factors for the Pass Through Trust after taking into account
each such repayment are set forth below:
<PAGE>
Pass Through Trust, 199__-___
Scheduled Principal
Regular Payments on
Distribution Date Equipment Certificates Pool Factor
$ 0.0000000
The Pass Through Agreement, any Intercreditor Agreement, any Liquidity
Facility and the Series Supplement permit, with certain exceptions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Pass Through Trust at any time by the Company and the Pass Through Trustee
with the consent of the Majority In Interest of Certificateholders in the Pass
Through Trust. Any such consent by the Certificateholder of this Pass Through
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Pass Through Certificate and of any Pass
Through Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this Pass
Through Certificate. The Pass Through Agreement, any Intercreditor Agreement,
any Liquidity Facility and the Series Supplement also permit the amendment
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of this
Pass Through Certificate for registration of transfer to the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
fractional undivided interests and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
<PAGE>
exchange, but the Pass Through Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement, any
Intercreditor Agreement, any Liquidity Facility and the Series Supplement and
the disposition of all property held as part of the Trust Property.
<PAGE>
Schedule I
to
Series Supplement
Federal Express Corporation
Pass Through Trust, 199__-___
Equipment Certificates;
Related Indenture Documents
Equipment Certificates (Federal Express Corporation Trust No. N___ FE):
Interest Rate: ________%
Maturity: _____________
Principal Amount: $____________
Related Indenture Documents:
EXHIBIT 5(a)(1)
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NY 10017
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation (the "Corporation"), in connection with the preparation
and filing with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), of a
shelf Registration Statement on Form S-3 (the "Registration Statement"). The
Registration Statement relates to up to $300,000,000 aggregate principal
amount of Equipment Trust Certificates (the "Certificates") that may be issued
by the Corporation in one or more series from time to time on a delayed basis.
Each series of Certificates will be issued pursuant to the provisions of a
separate Trust Indenture and Security Agreement to be entered into between
State Street Bank and Trust Company of Connecticut, National Association, as
Owner Trustee (the "Owner Trustee") and The Bank of New York, as Indenture
Trustee (the "Indenture Trustee"), substantially in the form filed as Exhibit
4(c)(2) to the Registration Statement (each, an "Indenture" and, in the case
of a refinancing transaction, each, as originally executed and as supplemented
by a related Indenture Supplement, an "Original Indenture").
In connection with the opinions expressed below, we have examined
originals, or copies certified to our satisfaction, of such agreements,
documents and certificates of governmental officials and corporate officers as
we have deemed necessary or advisable as a basis for such opinions. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
examined the form of Indenture filed with the Commission. Unless otherwise
defined herein,
<PAGE>
capitalized terms used herein have the meanings assigned thereto in the
related Indentures.
Based on the foregoing, it is our opinion that:
Assuming (i) the due authorization, execution and delivery of the
Indentures and the Trust Agreements and, in the case of a refinancing
transaction, the Original Indentures and the related Indenture Supplements by
each of the parties thereto, (ii) that the Trust Agreements, the Original
Indentures, if any, and the related Indenture Supplements have not been
terminated, varied, transferred or assigned, (iii) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication and delivery by the Indenture Trustee, of the Certificates to
be issued under each such Indenture, in each case in accordance with the terms
of such Indenture and (iv) in the case of a refinancing transaction, that the
outstanding Original Loan Certificate under each Original Indenture is
delivered by the holder thereof to the Indenture Trustee thereunder for
cancellation and is cancelled, (A) the Indentures, when duly executed and
delivered, will constitute valid and binding agreements of each of the parties
thereto, and (B) the Certificates, when duly authorized, executed, issued and
delivered by the Owner Trustee and duly authenticated and delivered by the
Indenture Trustee in accordance with the terms of the respective Indentures
and sold in accordance with the related purchase agreement or underwriting
agreement between the Corporation and the purchasers or underwriters, as the
case may be, named therein, will be valid and binding obligations of the Owner
Trustee and will be entitled to the benefits of the applicable Indenture.
In giving the foregoing opinion we do not purport to be experts on,
or to express any opinion herein concerning, any laws other than the laws of
the state of New York and the laws of the United States. In giving the
forgoing opinion, we express no opinion as to the priority of the security
interests created by the Original Indentures, if any, or the Indentures.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the prospectus, and in any subsequently filed prospectus
supplements, relating to the Certificates that constitutes part of the
Registration Statement.
Very truly yours,
/s/ DAVIS POLK & WARDWELL
DAVIS POLK & WARDWELL
EXHIBIT 5(a)(2)
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NY 10017
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation, a
Delaware corporation (the "Corporation"), in connection with the preparation
and filing with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), of a
shelf Registration Statement on Form S-3 (the "Registration Statement"). The
Registration Statement relates to up to $300,000,000 aggregate amount of Pass
Through Certificates (the "Pass Through Certificates") that may be issued by
the Corporation in one or more series from time to time on a delayed basis.
The Pass Through Certificates will be issued pursuant to the provisions of the
Pass Through Trust Agreement dated as of June 1, 1999 between the Corporation
and The Bank of New York, as Pass Through Trustee (the "Pass Through
Trustee"), filed as Exhibit 4(a)(1) to the Registration Statement (the "Pass
Through Agreement") as supplemented by a separate Series Supplement for each
series of Pass Through Certificates (each, a "Series Supplement").
In connection with the opinions expressed below, we have examined
originals, or copies certified to our satisfaction, of such agreements,
documents and certificates of governmental officials and corporate officers as
we have deemed necessary or advisable as a basis for such opinions. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
examined the Pass Through Agreement filed with the Commission. Unless
otherwise defined herein, capitalized terms used herein have the meanings
assigned thereto in the Pass Through Agreement.
<PAGE>
Based on the foregoing, it is our opinion that:
Assuming (i) the due authorization, execution and delivery of the
Pass Through Agreement and each applicable Series Supplement by each of the
parties thereto (other than the Corporation), (ii) that the Pass Through
Agreement and each applicable Series Supplement have not been terminated,
varied, transferred or assigned and (iii) the due authorization, execution,
issue, delivery and authentication by the Pass Through Trustee of the Pass
Through Certificates to be issued under the Pass Through Agreement and each
applicable Series Supplement, in each case in accordance with the terms of
such Pass Through Agreement and each such Series Supplement, (A) the Pass
Through Agreement constitutes, and each applicable Series Supplement when duly
executed and delivered will constitute, valid and binding agreements of each
of the parties thereto, and (B) the Pass Through Certificates, when duly
authorized, executed, issued, delivered and authenticated by the Pass Through
Trustee in accordance with the terms of the Pass Through Agreement and each
applicable Series Supplement and sold in accordance with the related purchase
agreement or underwriting agreement between the Corporation and the purchasers
or underwriters, as the case may be, named therein, will be valid and binding
obligations of the Pass Through Trustee and will be entitled to the benefits
of the Pass Through Agreement and each applicable Series Supplement.
In giving the foregoing opinion we do not purport to be experts on,
or to express any opinion herein concerning, any laws other than the laws of
the state of New York and the laws of the United States.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the captions
"Legal Matters" and "Federal Income Tax Consequences" in the prospectus, and
in any subsequently filed prospectus supplements, relating to the Pass Through
Certificates that constitutes part of the Registration Statement.
Very truly yours,
/s/ DAVIS POLK & WARDWELL
DAVIS POLK & WARDWELL
EXHIBIT 5(b)
[Letterhead of Powell, Goldstein, Frazer & Murphy LLP]
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Attention: Chief Financial Officer
Re: Federal Express Corporation --
Pass Through Certificates -- Shelf Registration
Dear Sirs:
We have acted as special counsel to The Bank of New York, a New York
banking corporation (the "Bank"), in its individual capacity and as pass
through trustee (the "Pass Through Trustee"), under a Pass Through Trust
Agreement dated as of June 1, 1999 (the "Agreement") between Federal Express
Corporation (the "Corporation") and the Pass Through Trustee. Pursuant to the
Agreement and one or more supplemental agreements thereto to be entered into
between the Corporation and the Pass Through Trustee, the Pass Through Trustee
will execute, authenticate and deliver, upon the Corporation's request, pass
through certificates in one or more series in an aggregate principal amount of
up to $300,000,000 (the "Pass Through Certificates"), to be registered with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "1933 Act"), under the Corporation's Registration Statement on
Form S-3 (the "Registration Statement").
In our capacity as special counsel, we have examined the Agreement and the
form of the Pass Through Certificates which you have furnished to us and which
are exhibits to the Registration Statement. We have also examined and relied
upon originals, or copies certified or otherwise identified to our
satisfaction, of such documents, corporate records and other instruments as we
have deemed necessary or appropriate for the purposes of this opinion,
including a certificate of the State of New York Banking Department as to the
Bank's existence as a banking organization and trust company. As to matters of
fact, we have relied upon (i) the representations and warranties of the parties
set forth in the Agreement and (ii) one or more certificates of authorized
officers or agents of the Bank delivered to us, without independent inquiry
regarding the accuracy of those representations and warranties or certificates.
We have assumed the genuineness of all signatures (other than those of the
Bank), that all documents submitted to us as originals are authentic and that
all copies submitted to us conform with the originals. With respect to the
discussion in the Prospectus forming part of the Registration Statement
entitled "New York Taxes," the assumptions set forth therein are
specifically incorporated herein by this reference.
Members of our firm are admitted to the bar of the State of New York, and
the opinions set forth herein are limited to the laws of the State of New York
governing taxation and the banking and trust powers of the Pass Through Trustee
and the federal laws of the United States of America governing the banking and
trust powers of the Pass Through Trustee. In addition, the opinions set forth
below are based on the assumption that the Corporation has duly authorized,
executed and delivered the Agreement and, at the time of such authorization,
execution and delivery, had the full power, authority and legal right to have
done so.
Based on the foregoing, we are of the opinion that:
1. The Bank is a validly existing banking corporation and trust company
under the supervision of the State of New York Banking Department under the
laws of the State of New York with the power and authority to execute, deliver
and perform, individually or as Pass Through Trustee, as the case may be, the
terms of the Agreement, and the supplements and Pass Through Certificates
contemplated thereby.
2. With respect to the Pass Through Certificates of each series, when (a)
the Agreement establishing the terms of the Pass Through Certificates of such
series and forming the related Pass Through Trust shall have been duly
authorized, executed and delivered by the Corporation and the Pass Through
Trustee in accordance with the terms and conditions of the Agreement (assuming
that (x) the terms and conditions of the Agreement are in compliance with then
applicable law at the time of such authorization, execution and delivery and
(y) the Pass Through Trustee continues in existence as a validly existing New
York banking corporation and trust company at the time of such authorization,
execution and delivery), and (b) the Pass Through Certificates of such series
shall have been duly executed, authenticated, issued and delivered by the Pass
Through Trustee and sold as contemplated by each of the Registration Statement
and the Prospectus included therein relating to the Pass Through Certificates,
the supplement or supplements to such Prospectus relating to the Pass Through
Certificates of such series, the purchase agreement or underwriting agreement
between the Corporation and the purchasers or underwriters named therein, as
the case may be, relating thereto, the Agreement and the related Series
Supplement (assuming that (x) the terms of the Pass Through Certificates of
such series are in compliance with then applicable law at the time of such
authorization, execution and delivery and (y) the Pass Through Trustee
continues in existence as a validly existing New York banking corporation and
trust company at the time of such authorization, execution and delivery), (i)
the Agreement will constitute a valid and binding obligation of the Pass
Through Trustee in accordance with its terms, except as the provisions thereof
may be limited by bankruptcy, reorganization, insolvency, arrangement,
fraudulent conveyance, moratorium, or other similar laws generally affecting
creditors' rights or debtors' relief from time to time in effect, and (ii) each
of the Pass Through Certificates will be validly issued and will be entitled to
the benefits of the Agreement pursuant to which it was issued. The opinions
expressed above as to the enforceability of the documents referred to above
further are subject in each case to applicable laws and usual equitable
principles that may render certain remedial provisions in the documents
referred to above invalid or unenforceable, which laws and principles do not,
in our opinion, make the remedies provided in such documents inadequate for the
practical realization of the benefits, taken as a whole, intended to be
provided thereby.
3. The discussion in the Prospectus forming part of the Registration
Statement entitled "New York Taxes," insofar as it relates to
statements of law or legal conclusions, is correct in all material respects.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and to the reference to us under the captions "Legal Matters" and
"New York Taxes" in the Prospectus forming part of the Registration
Statement and in any subsequently filed prospectus supplement. In giving this
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the 1933 Act or the Rules and
Regulations of the SEC.
This opinion is rendered as of the date hereof and we assume no obligation
to advise you of any change of law or fact occurring subsequent to the date
hereof. This opinion is being furnished only to the parties to whom this
opinion is addressed and is solely for their benefit, and no other person or
entity shall be entitled to rely on this opinion without our express prior
written consent. This opinion may not be used, circulated, quoted, published or
otherwise referred to for any purpose without our express prior written
consent. Our opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the opinions expressly stated herein.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
EXHIBIT 5(c)
[Letterhead of Bingham Dana LLP]
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Re: Federal Express Corporation $300,000,000 Shelf Registration
Ladies and Gentlemen:
We have acted as special counsel in the State of Connecticut to State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association in its individual capacity ("State Street") and in its
capacity as Owner Trustee (the "Owner Trustee") under one or more Trust
Agreements ("Trust Agreements"), in connection with the filing by Federal
Express Corporation ("Federal Express") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "1933 Act"), of
the Registration Statement on Form S-3 to which this opinion is attached as
Exhibit 5(c), which Registration Statement we understand is to be filed with
the Securities and Exchange Commission on the date hereof (as such Registration
Statement may be amended from time to time, the "Registration Statement"). The
Registration Statement relates to the issuance from time to time of up to
$300,000,000 aggregate principal amount of Equipment Trust Certificates (the
"Certificates") that will be issued by the Owner Trustee in connection with
certain leveraged lease finance transactions pursuant to one or more Trust
Agreements, each between State Street and the owner participant named therein
(the "Owner Participant"), and one or more Trust Indenture and Security
Agreements (individually an "Indenture", collectively the "Indentures") between
the Owner Trustee and The Bank of New York ("BNY") as indenture trustee.
Capitalized terms not otherwise defined herein shall have the meanings
specified in, or defined by reference in or set forth in, the Indentures.
State Street has requested that we deliver this opinion to you.
<PAGE>
Our representation of State Street has been as special counsel for the
limited purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied, with your permission, entirely upon (i)
the representations and warranties of the parties set forth in the Operative
Agreements (as defined below) and (ii) certificates delivered to us by the
management of State Street and have assumed, with your permission, without
independent inquiry, the accuracy of those representations, warranties and
certificates.
We have examined a form of Trust Agreement and a form of Indenture which
you have furnished to us (the "Operative Agreements") and which have been filed
as exhibits to the Registration Statement by incorporation by reference to the
Registration Statement on Form S-3 of Federal Express, File No. 333-49411, the
Certificate of the Comptroller of the Currency relating to State Street and
originals, or copies certified or otherwise identified to our satisfaction, of
such other corporate and public records and agreements, documents, certificates
and other instruments as we have deemed necessary or appropriate for the
purposes of rendering this opinion. For purposes of our opinion rendered in
paragraph 1 below, with respect to the authority of State Street to transact
the business of banking and exercise fiduciary powers, our opinion relies upon
and is limited by such Certificate of the Comptroller of the Currency.
We have assumed, with your permission, the genuineness of all signatures
(other than those on behalf of State Street and the Owner Trustee), the
conformity to the originals of all documents reviewed by us as copies, the
authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document (other than those individuals executing documents on behalf of State
Street and the Owner Trustee).
Each opinion set forth below relating to the enforceability of any
agreement or instrument against State Street, the Owner Trustee or the Owner
Participant, as applicable, is subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without any independent investigation that (i)
each party to the Operative Agreements, other than State Street or the
Owner Trustee, as applicable, at all times relevant thereto, is validly
existing and in good standing under the laws of the jurisdiction in which
it is organized, and is qualified to do business and in good standing
under the laws of each jurisdiction where such qualification is
<PAGE>
required generally or necessary in order for such party to enforce its
rights under such Operative Agreements, and (ii) each party to the
Operative Agreements, at all times relevant thereto, had and has the full
power, authority and legal right under its certificate of incorporation,
partnership agreement, by-laws, and other governing organizational
documents, and the applicable corporate, partnership, or other enterprise
legislation and other applicable laws, as the case may be (other than
State Street and the Owner Trustee with respect to the laws of the United
States of America and the internal substantive laws of the State of
Connecticut) to execute, and to perform its obligations under, the
Operative Agreements.
(b) We have assumed without any independent investigation (i) that
each of the Operative Agreements is a valid, binding and enforceable
obligation of each party thereto other than State Street, the Owner
Trustee and the Owner Participant, as applicable, and, (ii) that each of
the Operative Documents is a valid, binding and enforceable obligation of
State Street, the Owner Trustee and the Owner Participant, as applicable,
to the extent that laws other than those of the State of Connecticut are
relevant thereto.
(c) The enforcement of any obligations of State Street, the Owner
Trustee or the Owner Participant, as applicable, under any of the
Operative Agreements may be limited (i) in the case of State Street, by
the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally, as well as (ii) as relates to State Street,
the Owner Trustee or the Owner Participant, by bankruptcy, insolvency,
reorganization, moratorium, marshaling or other laws and rules of law
affecting the enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of debtors' or
guarantors' rights); and we express no opinion as to the status under any
fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of State Street, the Owner Trustee or the Owner Participant,
as applicable, under any of the Operative Agreements.
(d) We express no opinion as to the enforceability of any particular
provision of any of the Operative Agreements relating to remedies after
default.
(e) We express no opinion as the availability of any specific or
equitable relief of any kind.
<PAGE>
(f) The enforcement of any of your rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity) and, as to any of your
rights to collateral security, will be subject to a duty to act in a
commercially reasonable manner.
(g) We express no opinion as to the enforceability of any particular
provision of any of the Operative Agreements relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) waivers or variations of provisions which are not
capable of waiver or variation under Sections 1-102(3), 9-501(3) or other
provisions of the Uniform Commercial Code ("UCC") of the State of
Connecticut (the "Connecticut UCC"), (v) the grant of powers of attorney
to any person or entity, (vi) exculpation or exoneration clauses,
indemnity clauses, and clauses relating to releases or waivers of
unmatured claims or rights, (vii) the imposition or collection of interest
on overdue interest or providing for a penalty rate of interest or late
charges on overdue or defaulted obligations, or the payment of any
premium, liquidated damages, or other amount which may be held by any
court to be a "penalty" or a "forfeiture," or (viii) so-called "usury
savings clauses" purporting to specify methods of (or otherwise assure)
compliance with usury laws or other similar laws of any jurisdiction.
(h) We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(i) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Agreements.
(j) We express no opinion as to any requirement that any party to the
Operative Agreements (or any other persons or entities purportedly
entitled to the benefits thereof) qualify or register to do business in
any jurisdiction in order to be able to enforce its rights thereunder or
obtain the benefits thereof.
<PAGE>
(k) We have made no examination of, and no opinion is given herein as
to the Owner Trustee's or Owner Participant's title to or other ownership
rights in, the accuracy of the descriptions of, or the existence of any
liens, charges, encumbrances, restrictions or limitations on, or adverse
claims against, the Indenture Estates. We express no opinion as to the
creation, attachment, validity, perfection or priority of any security
interest, mortgage, or other lien or encumbrance with respect to any of
the property or assets of the Owner Trustee.
Subject to the limitations set forth herein, we have made such examination
of law as we have deemed necessary for the purposes of this opinion. The
opinions expressed herein are limited solely to the internal substantive laws
of the State of Connecticut as applied by courts located in the State of
Connecticut and the Federal laws of the United States of America governing the
banking and trust powers of State Street and, solely with respect to the
validity and binding nature of the Indentures and the Certificates, the laws of
the State of New York. We express no opinion as to the laws of any other
jurisdiction. No opinion is given herein as to the choice of law or internal
substantive rules of law that any court or other tribunal may apply to the
transactions contemplated by the Operative Agreements. Insofar as the opinions
expressed herein involve the laws of the State of New York, we have with your
permission and without independent investigation relied entirely upon the
opinion letter dated the date hereof of Davis Polk & Wardwell, and the opinions
set forth herein are subject to each of the assumptions, exceptions,
qualifications and limitations contained in such opinion letter. We have
assumed that the Trust Agreements and the Indentures will not differ in any
material respect from the forms of Trust Agreement and Indenture filed as
exhibits to the Registration Statement and that no relevant provision of
Connecticut, New York or United States of America federal law will have
differed in any material respect from such law as in effect on the date hereof.
No opinion is expressed herein as to the application or effect of federal
securities laws or as to the securities or so-called "Blue Sky" laws of any
state or other jurisdiction. In addition, no opinion is expressed as to matters
governed by the Transportation Code, or by any other law, statute, rule or
regulation of the United States relating to the acquisition, ownership,
registration, use, operation, maintenance, repair, replacement or sale of or
the nature of the Aircraft, Airframe or the Engines.
This opinion is rendered solely for your benefit in connection with the
transactions contemplated by the Operative Agreements and may not be used or
relied upon by any other person or for any other purpose.
<PAGE>
Based upon the foregoing and subject to the assumptions, exceptions and
qualifications set forth below, we are of the opinion that:
1. State Street is a national banking association validly formed and
validly existing under the laws of the United States of America, authorized to
transact the business of banking under the laws of the United States of America
as a national banking association and exercise fiduciary powers.
2. Upon the execution and delivery by State Street and the Owner Trustee,
as the case may be, of each of the Trust Agreements and the execution and
delivery of the Trust Agreements by the respective owner participant and
assuming that at the time of such execution and delivery State Street continues
in existence as a national banking association authorized to transact business
as a national bank and exercise fiduciary powers and has maintained its current
full corporate power and authority to enter into and perform the Trust
Agreements, each of the Trust Agreements will constitute a legal, valid and
binding obligation of the Owner Trustee (and, to the extent set forth in the
respective Trust Agreements, of State Street) enforceable against the Owner
Trustee (and, to the extent set forth in the respective Trust Agreements,
against State Street) in accordance with its terms; and assuming each of the
Trust Agreements is properly authorized, executed and delivered by such owner
participant and that the terms of the Trust Agreements are not, and the
performance by the applicable owner participant is not, in violation of its
charter or by-laws or any laws (federal, state or otherwise), documents,
judgments, regulations or other provisions applicable to such owner
participant, each of the Trust Agreements will constitute, under the laws of
the State of Connecticut, a legal, valid and binding obligation of the owner
participant enforceable against the owner participant named therein in
accordance with its terms.
3. Assuming (i) the due authorization, execution and delivery of each of
the Indentures by each of the parties to each such document (other than State
Street or the Owner Trustee, as the case may be), (ii) that each such party
has, at the time of execution, the corporate power, authority and legal right
to execute, deliver and perform each Indenture to which it is a party, (iii)
that each such party continues to have such power, authority and legal right,
(iv) that the execution, delivery and performance of each such Indenture by
each such party will not violate such party's respective charter or by-laws and
fully complies with all laws and governmental rules and regulations (federal,
state, or otherwise) that may be applicable to such party, in its individual or
trust capacity, as the case may be, (v) that no such document has been
terminated, amended, transferred or assigned, (vi) that the conditions to the
closing of the transactions contemplated by the Trust Agreements and the
<PAGE>
Indentures set forth in the Trust Agreements, the Indentures and the other
Operative Agreements, as applicable, will have been satisfied, and (vii) that
State Street or the Owner Trustee, as the case may be, has maintained its
current full corporate power and authority to enter into and perform the Trust
Agreements and Indentures and to enter into, issue and perform the Certificates
to be issued under each Indenture, (a) upon the execution and delivery of the
Indentures by State Street or the Owner Trustee, as the case may be, the
Indentures will constitute valid and binding agreements of State Street or the
Owner Trustee, as the case may be, and (b) upon the due execution by the Owner
Trustee and the due authentication by BNY as indenture trustee of each
Certificate to be issued under each such Indenture, in each case in accordance
with the terms of each such Indenture, each such Certificate, when issued and
sold in accordance with the purchase agreement or underwriting agreement
between Federal Express and the purchasers or underwriters, as the case may be,
named therein will be a valid and binding obligation of the Owner Trustee and
will be entitled to the benefits of the Indenture pursuant to which it was
issued.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the caption "Legal Matters" in any
subsequently filed prospectus supplements forming part of the Registration
Statement. In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the 1933 Act
or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ BINGHAM DANA LLP
BINGHAM DANA LLP
EXHIBIT 5(d)(1)
[Letterhead of Federal Express Corporation]
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Federal Express
Corporation (the "Company") and have acted as such in connection with the
preparation and filing of a Registration Statement on Form S-3, as amended (the
"Registration Statement") and the three prospectuses contained therein
(collectively, the "Prospectuses") with the Securities and Exchange commission
under the Securities Act of 1933, as amended (the "Securities Act"). The
Registration Statement relates to:
(i) Equipment Trust Certificates, to be issued in one or more series in an
aggregate principal amount of up to $300 million pursuant to one or more Trust
Indenture and Security Agreements (the "Indentures") to be entered into among
the Company, The Bank of New York, a New York corporation, as Indenture
Trustee, and State Street Bank and Trust Company of Connecticut, National
Association, as Owner Trustee;
(ii) Pass Through Certificates, to be issued in one or more series in an
aggregate amount of up to $300 million pursuant to a Pass Through Trust
Agreement (the "Pass Through Agreement") dated as of June 1, 1999 between the
Company and The Bank of New York, a New York corporation, as Pass Through
Trustee; or
(iii) Debt Securities, to be issued in one or more series in an aggregate
principal amount of up to $300 million pursuant to a Trust Indenture to be
entered into between the Company and The First National Bank of Chicago, as
Trustee.
In connection with the opinions expressed below, I or attorneys under my
supervision have examined originals, or copies certified to my satisfaction, of
such agreements, documents, certificates and statements of government officials
and other papers as we have deemed necessary or advisable as a basis for such
opinions. In such examination we have assumed the genuineness of all signatures
and the authenticity of all
<PAGE>
documents submitted to us as originals, and the conformity with the originals
of all documents submitted to us as copies. I or attorneys under my supervision
have also examined the Pass Through Agreement and the forms of Indentures filed
with the Securities and Exchange Commission.
Based upon the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and is duly authorized to
carry on the business in which it is engaged.
2. The execution and delivery by the Company of each Indenture and the
Pass Through Agreement has been duly authorized by the Company.
I am qualified to practice law in the State of Tennessee and I do not
purport to be an expert on, or to express any opinion herein concerning, any
laws other than the laws of the State of Tennessee, the corporate laws of the
State of Delaware and the federal laws of the United States.
I hereby consent to the filing of this opinion as a exhibit to the
Registration Statement and to the reference to me under the heading "Legal
Matters" in the Prospectuses and in any subsequently filed Prospectus
Supplements. In giving such consent, I do not admit that I am in the category
of persons whose consent is required under Section 7 of the Securities Act.
Sincerely,
FEDERAL EXPRESS CORPORATION
/s/ KAREN M. CLAYBORNE
Karen M. Clayborne
Senior Vice President and General Counsel
EXHIBIT 5(d)(2)
[Letterhead of Federal Express Corporation]
June 4, 1999
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Federal Express
Corporation (the "Company") and have acted as such in connection with the
preparation and filing of a Registration Statement on Form S-3, as amended (the
"Registration Statement") and the three prospectuses contained therein
(collectively, the "Prospectuses") with the Securities and Exchange commission
under the Securities Act of 1933, as amended (the "Securities Act"). The
Registration Statement relates to:
(i) Equipment Trust Certificates, to be issued in one or more series in an
aggregate principal amount of up to $300 million pursuant to one or more Trust
Indenture and Security Agreements to be entered into among the Company, The
Bank of New York, a New York corporation, as Indenture Trustee, and State
Street Bank and Trust Company of Connecticut, National Association, as Owner
Trustee;
(ii) Pass Through Certificates, to be issued in one or more series in an
aggregate amount of up to $300 million pursuant to a Pass Through Trust
Agreement dated as of June 1, 1999 between the Company and The Bank of New
York, a New York corporation, as Pass Through Trustee; or
(iii) Debt Securities, to be issued in one or more series in an aggregate
principal amount of up to $300 million pursuant to a Trust Indenture (the
"Trust Indenture") to be entered into between the Company and The First
National Bank of Chicago, as Trustee.
In connection with the opinions expressed below, I or attorneys under my
supervision have examined originals, or copies certified to my satisfaction, of
such agreements, documents, certificates and statements of government officials
and other papers as we have deemed necessary or advisable as a basis for such
opinions. In such examination we have assumed the genuineness of all signatures
and the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies. I or
attorneys under my supervision have also
<PAGE>
examined the form of Trust Indenture filed with the Securities and
Exchange Commission.
Based upon the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and is duly authorized to
carry on the business in which it is engaged.
2. The execution and delivery by the Company of the Trust Indenture has
been duly authorized by the Company.
3. Subject to (i) the determination of the terms of the Debt Securities in
accordance with the Trust Indenture, (ii) the issuance, sale, authentication
and delivery of the Debt Securities as contemplated by the Trust Indenture and
the underwriting agreement for debt securities in substantially the form filed
as Exhibit 1(c) to the Registration Statement, and (iii) the Registration
Statement being declared effective, the Debt Securities, when issued and sold,
will be legally issued and the valid and binding obligations of the Company
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditors rights generally.
I do not find it necessary for purposes of this opinion and accordingly,
do not purport to cover herein the application of the "Blue Sky" or securities
laws of the various states to the sales of the Debt Securities.
I am qualified to practice law in the State of Tennessee and I do not
purport to be an expert on, or to express any opinion herein concerning, any
laws other than the laws of the State of Tennessee, the corporate laws of the
State of Delaware and the federal laws of the United States.
I hereby consent to the filing of this opinion as a exhibit to the
Registration Statement and to the reference to me under the heading "Legal
Matters" in the Prospectuses and in any subsequently filed Prospectus
Supplements. In giving such consent, I do not admit that I am in the category
of persons whose consent is required under Section 7 of the Securities Act.
Sincerely,
FEDERAL EXPRESS CORPORATION
/s/ KAREN M. CLAYBORNE
Karen M. Clayborne
Senior Vice President and General Counsel
Arthur Andersen Letterhead
May 31, 1999
Federal Express Corporation:
We are aware that Federal Express Corporation has incorporated by reference in
this Form S-3 Registration Statement their Form 10-Q's for the quarters ended
August 31, 1998, November 30, 1998 and February 28, 1999, which include our
reports dated September 23, 1998, December 16, 1998 and March 17, 1999,
respectively, covering the unaudited interim financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933, those reports
are not considered a part of the registration statement prepared or certified by
our firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-3 registration statement to be filed with the
Securities and Exchange Commission on June 4, 1999, of our reports dated July
8, 1998, included or incorporated by reference in the Form 10-K filing for the
year ended May 31, 1998 of Federal Express Corporation, and to all references
to our firm included in this registration statement.
ARTHUR ANDERSEN LLP
Memphis, Tennessee
May 31, 1999.
EXHIBIT 25(b)
CONFORMED COPY
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
- -------------------------------------------------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
- -------------------------------------------------------------------------------
Federal Express Corporation
(Exact name of obligor as specified in its charter)
Delaware 71-0427007
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2005 Corporate Avenue
Memphis, Tennessee 38132
(Address of principal executive offices) (Zip code)
----------------------
Equipment Trust Certificates and Enhanced Pass Through Certificates
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- --------------------------------------------------------------
Name Address
- --------------------------------------------------------------
Superintendent of Banks of the State of
2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-2-
<PAGE>
CONFORMED COPY
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of Atlanta, and
State of Georgia, on the 27th day of May, 1999.
THE BANK OF NEW YORK
By: /s/ STEFAN VICTORY
--------------------------
Name: Stefan Victory
Title: Agent
<PAGE>
EXHIBIT 7 TO FORM T-1
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1998, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
- ------ --------------
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin .................................... $ 3,951,273
Interest-bearing balances ............................ 4,134,162
Securities:
Held-to-maturity securities .......................... 932,468
Available-for-sale securities ........................ 4,279,246
Federal funds sold and securities
purchased under agreements to resell.................. 3,161,626
Loans and lease financing receivables:
Loans and leases,
net of unearned income ........................ 37,861,802
LESS: Allowance for loan and
lease losses .................................. 619,791
LESS: Allocated transfer risk
reserve:....................................... 3,572
Loans and leases, net of unearned
income and allowance and reserve............... 37,238,439
Assets held in trading accounts .......................... 1,551,556
Premises and fixed assets (including
capitalized leases) .................................. 684,181
Other real estate owned .................................. 10,404
Investments in unconsolidated
subsidiaries and associated
companies ......................................... 196,032
Customers' liability to this bank on
acceptances outstanding ........................... 895,160
Intangible assets ........................................ 1,127,375
Other assets ............................................. 1,915,742
----------
Total assets ............................................. $60,077,664
-----------
-4-
<PAGE>
LIABILITIES
- -----------
Deposits:
In domestic offices .................................. $27,020,578
Noninterest-bearing .................................. 11,271,304
Interest-bearing ..................................... 15,749,274
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .................. 17,197,743
Noninterest-bearing .................................. 103,007
Interest-bearing ..................................... 7,094,736
Federal funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal Funds Purchased............................... 1,761,170
Demand notes issued to the U.S.
Treasury ............................................. 125,423
Trading liabilities ...................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less .......... 1,903,700
With remaining maturity of more than
one year through three years....................... 0
With remaining maturity of more than
three years........................................ 31,639
Bank's liability on acceptances
executed and outstanding .......................... 900,390
Subordinated notes and debentures ........................ 1,308,000
Other liabilities ........................................ 2,708,852
-----------
Total liabilities ........................................ 54,583,127
-----------
EQUITY CAPITAL
- --------------
Common stock ............................................. 1,135,284
Surplus .................................................. 764,443
Undivided profits and capital
reserves ............................................. 3,542,168
Net unrealized holding gains (losses)
on available-for-sale securities ..................... 82,367
Cumulative foreign currency
translation adjustments .............................. (29,725)
-----------
Total equity capital ..................................... 5,494,537
-----------
Total liabilities and equity capital ..................... $60,077,664
-----------
-5-
<PAGE>
I, Thomas J. Masiro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Masiro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi )
Gerald L. Hassell ) Directors
Allen R. Griffith )
