EXHIBIT 4.e.1
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N582FE)
Dated as of April 1, 1996
Amended and Restated as of June 1, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
BOATMEN'S EQUIPMENT FINANCE, INC.,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BANK OF AMERICA NT & SA
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH),
Original Loan Participants
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48420, REGISTRATION NO. N1751A
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
Section 2.03. Owner Participant Payment................................ 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 17
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 17
Section 6.02. Offering by Lessee....................................... 23
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 31
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 31
Section 7.02. Citizenship, Etc......................................... 32
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 34
Section 7.04. Representations, Covenants and Warranties of FSBU and the
Owner Trustee............................................ 37
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee.................................................. 40
Section 7.06. Indenture Trustee's Notice of Default.................... 41
Section 7.07. Releases from Indenture.................................. 41
Section 7.08. Covenant of Quiet Enjoyment.............................. 41
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties........................... 42
Section 7.10. Survival of Representations, Warranties and Covenants.... 43
Section 7.11. Lessee's Assumption of the Certificates.................. 43
Section 7.12. Indebtedness of Owner Trustee............................ 45
Section 7.13. Compliance with Trust Agreement, Etc..................... 45
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 46
Section 8.02. After-Tax Basis.......................................... 52
Section 8.03. Time of Payment.......................................... 53
Section 8.04. Contests................................................. 53
Section 8.05. Refunds.................................................. 55
Section 8.06. Lessee's Reports......................................... 56
Section 8.07. Survival of Obligations.................................. 56
Section 8.08. Payment of Taxes......................................... 57
Section 8.09. Reimbursements by Indemnitees Generally.................. 57
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 57
Section 9.02. After-Tax Basis.......................................... 61
Section 9.03. Subrogation.............................................. 61
Section 9.04. Notice and Payment....................................... 62
Section 9.05. Refunds.................................................. 62
Section 9.06. Defense of Claims........................................ 62
Section 9.07. Survival of Obligations.................................. 63
Section 9.08. Effect of Other Indemnities.............................. 63
Section 9.09. Interest................................................. 64
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 64
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 66
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 68
Section 12.02. Interest of Holders of Certificates..................... 68
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 68
Section 13.02. Further Assurances...................................... 69
Section 13.03. No Retroactive Application.............................. 69
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 69
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 70
Section 15.02. Reoptimization.......................................... 73
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 75
Section 17.02. [Intentionally Left Blank.]............................. 75
Section 17.03. Counterparts............................................ 75
Section 17.04. No Oral Modifications................................... 75
Section 17.05. Captions................................................ 75
Section 17.06. Successors and Assigns.................................. 76
Section 17.07. Concerning the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee................................ 76
Section 17.08. Severability............................................ 76
Section 17.09. Public Release of Information........................... 76
Section 17.10. Certain Limitations on Reorganization................... 77
Section 17.11. GOVERNING LAW........................................... 77
Section 17.12. Section 1110 Compliance................................. 77
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 78
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special New York Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Missouri Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N582FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N582FE) dated as of April 1, 1996, as amended and restated as of June 1, 1996
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"),
BOATMEN'S EQUIPMENT FINANCE, INC., a Missouri corporation (herein, together
with its successors and permitted assigns, the "Owner Participant"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, BANK OF AMERICA NT & SA, THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH), (individually, together with its successors and
permitted assigns, an "Original Loan Participant" and collectively the
"Original Loan Participants"), FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as otherwise expressly stated herein, but solely as owner trustee under
the Trust Agreement referred to below (in such capacity as trustee, together
with its successors and permitted assigns, the "Owner Trustee"), STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as otherwise expressly stated herein, but solely as indenture
trustee under the Indenture referred to below (in such capacity as trustee,
together with its successors and permitted assigns, the "Indenture Trustee")
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in
its individual capacity, except as otherwise expressly stated herein, but
solely as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with FSBU in its individual capacity,
pursuant to which FSBU agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates and
the payment to the Owner Trustee of the Additional Leverage Amount;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend and restate the Original Ancillary
Agreement I, to amend the Original Tax Indemnity Agreement and to amend and
restate the Original Trust Agreement, each such amendment and restatement to
be executed and delivered simultaneously with the purchase of the Certificates
by the Pass Through Trustee for the Pass Through Trusts and the Refinancing in
full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the terms defined in Schedule
II hereto are incorporated herein for all purposes of this Agreement and shall
be equally applicable to both the singular and the plural forms of the terms
so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Owner Participant shall on behalf of the Owner Trustee
execute a wire transfer or intra-bank transfer in favor of the Agent in the
amount of all accrued and unpaid interest on the Original Loan Certificates
to but excluding the Refunding Date, which transfer shall constitute the
payment of all such accrued and unpaid interest;
(ii) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii) for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv) the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable (A) by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates and
(B) by wire transfer in favor of the Owner Participant on behalf of the
Owner Trustee in the amount of the Additional Leverage Amount;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi) the Owner Trustee shall cause the Certificates to be delivered to
the applicable Pass Through Trustee in accordance with Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass Through
Trustee, upon the request of the Owner Trustee, the Certificates as provided
in Section 2.02 hereof. The Owner Participant hereby requests and directs the
Owner Trustee to execute and deliver this Agreement and, subject to the terms
hereof, to take the actions specified herein. The Original Loan Participants
by their execution and delivery hereof, request and direct the Indenture
Trustee to execute and deliver this Agreement and concurrently with the events
specified in clauses (iii) through (v) of this Section 2.01(b) and subject to
the terms and conditions hereof to take the actions contemplated herein. The
parties hereto, including, without limitation, the Original Loan Participants,
confirm that, as provided in Section 2.06 of the Original Indenture, upon
payment in full of the principal amount, Breakage Costs, if any, and interest
on the Original Loan Certificates and all other sums then payable to the
Original Loan Participants under the Original Agreements to the extent
specified in subsection (c) below, the Original Loan Participants shall have
no further interest in, or other right or obligation with respect to, the
Trust Indenture Estate, the Original Agreements or the Operative Agreements
(it being understood that the foregoing shall not limit or detract from any
claim that any Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participants
shall, until the payment in full of such amounts to the Agent on behalf of the
Original Loan Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and shall, upon such payment and thereafter, be governed by this Agreement.
The Lessee hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before June 30, 1996, then the rights and obligations
of the parties to the Original Participation Agreement, including, without
limitation, the Original Loan Participants, shall be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and this Agreement shall be of no further force and effect, except that the
Lessee shall be obligated hereby to pay all fees and expenses of the Original
Loan Participants, the Indenture Trustee, the Owner Participant, the Owner
Trustee, the Pass Through Trustee and their respective counsel relating to the
transactions contemplated hereby. Each of the parties hereto agrees to
execute and deliver to the other parties such documents and instruments as may
be necessary to give effect to the foregoing provisions of this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
Section 2.03. Owner Participant Payment. The Owner Participant
agrees on behalf of the Owner Trustee to make available to the Owner Trustee
funds sufficient to pay to the Indenture Trustee on the Commencement Date an
amount equal to the difference between the amounts of principal (if any) and
interest scheduled to be paid on the Certificates on such date and the amount
of Basic Rent, if any, scheduled to be paid by the Lessee on such date (the
"Excess Amount"), and the Owner Trustee shall upon receipt thereof make such
funds available to the Indenture Trustee to pay amounts due and owing under
the Certificates on the Commencement Date, provided that the Owner Participant
shall not be obligated to make such funds available if a Bankruptcy Default or
an Event of Default under the Lease shall have occurred and be continuing on
the date on which such funds are to be made available, but in any event, if
the Owner Participant does not make such funds available, the Lessee shall be
obligated to make a pre-payment of Basic Rent pursuant to Section 3.05 of the
Lease in an amount sufficient to pay in full the amounts of principal and
interest due on the Certificates on such date. Such obligations shall not,
nor shall they be construed to, make the Owner Participant directly liable on
the Certificates or in any way convert the Certificates to recourse loans
against the Owner Participant.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Lessee, the Indenture Trustee and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee for
each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of the
Pass Through Trustee on behalf of such Pass Through Trust, in the principal
amounts, Maturity, bearing the interest rate and the other economic terms
specified in the Series Supplements and otherwise as provided in Section
2.04 of the Indenture. The Pass Through Certificates shall be registered
under the Securities Act, any applicable state securities laws shall have
been complied with, and the Pass Through Agreement shall have been qualified
under the Trust Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee or their special counsel, would
make it illegal for the Owner Participant, the Lessee, the Owner Trustee,
the Pass Through Trustee or the Indenture Trustee, and no change in
circumstances outside the control of the Owner Participant shall have
occurred which would otherwise make it illegal for the Owner Participant,
the Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, to participate in the transactions to be consummated on the
Refunding Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee or the Pass Through Trustee is not
frivolous, nor shall any order have been issued or proposed to be issued by
any court, or governmental authority or agency, as of the Refunding Date,
to set aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other Operative
Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the
Owner Participant, as the case may be, of such documents shall have been
delivered to the Owner Participant, the Lessee, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of each of the Lease, the Lease Supplement and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Owner Participant Guaranty;
(vi) the Ancillary Agreement I; and
(vii) the Ancillary Agreement II.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participants, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its counsel) shall have
received the following, in each case in form and substance satisfactory to
it:
(i) a copy of the certificate of incorporation and by-laws of
the Lessee, certified by the Secretary or an Assistant Secretary of
the Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation or articles of
association, as the case may be, and bylaws of the Owner Participant
and the Owner Participant Guarantor, in each case certified by the
Secretary or an Assistant Secretary of the Owner Participant or the
Owner Participant Guarantor, as the case may be, as of the Refunding
Date, and, in the case of the Owner Participant, a copy of the
resolutions of the board of directors of the Owner Participant,
certified as such as of the Refunding Date by such Secretary or an
Assistant Secretary, authorizing the execution and delivery by the
Owner Participant of the Original Agreements to which it is a party,
this Agreement, the Tax Indemnity Agreement, the Trust Agreement and
the other Operative Agreements to which the Owner Participant is or
is to be a party and each other document to be executed and delivered
by the Owner Participant in connection with the transactions
contemplated hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws
and other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of each
of the Original Agreements to which it is party, this Agreement, the
Indenture and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Indenture Trustee in connection with the transactions
contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws
and other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant
as the Indenture Trustee, the Pass Through Trustee or the Owner
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Supplement
covering the Aircraft;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1995, November 30, 1995 and
February 29, 1996) and (ii) in the Lessee's Current Report on Form
8-K dated April 30, 1996, as to which such officer will make no
certification concerning the liability of the Lessee (if any), or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, no material adverse
change has occurred in the financial condition, business or
operations of the Lessee from that shown in the unaudited
consolidated financial statements of the Lessee as of February 29,
1996 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant and the Owner
Participant Guarantor. On the Refunding Date, the following statements
shall be true, and the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from (i) the
Owner Participant, signed by a duly authorized officer of the Owner
Participant dated the Refunding Date, stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party and in any
certificate delivered pursuant hereto or thereto, are true and
correct on and as of the Refunding Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or inaction on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default,
and (ii) from the Owner Participant Guarantor, signed by a duly authorized
officer of the Owner Participant Guarantor dated the Refunding Date,
stating that the representations and warranties of the Owner Participant
Guarantor contained in the Owner Participant Guaranty and in any
certificate delivered pursuant thereto are true and correct on and as of
the Refunding Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an earlier
date, in which case such certificate shall state that such representations
and warranties were true and correct on and as of such earlier date).
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSBU and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSBU and SSB, respectively, dated the
Refunding Date, stating with respect to FSBU and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSBU in its
individual capacity and as Owner Trustee, of SSB in its individual
capacity and as Indenture Trustee and of SSB in its individual
capacity and as Pass Through Trustee contained in this Agreement, the
Lease, the Trust Agreement and the Indenture and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSBU in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSBU and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participants, the Underwriters, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participants, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate and
Business Transactions of the Lessee, in the form of Exhibit A(1)(a)
hereto and addressed to the Agent, the Original Loan Participants,
the Underwriters, the Owner Participant, the Owner Trustee, the Pass
Through Trustee and the Indenture Trustee;
(ii) Winston & Strawn, special New York counsel for the Owner
Participant and the Owner Participant Guarantor, in the form of
Exhibit A(2)(a) hereto and Bryan Cave LLP., special Missouri counsel
to the Owner Participant and the Owner Participant Guarantor, in the
form of Exhibit A(2)(b) hereto, each addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(vi) Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee; and
(vii) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(6) hereto and addressed to
the Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee.
(m) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(n) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to
(i) the due recording of such documents and the documents identified in
Section 4.01(i) of the Original Participation Agreement and (ii), subject to
customary qualifications, the lack of any intervening documents with respect
to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l)(ii), (iii), (iv),
(v), (vi) and (vii) of Section 4.01 hereof and the Underwriters and the Owner
Participant shall have made available the amounts required to be paid by them
pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1995, November 30, 1995 and February 29, 1996)
and (ii) in the Lessee's Current Report on Form 8-K dated April 30, 1996, as
to which no representation is made concerning the Lessee's liability (if
any) or the effect of any adverse determination upon the consolidated
financial condition, business or operations of the Lessee, if adversely
determined, would materially and adversely affect the consolidated
financial condition, business or operations of the Lessee, or (C) if
adversely determined would adversely affect the ability of the Lessee to
perform its obligations under the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Transportation Code of the Indenture, the Trust Agreement
and the Lease, (B) the filing of the financing statements referred to in
Section 4.01(f) hereof and (C) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document, is necessary or advisable in order (i) to establish the Owner
Trustee's title to and interest in the Aircraft and the Lessor's Estate as
against the Lessee and any third parties, or (ii) to perfect the first
security interests in and mortgage Lien on the Trust Indenture Estate in
favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1995, November 30, 1995 and February
29, 1996, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1995 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1995, November 30, 1995 and February
29, 1996, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur
Andersen, LLP, independent public accountants; said financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly the financial position
of the Lessee as of such dates and the results of its operations and
cash flows for such periods and such Annual Report, Quarterly Reports and
financial statements did not, as of their respective dates of filing with
the SEC, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as hereinafter defined) nor
their related trusts have been terminated in a distress termination
pursuant to Section 4041(c) of ERISA or by the PBGC (as hereinafter
defined) pursuant to Section 4042 of ERISA, nor have any actions been
taken to so terminate any Pension Plan or related trust and neither
the Lessee nor any ERISA Affiliate (as hereinafter defined) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the imposition
of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
non-exempt transaction which is prohibited by Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section
4975 of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets (within the meaning of ERISA and
any applicable rules and regulations) of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code.
As used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is (or, solely for purposes of
clause (i) of this Section 6.01(m), within the preceding 5 calendar years
has been) maintained, or contributed to, by the Lessee or any ERISA
Affiliate; the term "PBGC" means Pension Benefit Guaranty Corporation and
any successor agency or instrumentality thereto; and the term "ERISA
Affiliate" means any entity which together with the Lessee would be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Refunding Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certified by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in the
performance of any term or condition of the Modification Agreement and the
GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof and there are no other broker's fees payable in connection with
such transactions other than those of D'Accord Financial Services, Inc.; and
(y) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 3 other institutional investors.
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will promptly take, or cause to be taken, at
the Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary or requested
by the Indenture Trustee to maintain the perfection of the first security
interest and the Lien created by the Indenture, and the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate as against
the Lessee and any third parties or if the Lessee cannot take, or cause to
be taken, such action, will furnish to the Indenture Trustee and the Owner
Trustee timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be
required to enable either of them to take such action at the Lessee's cost
and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in Section
7.01 of the Lease and shall cause the Aircraft to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if, at any time after the eighth anniversary of
the Commencement Date, the Lessee has requested their consent to the
registration of the Aircraft in the name of the Owner Trustee (or, if
appropriate, in the name of the Lessee or a sublessee as a "lessee" or a
"sublessee"), at the Lessee's expense, in a country listed in Schedule III
hereto with which the United States then maintains normal diplomatic
relations, the Owner Participant, upon receipt by the Owner Participant,
the Owner Trustee and the Indenture Trustee of the assurances and opinion
described below, shall not unreasonably withhold their consent to such
change in registration (it being agreed, without limitation, that the
inability of the Lessee to deliver such assurances and opinion shall
constitute reasonable grounds to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received, all at the Lessee's cost and
expense:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) that the Owner Trustee's right, title and interest in and
to the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry and that the new jurisdiction of registry
will give effect to the title and registry of the Aircraft therein
substantially to the same extent as does the Government;
(C) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(D) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided for
under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(E) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(F) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity, and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity, and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry and if the sublessee, if any, is a
government or governmental body, such sublessee shall have
effectively waived any rights to sovereign immunity;
(G) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee is not
required to indemnify the Owner Participant, the Indenture Trustee,
the Owner Trustee (or any successor, assign or Affiliate thereof) and
the Trust Estate pursuant to Article 8 hereof or for which the Lessee
has not agreed to indemnify such parties in a manner satisfactory to
such parties;
(H) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change of
registry, including any reasonable attorneys' fees and expenses;
(I) that the Lessee shall maintain the registration of the
Aircraft under the laws of such country unless and until the
registration of the Aircraft is changed as provided herein, and shall
cause to be done at all times all other acts (including, if
applicable, the filing, recording and delivery of any document or
instrument and the payment of any sum) necessary or, by reference to
prudent industry practice in such country, advisable in order to
create, preserve and protect the interests of the Lessor and the
Indenture Trustee as against the Lessee or any third parties in such
jurisdiction;
(J) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(K) that appropriate deregistration powers of attorney in
favor of the Owner Trustee and the Indenture Trustee have been
executed and delivered by the Lessee and any sublessee and, if
necessary or desirable for the effectiveness thereof, filed with the
relevant aeronautics authority.
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal, valid,
binding and enforceable in such jurisdiction against the Lessee, any
sublessee, the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(C)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than such tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction (i) will not impair
the rights of the Lessor in and to the Aircraft and (ii) (unless the
Lessee shall have agreed to provide insurance reasonably satisfactory
to the Indenture Trustee and the Owner Participant covering the risk
of requisition of use of the Aircraft by the government of registry
of the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft therein
substantially to the same extent as does the Government, and that the
Lien of the Indenture shall continue as a first priority, duly
perfected lien on the Aircraft;
(G) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(H) that the rights of the Lessor in and to the Aircraft will
not be impaired in such new jurisdiction of registry; and
(I) to such further effect with respect to such other matters
as the Owner Participant, the Owner Trustee or the Indenture Trustee
may reasonably request.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its business judgment, is no longer necessary or desirable
in the conduct of its business and (ii) the loss of which will not
materially adversely affect or diminish the rights of the Holders or the
Owner Participant or the ability of the Lessee to perform its obligations
under the Operative Agreements.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Trustee and the
Owner Participant all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
counsel to the Lessee which counsel shall be reasonably satisfactory to the
Owner Participant and the Indenture Trustee and which opinion shall be
reasonably satisfactory to the Owner Participant and the Indenture Trustee,
and an officer's certificate, each stating that such merger, consolidation,
conveyance, transfer or lease and the instrument noted in clause (iv) above
comply with this Section 6.03(g), that such instrument is a legal, valid
and binding obligation of, and is enforceable against, such survivor or
Person (except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally), and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to a Default not capable of
cure within the applicable grace period therefor or an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the Lessor
and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any officer of the Lessee obtaining knowledge of any
condition or event which constitutes a Default or an Event of
Default, an officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is taking
or proposes to take with respect thereto;
(F) promptly, notice of all legal or arbitral proceedings,
and of all proceedings by or before any governmental or regulatory
authority or agency, and of any material development in respect of
such legal or other proceedings affecting the Lessee, which in each
case specified above, if adversely determined, would, in the Lessee's
reasonable judgment, materially impair the ability of the Lessee to
perform its obligations under the Operative Agreements or consummate
the transactions contemplated hereby and thereby; and
(G) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an officer reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or Event of Default or
if a Default or an Event of Default exists or did exist, specifying the nature
thereof, the period of existence thereof and what action the Lessee has taken
or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust
Agreement, at all times be within its control and the foregoing representation
shall neither expand nor limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant further represents and warrants that neither the Owner Participant
nor anyone else authorized to act on its behalf has directly or indirectly
offered any interest in the Lessor's Estate or the Trust Agreement, or in any
similar security, for sale to, or solicited any offer to acquire any of the
same from, anyone. The Owner Participant further represents and warrants that
neither it nor anyone authorized to act on its behalf has made or will make any
offer, solicitation or sale of any interest in the Lessor's Estate or the
Trust Agreement in violation of the provisions of Section 5 of the Securities
Act of 1933, as amended. No representation in this Section 7.01(b) shall
include any action or inaction of the Lessee, the Agent, First Chicago Leasing
Corporation or the Underwriters whether or not purportedly on behalf of the
Owner Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any Certificates or any interest in the Lessor's Estate, or
in any similar security, for sale to, or solicited any offer to acquire any of
the same from anyone (other than the Owner Participant) and (ii) shall own
Certificates.
Section 7.02. Citizenship, Etc. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall cease to be a Citizen of the United
States, it will resign immediately as the Owner Trustee if such citizenship is
necessary under the Transportation Code as in effect at such time or, if it is
not necessary under the Transportation Code as in effect at such time, if it
is informed in writing by the Lessee or the Owner Participant that such lack
of United States citizenship would have any adverse effect on the Lessee or
the Owner Participant. The Owner Trustee, in its individual capacity, further
covenants that if at any time it appears reasonably probable that it will
cease to be a Citizen of the United States based on information that is (i)
known to a Responsible Officer or (ii) generally known to the public, it will
promptly so notify, to the extent permitted by law, all parties to this
Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee and the Indenture Trustee,
that if at any time when the Aircraft is registered or the Lessee proposes to
register the Aircraft in the United States (i) it shall fail to be a Citizen
of the United States and the Aircraft shall or would therefore become
ineligible for registration in the name of the Owner Trustee under the
Transportation Code and regulations then applicable thereunder, then the Owner
Participant shall give notice thereof to the Lessee and the Indenture Trustee
and shall (at its own expense and without any reimbursement or indemnification
from the Lessee) promptly but in any event within ten (10) Business Days (x)
effect a voting trust or other similar arrangement, (y) transfer in accordance
with the terms of this Agreement and the Trust Agreement all its rights, title
and interest in and to such Trust Agreement, the Lessor's Estate and this
Agreement, or (z) take any other alternative action that would prevent any
deregistration, or maintain or permit the United States registration, of the
Aircraft; or (ii) it determines that there is a reasonable likelihood that it
will in the future fail to qualify as a Citizen of the United States, and the
Aircraft would as a result thereof become ineligible for registration in the
name of the Owner Trustee under the Transportation Code, then the Owner
Participant shall give notice of such determination to the Lessee and the
Indenture Trustee and shall (at its own expense and without reimbursement or
indemnification from the Lessee and on such timetable as shall be reasonable
under the circumstances and consistent with its obligations under this Section
7.02(c)) prepare such documentation and establish such procedures as shall be
required to effect the voting trust, arrangements, transfer or other action
referred to in the preceding clause (i) in each case to be effective on the
date upon which the Owner Participant fails to qualify as a Citizen of the
United States (but in no event later than (10) Business Days after such date)
so as to prevent any deregistration of and to maintain or permit the
registration of, the Aircraft. It is agreed that the Owner Participant shall
be liable to pay promptly on request (A) to each of the other parties hereto
any damages actually incurred by any such other party as the result of the
representation and warranty of the Owner Participant in the first sentence of
Section 7.02(a) hereof proving to be untrue as of the Refunding Date; and (B)
to the Lessee, the Indenture Trustee or the Pass Through Trustee for any
damages actually incurred by the Lessee, the Indenture Trustee and the Pass
Through Trustee as a result of the Owner Participant's failure to comply with
its obligations pursuant to the first sentence of this Section 7.02(c);
provided, that, the foregoing shall not restrict the Pass Through Trustee or
the Indenture Trustee from asserting against the Owner Participant any damages
actually incurred by the holders of any Pass Through Certificates. Each other
party hereto agrees, upon the request and at the sole expense of the Owner
Participant, to cooperate with the Owner Participant in making any filings
required in order for the Owner Participant to comply with its obligations
under the provisions of the first sentence of this Section 7.02(c), but
without any obligation on the part of such other party to take any action
believed by it in good faith to be burdensome to such party or adverse to its
business interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Missouri and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement;
(ii) the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary action on its part and, assuming the accuracy of the Lessee's
representations in Section 6.01(o) hereof, do not require any governmental
approvals that would be required to be obtained by the Owner Participant;
(iii) based on the representations, warranties and covenants contained
in Sections 6.01(m)(viii), 6.02 and 7.09 hereof, neither the execution,
delivery or performance by the Owner Participant of the Original Agreements
to which it is a party, this Agreement, the Tax Indemnity Agreement, and
the Trust Agreement nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under any law, governmental rule or
regulation applicable to the Owner Participant, or the charter documents,
as amended, or bylaws, as amended, of the Owner Participant, or any order,
writ, injunction or decree of any court or governmental authority against
the Owner Participant, or by which it or any of its Properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which the Owner Participant is a party or by which it or any of its
Properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any Lien upon any of its
Properties;
(iv) the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have an adverse effect on the ability of the Owner Participant to
perform its obligations under the Original Agreements to which it is a
party, this Agreement and the other Operative Agreements to which it is or
is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against or affecting the Owner Participant or any of its Property before or
by any court or administrative agency which (A) involve the Aircraft or (B)
if adversely determined would adversely affect the ability of the Owner
Participant to perform its obligations under any of the Original Agreements
to which it is a party, this Agreement and the other Operative Agreements
to which it is or is to be a party;
(vii) neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is nor the performance of its obligations hereunder
or thereunder requires the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any governmental authority or agency that would be required to be obtained
or taken by the Owner Participant except for filings contemplated by this
Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and is not a tax resident of another country and if it shall at any
time cease to be such a "U.S. Person" or shall become a tax resident of
another country, it shall furnish to each Certificate Holder an indemnity,
in form and substance reasonably satisfactory to such Certificate Holder,
for any Taxes that may be imposed on such Holder as a result of the Owner
Participant's failure to be such a "U.S. Person" or as a result of its
being a tax resident of another country, and the Owner Participant shall be
personally liable for any debt service to the extent that the receipt of
rentals is reduced by reason of any withholding Taxes that result from such
failure to be such a "U.S. Person" or from being a tax resident of another
country; and
(x) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, other than
such laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable aviation law and the other matters set
forth in Section 7.02(c) hereof.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it or
any of its Affiliates against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it or any such Affiliate against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it or any such Affiliate on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Indenture
Trustee, the Owner Trustee and the Pass Through Trustee that the Owner
Participant will, at its own cost and expense, take such action as may be
necessary (by bonding or other appropriate actions, so long as neither the
Lessee's operation and use of the Aircraft nor the validity and priority of
the Lien of the Indenture is impaired) to duly discharge and satisfy in full,
promptly and in any event within 30 days after the same first becomes known to
the Owner Participant, any Lessor's Lien against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to
the Owner Participant or any such Affiliate, provided, however, that the Owner
Participant shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Owner Participant in good faith and by
appropriate proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Aircraft or the
Lessor's Estate or the Trust Indenture Estate or any interest in any thereof
or otherwise materially adversely affect the validity or priority of the Lien
of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant or any of its
Affiliates and required to be discharged as described in Section 7.03(b)
hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSBU represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to execute,
deliver and perform this Agreement, the Original Agreements to which it is
a party and the Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the other
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSBU, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSBU's performance of or compliance with
any of the terms and provisions thereof will violate any Federal or state
or local law or regulation governing FSBU's banking or trust powers;
(iii) (A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSBU in its individual capacity, constitute the legal,
valid and binding obligation of FSBU in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSBU in its individual capacity
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on FSBU in its individual
capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against FSBU before any court or administrative agency which
would materially and adversely affect the ability of FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSBU in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii) on the Refunding Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by the Lessee on the
Delivery Date, the Aircraft shall be free of Lessor's Liens attributable to
FSBU in its individual capacity and FSBU in its individual capacity and as
Owner Trustee is a Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) Lessor's Liens. FSBU, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSBU, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSBU, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSBU to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSBU, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as follows:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii) the Indenture and this Agreement, the Original Agreements to
which it is a party and the other Operative Agreements to which it is or is
to be a party, and the authentication of the Certificates to be delivered
on the Refunding Date, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or Massachusetts law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, the Original
Agreements to which it is a party and the other Operative Agreements to
which it is or is to be a party, has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and this
Agreement, the Original Agreements to which it is a party and the other
Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or state governmental authority or agency governing its banking and
trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi) the Indenture Trustee holds the original counterparts of the
Original Lease, the Lease Supplement, Ancillary Agreement I and the
Warranty Bill of Sale.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days, after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Payment Default
promptly upon a Responsible Officer of the Indenture Trustee having actual
knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither the Owner Participant
(or the Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right to
quietly enjoy the Aircraft during the Term without hindrance or disturbance by
the Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be), provided, however, that neither the
Owner Participant nor the Owner Trustee shall be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee or the Pass Through Trustee.
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Default or
Event of Default shall have occurred and be continuing then, upon compliance
with the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) but subject to the Lien of the Indenture,
all of the Owner Trustee's right, title and interest in and to the Aircraft,
and if the Lessee, in connection with such purchase, elects pursuant to
Section 4.02(a)(A), (D) or (E) of the Lease to assume the obligations of the
Owner Trustee to the Indenture Trustee and the Holders under the Indenture,
the Certificates and hereunder, then the Owner Trustee shall so notify the
Indenture Trustee (such notice to be given at least 30 and not more than 60
days prior to the effective date of such assumption), and each of the parties
shall execute and deliver appropriate documentation permitting the Lessee to
assume such obligations on the basis of full recourse to the Lessee,
maintaining for the benefit of the Holders the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions of
this Section 7.11, such documentation shall become effective and the Owner
Participant and the Owner Trustee shall be released from all obligations in
respect of the Certificates, the Indenture, this Agreement and all other
Operative Agreements, except any obligations which shall have arisen (or with
respect to events which shall have occurred) prior to such assumption, and
take all such other actions, at the Lessee's expense, as are reasonably
necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Indenture Trustee and the Holders, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Delivery Date with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each opinion
described in clause (A) or (B) above, covering such additional matters as
the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSBU and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would adversely
affect such party without the prior written consent of such party. The Owner
Trustee confirms for the benefit of the Lessee, the Indenture Trustee and the
Pass Through Trustee that it will comply with the provisions of Article 2 of
the Trust Agreement. Notwithstanding anything else to the contrary in the
Trust Agreement, so long as the Lease or the Indenture remains in effect, the
Owner Participant agrees not to terminate or revoke the trust created by the
Trust Agreement without the consent of the Lessee (except in connection with
the exercise of remedies pursuant to Article 17 of the Lease) or, if the Lien
of the Indenture shall not have been discharged, the Indenture Trustee. The
Owner Trustee and the Owner Participant agree that no co-trustee or separate
trustee shall be appointed pursuant to Section 3.14 of the Trust Agreement if
such appointment would adversely affect the priority of the Lien of the
Indenture. The Indenture Trustee agrees that it shall not take any action
under this Section 7.13 except as instructed pursuant to Section 8.01 of the
Indenture.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement or Original Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or
local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements or Original
Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, held by the Owner
Trustee under the Trust Agreement or after an Event of Default under the
Lease, or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or Original
Agreement, any interest therein or by reason of the transactions described
in or contemplated by the Operative Agreements or the Original Agreements;
(v) the principal or interest or other amounts payable with respect
to the Original Loan Certificates, the Pass Through Certificates or the
Certificates;
(vi) the Original Loan Certificates, the Pass Through Certificates or
the Certificates or the issuance, sale, acquisition, reoptimization, or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and Supplemental
Rent), receipts or earnings arising from the Operative Agreements or the
Original Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value-added taxes, capital, franchise, net worth (whether
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes"), provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 8.01(a) above any such Income Taxes to the extent such
taxes are imposed by any jurisdiction in which the Indemnitee would not be
subject to such taxes but for, or would be subject to such taxes solely as
a result of, (x) the operation, registration, location, presence, or use of
the Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or the
activities of the Lessee or any sublessee in such jurisdiction (it being
understood that (A) any such indemnity would be payable only to the extent
of the net harm incurred by the Indemnitee from such Income Taxes, taking
into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements or the Original Agreements were the Indemnitee's sole
nexus to the jurisdiction); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii) With respect to an Original Loan Participant, Income Taxes (other
than in the case of a Non-U.S. Person, U.S. federal withholding taxes on
amounts payable with respect to such Original Loan Participant's Loan
Certificate) except to the extent such Income Tax is imposed (including by
way of increase) by any jurisdiction in which the Indemnitee is subject to
tax (A) on or with respect to any gain resulting from the assumption of any
Loan Certificate by the Lessee, (B) as a result of the operation,
registration, location, presence, basing or use of the Aircraft, Airframe,
any Engine or any Part thereof, in such jurisdiction (it being understood
that (I) the incremental Income Taxes described in this clause (B) shall
not include any U.S. Federal income taxes and (II) that to the extent such
incremental Income Taxes give rise to any incremental current Tax benefit in
another tax jurisdiction, that such incremental benefit shall offset and
decrease the incremental Income Taxes determined under this clause (B)) or
(C) solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant, the
Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in such
jurisdiction (it being understood that to the extent that any Income Taxes
described under this clause (C) give rise to any incremental current Tax
benefit in another tax jurisdiction or another tax period, that such
incremental Tax benefit shall offset and decrease the Income Taxes
determined under this clause (C)); provided, however, that the provisions
of this paragraph (b)(ii) relating to Income Taxes shall not exclude from
the indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02 of this Agreement;
(iii) Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods (or any combination of the
foregoing) which occur after the later of (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Original Loan Certificates in the case of an
Original Loan Participant, the Indenture Trustee or the Trust Indenture
Estate if the Lessee shall have assumed the Certificates pursuant to
Section 7.11 of this Agreement), and (B) the earliest of (x) the expiration
of the Term of the Lease and return of the Aircraft in accordance with
Article 12 of the Lease, (y) the termination of the Lease in accordance with
the applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer of
all right, title and interest in the Aircraft to the Lessee pursuant to its
exercise of any of its purchase options set forth in Section 4.02(a) of the
Lease, provided that this exclusion (iii) shall not apply in respect of any
payment made after the dates set forth in clauses (A) and (B) above unless
such payment is made with respect to any event or circumstance occurring
on, with or prior to such return or transfer or period prior to such return
or transfer, or Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default;
(iv) As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements
or the Original Agreements) or the breach by such Indemnitee of: (i) in the
case of an Indemnitee other than the Owner Participant, any representation,
warranty or covenant contained in the Operative Agreements or the Original
Agreements or any document delivered in connection therewith and (ii) in
the case of the Owner Participant, the representations or covenants in
Sections 7.02(a), (c); 7.03(a)(i), (ii), (iii), (iv), (vii), (ix); and
7.03(b), (c), (d), (e) of the Original Participation Agreement or this
Agreement (in either case unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on, and not collected by withholding from payments
of Rent, the Owner Trustee or the Owner Participant or any successor,
assign or Affiliate thereof which became payable by reason of any voluntary
or involuntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including revocation of the Trust, of any interest in some
or all of the Aircraft, Airframe, Engines or Parts thereof or its interest
in the Lessor's Estate (not including any transfers of any Certificates
pursuant to Section 15.01(a) hereof) or a disposition in connection with a
bankruptcy or similar proceedings involving either the Lessor or the Owner
Participant other than (A) transfers resulting from a loss, substitution or
modification of the Aircraft, Engines or any Part, (B) any transfer of the
Aircraft, Engines or any Part (in each case other than at Fair Market
Value) to the Lessee or other person in possession thereof, (C) transfers
attributable to an Event of Default or (D) a transfer pursuant to the
Lessee's exercise of its rights under Section 10.01 of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or of any
other Indemnitee under the Original Agreements or an Indemnitee as of the
date hereof under the Operative Agreements (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) which
on the Delivery Date is an Indemnitee (for purposes of this clause (viii),
an "original Indemnitee") or such original Indemnitee to the extent that
such Taxes exceed the amount of Taxes that would have been imposed (in the
case of an Original Loan Participant, immediately after giving effect to
such succession, assignment or other transfer) and would have been
indemnifiable pursuant to Section 8.01(a) had there not been a succession,
assignment or other transfer by such original Indemnitee of any such
interest of such Indemnitee in the Aircraft or any Part, any interest in or
under any Operative Agreement, or any proceeds thereunder (it being
understood that for purposes of determining the amount of indemnification
that would have been due to such original Indemnitee with respect to a net
income Tax, it shall be assumed that such original Indemnitee would be
subject to taxation on its income at the highest marginal statutory rate
applicable to it), provided, however, that the exclusion provided by this
clause (viii) shall not apply in the case of a succession, transfer or
disposition (A) while an Event of Default under the Lease has occurred and
is continuing at the time of such transfer or disposition, (B) which is an
actual or deemed transfer pursuant to Section 7.11 hereof or as a
consequence of a Refinancing under Section 15.01 hereof, or any actual or
deemed transfer of an Original Loan Certificate that as part of a
Refinancing under Section 15.01 hereof is not retired, but only to the
extent the Taxes attributable to such transfer exceed the amount of Taxes
that would have been imposed on such transferor if the debt had instead
been retired, (C) to the extent necessary to make payments with respect to
such Taxes on an After-Tax Basis, (D) to the extent such Taxes are directly
attributable to the failure of the Lessee to take administrative actions as
have been reasonably requested of it in writing in a timely manner and
which will result in no after-tax cost or expense to the Lessee or (E) in
the case of the Owner Participant or the Lessor, to any Tax other than an
Income Tax;
(ix) [Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price and which
have been paid to the applicable taxing authorities;
(xi) Any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien;
(xii) Taxes imposed on the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA and Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Loan Certificate (A) in connection with which
purchase or holding the Owner Participant or any Affiliate thereof is
acting as the investment manager, advisor or discretionary trustee and is
making or directing such purchase or holding (other than in the capacity of
a custodian, directed trustee or other similar nondiscretionary capacity),
or (B) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or a plan subject to Section 4975 of the Code with respect to which
the Owner Participant (or any Affiliate thereof) is the "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA, provided, however, that in
the event of a Refinancing of the Certificates described in Section
15.01(d)(viii) hereof, the exception under this clause (xii) shall not be
applicable and in place thereof the exception described in Section
15.01(d)(viii) hereof to the indemnity provided for in Section 8.01(a)
hereof shall be applicable; and
(xiii) Taxes imposed on the Lessor or on the Owner Participant by any
jurisdiction that would have been imposed on the Lessor or the Owner
Participant for activities in such jurisdiction unrelated to the
transactions contemplated by the Operative Agreements or the Original
Agreements to the extent imposed on such unrelated activities.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a tax benefit by reason
of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized by such Indemnitee that would not have been
realized but for any payment made by such Indemnitee pursuant to this sentence
and not already paid to the Lessee, and (y) the amount of the payment made
under Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore required to be made under this Section 8.02 and
Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment to
the Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee (and without regard to Section 8.01(b) hereof,
except for clause (v) thereof) for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is subsequently disallowed or reduced (including the
expiration of any tax credit carryovers or carrybacks of such Indemnitee that
would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not paying
the same except under protest if protest is necessary and proper in each
case so long as non-payment will not result in a material risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a Lessor's Lien
on the Aircraft, Airframe or any Engine or any risk of criminal liability;
or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including legal fees and expenses and all
costs and expenses relating to amendments, supplements, adjustments, consents,
refinancings and waivers under the Operative Agreements and the Original
Agreements except as otherwise provided in Section 10.01(d)(i) or Article 15
hereof) of every kind and nature (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Pass Through Agreement, the Bills of
Sale or any other Operative Agreement or any amendment to any Operative
Agreement or any other document entered into in connection herewith or any
sublease or transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, ownership, use, non-use, maintenance,
storage, delivery, non-delivery, control, testing, overhaul or repair of
the Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, ownership,
use, non-use, maintenance, storage, delivery, non-delivery, control,
testing, overhaul or repair is in compliance with the terms of the Lease,
including without limitation, claims for death, personal injury or property
damage or other loss or harm to any Person whatsoever and claims relating
to any laws, rules or regulations;
(iii) the manufacture, design, purchase, condition, repair,
modification, airworthiness, return, lease, sale, acceptance, rejection,
servicing, rebuilding, registration, alteration, merchantability,
substitution, replacement, fitness for use, transfer or sublease of any
Airframe, Engine, or Part under the Lease, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part, latent or other defects
whether or not discoverable, strict tort liability, and any claims for
patent, trademark or copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to securities), or
the action or inaction of the Owner Trustee or Indenture Trustee as
trustees, in the manner contemplated by this Agreement, the Original
Participation Agreement, the Indenture, the Original Indenture, the
Indenture and Security Agreement Supplement, the Trust Agreement or the
Original Trust Agreement and in the case of the Owner Participant, its
obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee:
(i) to the extent attributable to the willful misconduct or gross
negligence of such Indemnitee;
(ii) in respect of the Aircraft to the extent attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or leased under the Lease or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor shall be entitled to
exercise remedies under such Article 17), or to acts or events which occur
after return of possession of the Aircraft by the Lessee in accordance with
the provisions of the Lease but in any such case only to the extent not
fairly attributable to acts or omissions of the Lessee prior to expiration
of the Term, including without limitation the Lessee's failure to fully
discharge all of its obligations under the Lease, the other Operative
Agreements or the Original Agreements;
(iii) which is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv) which is a cost or expense expressly required to be paid by the
Owner Participant or its permitted transferees (and not by the Lessee)
pursuant to this Agreement or any other Operative Agreement;
(v) to the extent that such Expenses would not have been incurred by
such Indemnitee if such Indemnitee had not been in breach of its
representations or warranties, or had not defaulted in the observance and
performance of the terms and provisions required to be observed and
performed by it, in this Agreement, the Engine Warranty Assignment, the
Lease, the Indenture, the Trust Agreement, the Original Agreements or any
other Operative Agreement to which it is a party unless such breach or
default shall be a result of the breach or default of any of the foregoing
by the Lessee or another Indemnitee;
(vi) which is a payment required to be made by the Owner Participant
pursuant to Section 2.01(b) hereof, but nothing contained in this Section
9.01(b)(vi) shall be deemed or construed to limit the obligations of the
Lessee to the Indenture Trustee and Holders of the Certificates pursuant to
Section 3.05 of the Lease;
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of FSBU, Lessor's
Liens to the extent attributable to FSBU; and in the case of the Indenture
Trustee, Indenture Trustee's Liens;
(viii) in the case of the Owner Participant or the Owner Trustee, to
the extent attributable to the offer or sale by such Indemnitee after the
Delivery Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest (including an offer or sale
resulting from bankruptcy or other proceedings for the relief of debtors in
which such Indemnitee is the debtor), unless in each case such offer or
sale shall occur (w) in connection with a Refinancing, (x) during a period
when an Event of Default has occurred and is continuing, (y) during a
period when an Event of Loss has occurred or (z) in connection with the
termination of the Lease or action or direction of the Lessee pursuant to
Section 4.02 of the Lease or Article 10 of the Lease; or
(ix) in the case of the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant, as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Loan Certificate (or any funded participation
therein) (i) over which purchase or holding the Owner Participant or any
Affiliate thereof (other than in the capacity of a directed trustee or
custodian or similar nondiscretionary capacity) has discretion or control,
or (ii) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or individual retirement account or plan subject to Section 4975 of
the Code with respect to which the Owner Participant (or any Affiliate
thereof) is a "plan sponsor", within the meaning of Section 3(16)(B) of
ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as any Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing. Any Taxes that are imposed
on any Indemnitee as a result of the disallowance or reduction of such Tax
benefit referred to in the next preceding sentence in a taxable year
subsequent to the year of allowance and utilization by such Indemnitee
(including the expiration of any tax credit carryovers or carrybacks of such
Indemnitee that would not otherwise have expired) shall be indemnifiable
pursuant to the provisions of Section 8.01 hereof (without regard to Section
8.01(b)(i), (iii) or (viii) hereof).
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default,
Bankruptcy Default or an Event of Default (in which case payment shall not be
made to the Lessee until such Payment Default, Bankruptcy Default or Event of
Default shall have been cured) such Indemnitee shall pay to the Lessee, within
ten (10) Business Days of receipt thereof by such Indemnitee, the amount of
any such recovery, including interest received with respect to the recovery,
net of any Taxes paid or payable as a result of the receipt of the recovery
and interest, plus any net additional permanent income Tax benefits actually
realized by Indemnitee as the result of any payment made pursuant to this
sentence less any reasonable costs and expense of any Indemnitee not
reimbursed by the Lessee; provided, however, that such amount shall not be
payable (a) before such time as the Lessee shall have made all payments or
indemnities then due and payable to such Indemnitee under this Article 9 or
(b) to the extent that the amount of such payment would exceed the amount of
all prior payments by the Lessee to such Indemnitee pursuant to this Article
9, less the amount of all prior payments by such Indemnitee to the Lessee
pursuant to this Article 9. Any subsequent loss of such recovery or Tax
benefit shall be subject to indemnification under Article 8 or this Article 9,
as the case may be.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim. The Lessee
shall not enter into any settlement or compromise which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment,
the Lease and the other Operative Agreements but, as to such indemnities, only
with respect to losses, liabilities, obligations, damages, penalties, claims,
actions, suits, costs, Expenses and disbursements caused by events occurring
or existing prior to or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or
(ii) the termination of the Lease or the Indenture or, if later, the return of
the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate and an Indemnitee who obtains a recovery under
Section 9.05 hereof that is required to be paid to the Lessee shall pay to the
Lessee on demand, interest on any amount not paid to the Lessee when due
pursuant to such Section 9.05, until the same shall be paid, at the Past Due
Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement (other than clause
(v) thereof) all fees and expenses of the following persons relating to the
public offering of the Pass Through Certificates contemplated by the
Underwriting Agreement and related to the transactions contemplated hereby:
(i) the fees and expenses of counsel for the Owner Participant; (ii) the fees
and expenses of the transaction documentation counsel and counsel for the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Original
Loan Participants and the Underwriters (other than those fees, expenses and
disbursements payable by the Underwriters pursuant to the Underwriting
Agreement); (iii) the fees and expenses of Daugherty, Fowler & Peregrin; (iv)
any initial fees and expenses of the Pass Through Trustee and the fees and
expenses of the Owner Trustee and the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Underwriters pursuant to the
Underwriting Agreement; (vi) the fees, if any, incurred in printing the Pass
Through Certificates; (vii) the fees and expenses incurred in connection with
printing any amendment to the Registration Statement on Form S-3 bearing
Registration No. 33-56569, printing any Preliminary Prospectus or Prospectus
(as such terms are defined in the Underwriting Agreement) for the offering of
the Pass Through Certificates; (viii) the fees and expenses of Arthur
Andersen, LLP; (ix) the fees and expenses of Moody's and S&P; and (x) the
fees and expenses of First Chicago Leasing Corporation. The fees and expenses
described in clauses (ii) through (x) of this paragraph shall be allocable to
the Owner Participant under this Agreement (1) to the extent incurred
specifically with respect to the Owner Participant or the refunding of the
Original Loan Certificates, and (2) to the extent such fees and expenses are
incurred but are not specifically attributable to the Owner Participant or the
refunding of the Original Loan Certificates, in the proportion that the
principal amount of the Certificates bears to the total amount of the Pass
Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.72% of the Purchase
Price (the "Estimated Expense Amount"); provided, however, that in no event
shall the sum of (i) the Owner Participant's Commitment (as such term is
defined in the Original Participation Agreement), (ii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 2.03 of the Original
Participation Agreement, (iii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 10.01 hereof and (iv) the Excess Amount
exceed, in the aggregate, $24,000,000, unless otherwise agreed by the Owner
Participant. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $24,000,000, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Owner Participant Guarantor, the Indenture Trustee and the
Pass Through Trustee all costs and expenses (including reasonable legal
fees and expenses) incurred by any of them in connection with (a) any
Default or Event of Default and any enforcement or collection proceedings
resulting therefrom or (b) the negotiation of any restructuring or
"work-out" (whether or not consummated), or the obligations of the Lessee
hereunder or under the other Operative Agreements and the enforcement of
this Section 10.01, including, without limitation, the entering into or
giving or withholding of any amendments or supplements or waivers or
consents (whether or not consummated), including without limitation, any
amendment, waiver, modification or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under the Original Agreements, this Agreement, the Lease,
the Indenture, the Certificates, the Tax Indemnity Agreement, the Engine
Warranty Assignment or any other Operative Agreement or document or
instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement
or is requested by the Lessee or necessitated by the action or inaction of
the Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses of the other parties hereto incurred in connection with
the offer, sale or other transfer (whether pursuant to Article 5 of the
Trust Agreement or otherwise) by the Owner Participant or the Owner Trustee
after the Refunding Date of any interest in the Aircraft, the Lessor's
Estate, the Beneficial Interest, the Trust Agreement or any similar
interest (and the Owner Participant shall be responsible for all such fees
and expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed under the Trust Agreement only in accordance with the
provisions of Section 3.11 of the Trust Agreement and the provisions of
paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the Engine
Warranty Assignment, the Indenture, the Indenture Supplement and any other
Operative Agreement to which the Owner Trustee is a party and agrees to be
bound by all the terms of such documents applicable to the Owner Trustee and
makes the representations and warranties contained in Section 7.04 hereof
(except that it may be duly incorporated, validly existing and in good
standing under the laws of the United States of America or any State
thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease
or any other Operative Agreement to which the Owner Participant is a party and
the Owner Participant shall not be liable for the performance by any party
hereto of such other party's obligations or duties hereunder. Under no
circumstances shall the Owner Participant as such be liable to the Lessee, nor
shall the Owner Participant be liable to any Holder, for any action or
inaction on the part of the Owner Trustee or the Indenture Trustee in
connection with this Agreement, the Indenture, the Lease, the Bills of Sale,
the Trust Agreement, the Engine Warranty Assignment, any other Operative
Agreement, any Original Agreement, the ownership of the Aircraft, the
administration of the Lessor's Estate or the Trust Indenture Estate or
otherwise, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that prior to the occurrence and
continuance of an Event of Default, no section of the Indenture or the Trust
Agreement shall be amended or modified in any manner materially adverse to the
Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service or other means, when
received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5826, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at One Boatmen's
Plaza, 800 Market Street, P.O. Box 236, St. Louis, Missouri 63166,
Attention: Documentation Specialist, telephone (314) 466-4275, facsimile
(314) 466-4266, or to such other address as the Owner Participant may from
time to time designate in writing to the Lessee and the Indenture Trustee;
and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to two refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date), in whole but not in
part, of the Certificates prior to the end of the Basic Term (each a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets in the United States and shall be denominated in United States
dollars, and shall be on terms reasonably satisfactory to the Owner Participant
and shall not materially adversely affect the Owner Participant. The Owner
Participant agrees to negotiate promptly in good faith to conclude an
agreement with the Lessee as to the terms of any such refinancing transaction
(including the terms of any debt to be issued in connection with such
refinancing and the documentation to be executed in connection therewith).
Without the prior written consent of the Owner Participant, the prospectus and
other offering materials relating to any Refinancing in the form of a public
offering shall not identify the Owner Participant and shall not include any
financial statements of the Owner Participant or any Affiliate thereof. In
connection with any such Refinancing in the form of a public offering, the
Lessee shall indemnify the Owner Participant for any liabilities under
federal, state or foreign securities laws resulting from such offering. With
the exception of the refinancing contemplated by this Agreement on the
Refunding Date, the aggregate principal amount of the new Certificates issued
in connection with each Refinancing shall be the same as the aggregate
principal amount outstanding on the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice of the scheduled closing
date of such Refinancing, the Owner Participant shall have been provided such
longer period required for a reasonable opportunity to review the relevant
documentation and the Owner Participant shall have determined in good faith
that neither it nor the Owner Trustee shall suffer any loss or expense or bear
any increased risk as a result of such Refinancing (including, without
limitation, any risk with respect to taxes or other adverse consequences to
the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for which it has not been or will not
have been indemnified by the Lessee in a manner reasonably satisfactory to the
Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values, and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken, at the Lessee's
sole cost and expense, all requested action, including, without limitation,
the execution and delivery of any documents and instruments, including,
without limitation, amendments or supplements to the Lease, which may be
reasonably necessary or desirable to effect such Refinancing, including, in
the case of the Owner Participant, direction to the Owner Trustee by the Owner
Participant to prepay the Certificates then outstanding; provided, however,
that such Refinancing shall be subject to the satisfaction of each of the
following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel and reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the reasonable
judgment of the Owner Participant are necessary for such Refinancing shall
have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this Agreement
of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit
the Lessee to place the Refinancing loan certificates with an ERISA Plan.
The Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Section 8 hereof, or
Expenses, within the meaning of Section 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates at the time of such prohibited transaction. If such
exemption is not available or is not valid, then the Lessee shall indemnify
the Owner Participant pursuant to, and to the extent provided for, under
Section 8 and 9 hereof for Taxes and Expenses arising under or in
connection with any "prohibited transaction", within the meaning of Section
406 of ERISA or Section 4975 of the Code, resulting from such placement.
(e) Any debt to be issued in connection with a Refinancing shall have
an interest rate that is fixed for the entire term of such debt and shall
not include any debt whose fixed interest rate is reset at any time during
the term of such debt.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and (C) replacement Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that for Federal income tax purposes the Owner
Participant will be the owner of the Aircraft and the Lessee will be the
lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement, the
Indenture Trustee and its successors as Indenture Trustee (and any additional
indenture trustee appointed) under the Indenture and the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional pass through
trustee appointed).
Section 17.07. Concerning the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee. Each of FSBU and SSB is entering into this
Agreement solely in their respective capacities (except to the extent
otherwise expressly indicated), in the case of FSBU, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, in the case of
SSB, not in its individual capacity but solely as Indenture Trustee under the
Indenture and as Pass Through Trustee under the Pass Through Agreement, and
except as otherwise expressly provided in this Agreement or in the Lease, the
Indenture, the Pass Through Agreement or the Trust Agreement, neither FSBU,
nor SSB, shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of FSBU and SSB accepts the benefits running to
it under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it
is a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens
and (g) taxes, fees or other charges on, or based on, or measured by, any
fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee agrees that, if (i) the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to such reorganization
provision, the Owner Participant is held to have recourse liability to the
debtor or the trustee of the debtor directly or indirectly on account of any
amount payable as principal, interest or premium on the Certificates, and
(iii) the Indenture Trustee actually receives any Recourse Amount which
reflects any payment by the Owner Participant on account of (ii) above, then
the Indenture Trustee, as the case may be, shall promptly refund to the Owner
Participant such Recourse Amount. For purposes of this Section 17.10,
"Recourse Amount" means the amount by which the portion of such payment by the
Owner Participant on account of clause (ii) above received by the Indenture
Trustee exceeds the amount which would have been received by the Indenture
Trustee if the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section shall
prevent the Indenture Trustee from enforcing any individual obligation (and
retaining the proceeds thereof) of the Owner Participant under this Agreement
or any other Operative Agreement to the extent herein or therein provided, for
which the Owner Participant has expressly agreed by the terms of this
Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 17.12. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Agreement and the other Operative Agreements are expressly intended to be,
shall be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code from time to time with respect to the
right to repossess the Airframe, the Engines and any Parts as provided herein,
and in any circumstances where more than one construction of the terms and
conditions of this Agreement is possible, a construction which would preserve
such benefits shall control over any construction which would not preserve
such benefits or would render them doubtful.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 5th day of June, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
BOATMEN'S EQUIPMENT FINANCE, INC.
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as an Original Loan Participant
By:__________________________________________
Name:
Title:
BANK OF AMERICA NT & SA
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:__________________________________________
Name:
Title:
COMMERZBANK AG, ATLANTA AGENCY
By:__________________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-A1
Federal Express Corporation Trust No. N582FE
Interest Rate: 7.85%
Maturity: January 30, 2015
Principal Amount: $61,948,000.00
2. Federal Express Corporation Pass Through Trust, 1996-A2
Federal Express Corporation Trust No. N582FE
Interest Rate: 8.17%
Maturity: January 30, 2016
Principal Amount: $3,252,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Additional Leverage Amount. An amount equal to 5.124835742% of the
outstanding principal amount of the Original Loan Certificates to be
refinanced on the Refunding Date.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed
to have been received by a Person shall be supplemented by a further payment
to such Person so that the sum of the two payments, after deduction of all
Taxes resulting from the receipt or accrual of such payments, shall be equal
to the payment received or deemed to have been received. In the case of
amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe)
together with three Engines (whether any of which is an initial Engine or a
Replacement Engine) whether or not any of such initial or Replacement Engines
may from time to time be installed on such Airframe or may be installed on any
other airframe or on any other aircraft, including any aircraft substituted
pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any replacement airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N582FE), dated as of June 1, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N582FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N582FE), dated the Refunding Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant on the Delivery Date pursuant to Section
4.01(n) of the Original Participation Agreement.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on July 29, 2016, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the
Warranty Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained
by the Pass Through Trustee for the payment of the Pass Through
Certificates, and after the Lien of the Indenture is discharged, Salt
Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N582FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. July 30, 1996.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. April 22, 1996.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of April 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N582FE), dated as of April 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 7.06 of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
due to theft or disappearance for a period in excess of 30 days (or such
longer period not to exceed 60 days from the end of such 30 day period if and
so long as the location of such property is known and the Lessee is pursuing
the recovery thereof) or to the end of the Term, if less, unless such event
constitutes an Event of Loss under clause (i)(B) or clause (ii) below, or (B)
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government, or instrumentality or agency
of any such foreign government, or any purported government or instrumentality
or agency thereof for a period in excess of 180 days, or (B) by the Government
for a period extending beyond the Term provided that no Event of Loss shall be
deemed to have occurred, and the Term shall be extended automatically for a
period of up to six months beyond the end of the Term in the event that the
Aircraft or the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease; or (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited for a period of four
(4) consecutive months, unless the Lessee, prior to the expiration of such
four (4) month period, shall be diligently carrying forward all steps which
are necessary and desirable to permit the normal use of the Aircraft or
Airframe provided, however, that an Event of Loss shall be deemed to have
occurred if (x) the Lessee fails to continue diligently carrying forward all
such steps or (y) the use of the Aircraft or the Airframe in the normal course
of air transportation of cargo shall have been prohibited for a period of an
additional 8 months following such 4 month period or (z) unless waived by the
Lessor, the Term shall have expired. The date of such Event of Loss shall be
(t) the 30th day or the 90th day, as the case may be, following loss of such
property or its use due to theft or disappearance; (u) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (v) the date of any insurance settlement on
the basis of a total loss or constructive or compromised total loss; (w) the
date of any condemnation, confiscation, seizure or requisition of title of
such property; (x) the earlier of the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government or instrumentality or agency thereof or the end of the Term; (y)
the last day of the Term in the case of requisition for use of such property
by the Government or (z) the last day of the 4 month or additional 8 month
period, referred to in clause (iv) above. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
of expenses paid or payable by the Lessee in respect of the Owner Participant,
the Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to Article 8, 9, or 10 and Section 15.01 of the
Participation Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to
Section 7.01(e), Article 9 or Section 11.03(a) of the Lease or Section 15.01
of the Participation Agreement, (ii) proceeds of public liability insurance
(or government indemnities in lieu thereof) in respect of the Aircraft payable
as a result of insurance claims paid for the benefit of, or losses suffered
by, the Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained with
respect to the Aircraft by the Owner Participant (whether directly or through
the Owner Trustee) maintained in accordance with the provisions of but not
required under Article 13 of the Lease, (iv) all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to
the Owner Participant or the Owner Trustee in its individual capacity, after
the release thereof from the Lien of the Indenture, (vi) subject to Section
3.05 of the Lease, payments constituting increases in Basic Rent attributable
to payments arising pursuant to Section 5 of the Tax Indemnity Agreement,
(vii) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (vi) above and (viii)
any payments in respect of interest to the extent attributable to the payments
referred to in clauses (i) through (vi) above.
Excess Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Exempt Recipient. A person described in Section 6049(b)(4) of the
Code.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA Bill of Sale. The bill of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed by the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
FPO Price. Has the meaning specified in Section 4.02(a)(F) of the
Lease.
FSBU. First Security Bank of Utah, National Association, a
national banking association.
FSC. Savannah International Sales, Inc., a United States Virgin
Islands corporation.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, except for purposes of Section 17.01 of the
Lease, it shall be assumed that the Aircraft is in at least the condition
required under the Lease in the case of return of the Aircraft pursuant to
Article 12 of the Lease and Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease. For purposes of
Section 17.01 of the Lease, such determination shall be made on an "as is,
where is" basis by a qualified independent appraiser selected by the Lessor
and the costs and expenses of the appraisal shall be borne by the Lessee,
unless the Lessor has not obtained possession of the Aircraft pursuant to such
Section 17.01, in which case an appraiser shall not be appointed and such Fair
Market Rental shall be deemed to be zero.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease, it shall be assumed that the Aircraft is in at
least the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease. For
purposes of Section 17.01 of the Lease, such determination shall be made on an
"as is, where is" basis by a qualified independent appraiser selected by the
Lessor and the costs and expenses of the appraisal shall be borne by the
Lessee, unless the Lessor has not obtained possession of the Aircraft free and
clear of all Liens and unencumbered by the Lease pursuant to such Section
17.01, in which case an appraiser shall not be appointed and such Fair Market
Value shall be deemed to be zero.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, the Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N582FE), dated as of April 1, 1996, as amended
and restated as of June 1, 1996, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, and as
said Indenture may from time to time be further supplemented or amended,
including any amendment or supplement thereto entered into from time to time
pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N582FE), dated April 22, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N582FE), dated as of April 1, 1996, as amended and restated as of June 1, 1996,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N582FE), dated April 22, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, the
GTA, the Engine Warranty Assignment, the Engine Consent, any Ancillary
Agreement, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without
limitation, insurance proceeds (other than insurance proceeds payable to or
for the benefit of either the Owner Trustee in its individual capacity or the
Owner Participant) and requisition, indemnity or other payments of any kind
for or with respect to the Aircraft (except amounts owing to the Owner
Participant or to the Owner Trustee in its individual capacity, or to any of
their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) "Lessor's Estate" shall include all property intended to be subjected to
the Indenture by the Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, the Owner Participant or any
Affiliate of the Owner Participant, in each case not related to the
transactions contemplated by the Operative Agreements, (ii) acts or omissions
of the Lessor in its individual capacity or as Owner Trustee, and, in the case
of the Lessor in its individual capacity, arising from its gross negligence or
willful misconduct either not related to the transactions contemplated by or
expressly prohibited under the Operative Agreements and any act or omission of
the Owner Participant or any Affiliate of the Owner Participant which is not
related to the transactions contemplated by the Operative Agreements or is in
violation of any of the terms of the Operative Agreements, (iii) Taxes or
Expenses imposed against the Lessor, in its individual capacity or as Owner
Trustee, or the Owner Participant or any Affiliate of the Owner Participant,
the Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 10 or 11 of the Lease and other than a transfer
pursuant to the exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. McDonnell Douglas Corporation, a Maryland
corporation, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Modification Agreement. The Aircraft Modification Agreement dated
as of December 1, 1995 between the Lessee and the Manufacturer providing for
the refurbishing and reconfiguration of the Aircraft including any warranties
relating thereto, as originally executed or as modified, supplemented, amended
or supplemented in accordance with the terms thereof, but only to the extent
that the foregoing relates to the Aircraft, to the extent assigned to the
Owner Trustee pursuant to the Warranty Bill of Sale.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident
of the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, the Owner Trustee Guaranty, if any, any Ancillary Agreement entered
into by or with the written consent of the Indenture Trustee, which by its
terms is an Operative Agreement, the Certificates outstanding at the time of
reference, the Indenture, the Indenture and Security Agreement Supplement, the
Engine Consent and the Tax Indemnity Agreement, each as amended from time to
time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N582FE), among the Lessee, the Owner
Participant, the Indenture Trustee and the Owner Trustee as it was originally
executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N582FE), dated as of April 1,
1996, between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N582FE), dated April 22, 1996 attached thereto was
recorded as one instrument by the FAA on April 23, 1996 and assigned
Conveyance Number P06442.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N582FE), dated as of April 1, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N582FE), dated April 22, 1996 attached thereto
was recorded as one instrument by the FAA on April 23, 1996 and assigned
Conveyance Number P06443.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to
the Original Participation Agreement and their successors and assigns (other
than any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N582FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of April 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N582FE), between the Lessee and the
Owner Participant as it was originally executed as of April 1, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N582FE), between the Owner Participant and the Owner
Trustee as it was originally executed as of April 1, 1996 and filed with the
FAA on April 22, 1996.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of
the Indenture; provided, that if such Certificates are to be
prepaid, notice of such prepayment has been duly given pursuant to
the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The Boatmen's National Bank of St.
Louis, a national banking association, its successors and permitted assigns
and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated
the Delivery Date, as amended and restated as of the Refunding Date by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee and any other guaranty
delivered in compliance with Article 5 of the Trust Agreement.
Owner Trustee. FSBU, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax yield and aggregate after-tax cash flow during the Interim Term and
the Basic Term, utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and FPO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N582FE), dated as of April 1, 1996, as amended
and restated as of June 1, 1996, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or,
prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of February 1, 1993, as amended and restated as of October 1, 1995 between the
Lessee and the Pass Through Trustee, as such Pass Through Agreement may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series A1 or 1996 Pass Through Certificates, Series A2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-A1 or Federal Express Pass Through Trust, 1996-A2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 30 and July 30 commencing on July 30,
1996.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates having
a Maturity in 2015, June 11, 2008 and with respect to the Certificates having a
Maturity in 2016, November 24, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. The amount specified as such in Ancillary
Agreement I.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term
with respect to which the Lessee has exercised its option to renew the Lease
pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 30 and July 30 commencing on July
30, 1996, and continuing thereafter during the Term.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-A1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-A2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent and, accordingly, no further
accrual or credit shall be required whenever Stipulated Loss Value is to be
calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Factors."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to FSBU, the Lessor, the Owner Participant,
the Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, and all amounts required to be paid by Lessee under the
agreements, covenants and indemnities contained in the Lease or in the
Participation Agreement or the Tax Indemnity Agreement or any other Operative
Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term, the Basic Term and any Renewal Term unless
the Lease is terminated earlier pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after the fifth anniversary of the Commencement Date in the case of
Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the
Lease, the Rent Payment Date falling on the 12th anniversary of the
Commencement Date or the 16th anniversary of the Commencement Date, as the
case may be, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date
that is on or after the fifth anniversary of the Commencement Date and (iii)
Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Termination Value is to be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N582FE), dated as of April 1, 1996, as amended and restated as of
June 1, 1996, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.
and Morgan Stanley & Co. Incorporated.
Underwriting Agreement. The Underwriting Agreement dated June 5,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Japan
Belgium Luxembourg
Canada Netherlands
Denmark New Zealand
Finland Norway
France Singapore
Germany Sweden
Iceland Switzerland
Ireland United Kingdom
EXHIBIT A
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N582FE), dated as of April 1, 1996, as amended and restated as of June 1,
1996 (the "Participation Agreement"), among Federal, as Lessee, Boatmen's
Equipment Finance, Inc., as Owner Participant, Morgan Guaranty Trust Company
of New York, Bank of America NT & SA, The Chase Manhattan Bank (National
Association), Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as
Original Loan Participants, First Security Bank of Utah, National Association,
a national banking association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement, State
Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture and State Street Bank and Trust Company, as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the refinancing in full of the Original Loan Certificates evidencing the
Original Loan Participants' participation in the payment of the Purchase Price
of one McDonnell Douglas MD-11F aircraft (the "Aircraft"), using the proceeds
from the public offering of the Pass Through Certificates. Two Series of Pass
Through Certificates will be issued by two Pass Through Trusts formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N582FE) dated as of April 1, 1996, as amended and restated as of June 1, 1996,
as supplemented by the related Indenture and Security Agreement Supplement
("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined
or caused to be examined by attorneys under my supervision, executed
counterparts of the Operative Agreements, the Pass Through Agreement and each
Series Supplement (the "Transaction Agreements"). We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals
of all documents submitted to us as copies. We have also assumed that each of
the parties to each of the Transaction Agreements, other than Federal, has
full power, authority and legal right to enter into such Transaction
Agreements and that each such Transaction Agreement has been duly
authorized, executed and delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a
party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms.
4. Neither the execution and delivery by Federal of the
Transaction Agreements to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Transaction Agreements to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a) require
the consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which are
required to be performed on or prior to the Refunding Date and which shall have
been accomplished on or prior to the Refunding Date) the registration with, or
the taking of any other action in respect of, the Aeronautics Authority, the
Securities and Exchange Commission or any other authority or agency of the
federal government or of the State of Tennessee other than (i) the
registration of the issuance and sale of the Pass Through Certificates under
the Securities Act, (ii) compliance with the securities laws of each
applicable state, and (iii) the filing of the Indenture, the Lease and the
Trust Agreement with the FAA, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action
or proceeding before any court or administrative agency which individually (or
in the aggregate in the case of any group of related lawsuits) (i) is expected
to have a material adverse effect on (A) except for the matters described (a)
under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in Federal's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 29, 1996) and (b) in the Lessee's Current Report on
Form 8-K dated April 30, 1996, as to which I can express no opinion at this
time concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and
valid title to the Aircraft free and clear of all Liens on file with the FAA,
except for Liens permitted under Section 6.01(a) of the Lease. Pursuant to
the Original Participation Agreement the Aircraft was duly delivered to the
Owner Trustee. Federal, as Lessee, duly accepted the Aircraft under the
Original Lease and the Lease Supplement and the Term commenced on the Delivery
Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in the
State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Transaction Agreements to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Transaction Agreements, the governing law with respect to each
of the Transaction Agreements is identical in all relevant respects to the law
of the State of Tennessee. Insofar as the foregoing opinion relates to the
enforceability of any instrument, such enforceability is subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally (whether such enforceability is considered in a
proceeding in equity or at law). The enforceability of the remedies provided
under the Lease may also be limited by applicable laws which may affect the
remedies provided therein but which do not in my opinion affect the validity of
the Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have
relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to
the extent such matters are addressed in such counsel's opinion and subject to
the assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated April 22, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. I hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N582FE), dated as of April 1, 1996, as amended and
restated as of June 1, 1996 (the "Participation Agreement"), among Federal
Express, as Lessee, Boatmen's Equipment Finance, Inc., as Owner Participant,
Morgan Guaranty Trust Company of New York, Bank of America NT & SA, The Chase
Manhattan Bank (National Association), Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as the Original Loan Participants, First Security
Bank of Utah, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement, State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but
solely as Indenture Trustee under the Indenture, and State Street Bank and
Trust Company, as Pass Through Trustee, relating to the Aircraft. This
opinion is being delivered pursuant to Section 4.01(l)(viii) of the
Participation Agreement. Capitalized terms not otherwise defined herein have
the meanings assigned thereto in the Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one McDonnell Douglas MD-11F Aircraft which was
purchased by the Owner Trustee pursuant to the Bills of Sale, subjected to the
Lien of the Original Indenture and leased to Federal Express under the Original
Lease. The Participation Agreement provides, among other things, for the
refinancing of the Original Loan Certificates using the proceeds from the
public offering of the Pass Through Certificates. Two Series of Pass Through
Certificates will be issued by separate Pass Through Trusts, each formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Indenture.
In connection with the opinions expressed below, we have
examined executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action was
or is necessary in order to establish the Owner Trustee's title thereto and
interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery
of the Transaction Agreements by each of the parties to each such document
(other than Federal Express), (ii) each such party has full power and legal
right to enter into and perform its respective obligations under the
Transaction Agreements, (iii) that the execution, delivery and performance by
each of the Transaction Agreements by each of the parties thereto will not
violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificates are delivered by the Original Loan Participants
to the Indenture Trustee for cancellation and are cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express
of each of the Transaction Agreements to which Federal Express is a party do
not, or did not on the date of execution thereof, violate, and fully comply,
or did fully comply on the date of execution thereof, with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 4(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the
Participation Agreement, the Trust Agreement, the Indenture and the Lease by
the Owner Trustee in its individual or trust capacity, as the case may be, and
the issuance, execution, delivery and performance of the Certificates by the
Owner Trustee in its trust capacity do not violate, and fully comply with, any
laws and governmental rules and regulations of the State of New York that may
be applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank of Utah, National Association in its individual or trust
capacity in the State of New York not related to the transactions contemplated
by the Transaction Agreements. We have assumed that First Security Bank of
Utah, National Association has made the filings necessary to comply with
Section 131.3 of the Banking Law of the State of New York, however we express
no opinion as to whether First Security Bank of Utah, National Association is
required to comply with said Section 131.3.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates
duly issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in
paragraph 2 above, neither the execution and delivery by Federal Express of the
Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in respect of,
the Department of Transportation, the FAA, the Securities and Exchange
Commission or any other Federal or New York State governmental authority.
10. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as
lessor under and by reason of the Lease. The Lease, including the rights under
Section 1110 of the United States Bankruptcy Code, has been assigned to the
Indenture Trustee pursuant to the Indenture as part of the collateral for the
Certificates and, as assignee, the Indenture Trustee has the benefit of
Section 1110.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty,
Fowler & Peregrin and George W. Hearn, Vice President - Law of
Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware. We express no opinion as to any matters
involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
(e) We rendered an opinion dated April 22, 1996 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection with
the financing and acquisition of the Aircraft on such date. We hereby
consent and agree that the addressees hereto who were not addressees
to the Delivery Date Opinion may rely on the Delivery Date Opinion as
fully and with the same force and effect as if such addressees were
originally named therein on the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(2)(a)
[Letterhead of Winston & Strawn]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special New York counsel for (i) Boatmen's
Equipment Finance, Inc., a Missouri corporation (the "Owner Participant"), in
connection with the transactions contemplated by (a) the Participation
Agreement (Federal Express Corporation Trust No. N582FE), dated as of April 1,
1996, as amended and restated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee (the "Lessee"), the
Owner Participant, Morgan Guaranty Trust Company of New York, Bank of America
NT & SA, The Chase Manhattan Bank (National Association), Commerzbank AG,
Atlanta Agency and NationsBank, N.A. (South), as the Original Loan
Participants (the "Original Loan Participants"), First Security Bank of Utah,
National Association, not in its individual capacity, except as otherwise
expressly set forth therein, but solely as Owner Trustee (the "Owner Trustee"),
State Street Bank and Trust Company, as Indenture Trustee (the "Indenture
Trustee") and State Street Bank and Trust Company, as Pass Through Trustee
(the "Pass Through Trustee"), (b) the Trust Agreement (Federal Express
Corporation Trust No. N582FE), dated as of April 1, 1996, as amended and
restated as of June 1, 1996 (the "Trust Agreement"), between the Owner
Participant and the Owner Trustee, (c) Amendment No. 1 to the Tax Indemnity
Agreement (Federal Express Corporation Trust No. N582FE), dated as of June 1,
1996 (the "Indemnity Agreement"), between the Owner Participant and the
Lessee, (d) the Ancillary Agreement I (Federal Express Corporation Trust No.
N582FE), dated April 22, 1996, as amended and restated on the date hereof (the
"Ancillary Agreement I"), among the Lessee, the Owner Participant, the Owner
Trustee, and the Indenture Trustee and (e) the Ancillary Agreement II (Federal
Express Corporation Trust No. N582FE), dated the date hereof (the "Ancillary
Agreement II"), among the Lessee, the Owner Participant, the Owner Trustee and
the Indenture Trustee, and (ii) The Boatmen's National Bank of St. Louis, a
national banking association (the "Guarantor"), in connection with the
transactions contemplated by the Owner Participant Guaranty, dated April 22,
1996, as amended and restated on the date hereof (the "Guaranty"), from the
Guarantor to each of the beneficiaries named therein. This opinion is
delivered pursuant to Section 4.01(l)(ii) of the Participation Agreement.
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective defined meanings set forth in the Participation Agreement.
In connection with our opinions herein, we have examined
executed counterparts of the Participation Agreement, the Trust Agreement, the
Indenture, the Indemnity Agreement, the Guaranty, Ancillary Agreement I and
Ancillary Agreement II (collectively, the "Documents"). We have further
examined and relied upon the accuracy of original, certified, conformed,
photographic or telecopied copies of such records, agreements, certificates
and other documents as we have deemed necessary or appropriate to enable us to
render the opinions expressed herein. In all such examinations, we have
assumed the genuineness of signatures on original documents and the conformity
to such original documents of all copies submitted to us as certified,
conformed, photographic or telecopied copies, and as to certificates and
telegraphic and telephonic confirmations given by public officials, we have
assumed the same to have been properly given and to be accurate. As to
various questions of fact material to our opinions, we have relied solely upon
the accuracy of the statements, representations and warranties made in the
Documents, and we have made no independent investigation or inquiry with
respect to such factual matters.
With your consent, and for purposes of this opinion, we have
assumed the accuracy of the following matters, but we have not made any
independent investigation or inquiry with respect thereto and we render no
opinion on such matters:
(a) The Participation Agreement, the Indemnity Agreement, the
Trust Agreement, Ancillary Agreement I and Ancillary Agreement II at
the time of execution and delivery by the Owner Participant will have
been duly and validly executed and delivered by all parties thereto
other than the Owner Participant and will constitute the legal, valid
and binding obligations of such parties, enforceable against such
parties in accordance with their terms, except as the enforceability
thereof may be limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(b) The parties to the Participation Agreement, the Indemnity
Agreement, the Trust Agreement, Ancillary Agreement I and Ancillary
Agreement II other than the Owner Participant, at the time of
execution and delivery by the Owner Participant, have obtained, and
there are in full force and effect at such time, any and all required
consents, permits, and approvals required by or from any and all
federal, state, local or foreign governmental agencies and
authorities in connection with the transactions contemplated thereby,
to the extent necessary for the legality, validity, binding effect or
enforceability of the Participation Agreement, the Indemnity
Agreement, the Trust Agreement, Ancillary Agreement I or Ancillary
Agreement II.
We have been retained as special counsel to the Owner
Participant and the Guarantor in connection with transactions contemplated by
the Participation Agreement and the Guaranty and have not generally represented
the Owner Participant or the Guarantor in their respective business activities
and are not familiar with the nature and extent of such activities.
Accordingly, we also have assumed without investigation that such activities
are not of such a nature as to cause the transactions contemplated by the
Participation Agreement and the Guaranty to be governed by laws or regulations
of the State of New York or the United States of America applicable only
because of such activities (such as laws relating specifically to the banking,
securities, insurance or utility industries) and not applicable to business
corporations generally.
Based upon the foregoing but subject to the assumptions,
limitations and qualifications set forth herein, we are of the opinion that:
1. The Participation Agreement, the Indemnity Agreement,
Ancillary Agreement I and Ancillary Agreement II constitute legal,
valid and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their respective
terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and except as enforcement thereof is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
2. The Guaranty, constitutes the legal, valid and binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or
in equity).
3. Neither the execution and delivery of the Participation
Agreement, the Trust Agreement, the Indemnity Agreement, Ancillary
Agreement I or Ancillary Agreement II by the Owner Participant nor the
consummation by the Owner Participant of any of the transactions
therein contemplated, or the fulfillment of, or compliance with, the
terms and provisions of any thereof, (A) requires for its validity
that the Owner Participant obtain the consent or approval of, give
notice to, register with, or take any other action with respect to,
any governmental authority or agency of the State of New York or the
Federal government of the United States, or (B) contravenes any law,
governmental rule or regulation of the State of New York or the
Federal government of the United States or any governmental authority
or agency thereof.
4. Neither the execution and delivery of the Guaranty by the
Guarantor nor the consummation by the Guarantor of any of the
transactions therein contemplated, or the fulfillment of, or
compliance with, the terms and provisions of any thereof, (A)
requires for its validity that the Guarantor obtain the consent or
approval of, give notice to, register with, or take any other action
with respect to, any governmental authority or agency of the Federal
government of the United States, or (B) contravenes any law,
governmental rule or regulation of the Federal government of the
United States or any governmental authority or agency thereof.
In rendering the foregoing opinions, we have relied, with your
consent, on the opinion of even date herewith of Bryan Cave LLP., as special
Missouri counsel for the Owner Participant and for the Guarantor, as to the
matters set forth therein that are governed by the laws of the State of
Missouri and our opinions are subject to the same limitations and exceptions
set forth therein.
The foregoing opinions are subject, however, to the
qualification that we express no opinion as to matters relating to the title
to or sufficiency of description of any property or collateral described in
the Documents or the perfection or relative priority of any lien or security
interest created with respect to such property or collateral thereunder. In
addition, we express no opinion as to matters governed by (i) any tax laws,
(ii) the Transportation Code, or by any other laws, statutes, rules or
regulations of the United States particularly relating to the acquisition,
ownership, registration, leasing, use or sale of the Aircraft, the Airframe or
the Engines other than such laws relating to personal property generally,
(iii) any securities laws or (iv) laws pertaining to the Owner Participant or
the Guarantor solely because of the business activities of the Owner
Participant or the Guaranty, respectively, and which are not applicable to
business corporations generally. Further, we express no opinion as to the
severability of any provision of any documents.
We are licensed to practice law in the State of New York and we
express no opinions herein as to the laws of any state or jurisdiction other
than the laws of the State of New York and the laws of the United States of
America.
This opinion is furnished by us at your request and at the Owner
Participant's and the Guarantor's request for your sole benefit, and we agree
that you may rely on the opinions expressed herein. No other Person or entity
shall be entitled to rely on the opinions expressed herein without our express
written consent. This opinion is limited to the matters stated herein, and no
opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion is of the date hereof and we undertake no, and disclaim
any, obligation to advise you of any changes in any matters set forth herein.
We rendered an opinion dated April 22, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Winston & Strawn
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(2)(b)
[Letterhead of Bryan Cave LLP]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special Missouri counsel for (i) Boatmen's
Equipment Finance, Inc., a Missouri corporation (the "Owner Participant"), in
connection with the transactions contemplated by (a) the Participation
Agreement (Federal Express Corporation Trust No. N582FE), dated as of April 1,
1996, as amended and restated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee (the "Lessee"), the
Owner Participant, Morgan Guaranty Trust Company of New York, Bank of America
NT & SA, The Chase Manhattan Bank (National Association), Commerzbank AG,
Atlanta Agency and NationsBank, N.A. (South), as Original Loan Participants
(the "Original Loan Participants"), First Security Bank of Utah, National
Association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement (the "Owner Trustee"), State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but solely
as Indenture Trustee under the Indenture (the "Indenture Trustee") and State
Street Bank and Trust Company, not in its individual capacity, except as
otherwise stated, but solely as Pass Through Trustee (the "Pass Through
Trustee"), (b) the Trust Agreement (Federal Express Corporation Trust No.
N582FE), dated as of April 1, 1996, as amended and restated as of June 1, 1996
(the "Trust Agreement"), by and between the Owner Participant and the Owner
Trustee, (c) Amendment No. 1 to the Tax Indemnity Agreement (Federal Express
Corporation Trust No. N582FE), dated as of June 1, 1996 (the "Indemnity
Agreement"), by and between the Owner Participant and the Lessee, (d)
Ancillary Agreement I (Federal Express Corporation Trust No. N582FE), dated
April 22, 1996, as amended and restated on the date hereof ("Ancillary
Agreement I"), by and among the Lessee, the Owner Participant, the Owner
Trustee, and the Indenture Trustee and (e) Ancillary Agreement II (Federal
Express Corporation Trust No. N582FE), dated the date hereof ("Ancillary
Agreement II"), by and among the Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee, and (ii) The Boatmen's National Bank of St.
Louis, a national banking association (the "Guarantor"), in connection with the
transactions contemplated by the Owner Participant Guaranty, dated April 22,
1996, as amended and restated on the date hereof (the "Guaranty"), from the
Guarantor to each of the beneficiaries named therein. For the purposes of this
opinion, all terms defined in the Participation Agreement but not defined
herein shall have the same meanings when used herein.
In connection with rendering this opinion, we have examined
executed counterparts of the Participation Agreement, the Trust Agreement,
Ancillary Agreement I, Ancillary Agreement II, the Tax Indemnity Agreement and
the Guaranty (the "Documents"). We have also examined: (i) a certificate
executed and delivered by an officer of Owner Participant which includes as
exhibits thereto the Certificate of Incorporation of the Owner Participant, as
amended to date, the bylaws of the Owner Participant, as amended to date, a
Certificate of Good Standing of the Owner Participant issued by the Secretary
of State of Missouri dated as of April 10, 1996, and authorizing resolutions
of the Owner Participant, a copy of which (exclusive of exhibits) is attached
hereto as Exhibit A (the "Owner Participant Certificate"); and (ii) a
certificate executed and delivered by an officer of the Guarantor which
includes as exhibits thereto the Articles of Association of the Guarantor, as
amended to date, the Bylaws of the Guarantor, as amended to date, a
Certificate of Corporate Existence of the Guarantor issued by the Office of
the Comptroller of the Currency dated as of April 11, 1996 and authorizing
resolutions of the Guarantor, a copy of which (exclusive of exhibits) is
attached hereto as Exhibit B (the "Guarantor Certificate"). In such
examination we have assumed the genuineness of all signatures (other than
those on behalf of the Owner Participant and the Guarantor), the authenticity
of all documents submitted to us as originals, the conformity with originals
of all documents submitted to us as copies and the legal competence of all
natural persons who are signatories thereto. As to any facts material to our
opinions expressed below, we have relied upon the representations and
warranties contained in or made pursuant to the Documents and upon the
certificates described above. We have assumed, except with regard to the
Owner Participant and the Guarantor, that the Documents have been duly
authorized, executed and delivered by the respective parties thereto and that
they constitute the legal, valid and binding obligations of each party thereto
enforceable against each such party in accordance with their respective terms.
With respect to our opinion relating to the due execution and
deliver of the Documents, we have further assumed that such Documents were
deposited with an overnight delivery service for the purpose of delivery to the
other parties thereto and that such documents were received by authorized
representatives of such parties.
We have not made any independent investigation or inquiries as
to, or any other examination of, and we do not opine upon (i) any corporate
documents, records or proceedings of the Owner Participant or the Guarantor,
except those expressly identified above, or (ii) the solvency, business or
financial condition of the Owner Participant or the Guarantor.
Subject to the foregoing and to the further qualifications
stated below, we are of the opinion that:
1. The Owner Participant is a Missouri corporation duly
incorporated and organized and validly existing in good standing under
the laws of the State of Missouri, and has adequate corporate
authority to execute, deliver and perform its obligations under the
Documents to which it is a party.
2. The Guarantor is a national banking association duly
organized and validly existing in good standing under the laws of the
United States of America, and has adequate authority to execute,
deliver and perform its obligations under the Guaranty.
3. Each of the Documents to which the Owner Participant is a
party has been duly authorized, executed and delivered by the Owner
Participant.
4. The Guaranty has been duly authorized, executed and
delivered by the Guarantor.
5. Neither the execution of and delivery by the Owner
Participant of the Documents to which it is a party nor the
performance by the Owner Participant of any of its obligations
thereunder: (a) requires the consent or approval of, the giving of
notice to, the registration with, the recording or filing of any
document with, or the taking of any other action with respect to any
governmental authority or agency of the State of Missouri or of the
federal government of the United States; or (b) violates any law,
governmental rule or regulation of the State of Missouri or of the
federal government of the United States or any governmental authority
or agency thereof; or (c) conflicts with or results in a breach of
any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of the Owner Participant; or (d) to the best
of our knowledge, based solely on the Owner Participant Certificate,
is in violation of any order or judgment applicable to or binding
upon the Owner Participant or any its properties, or would violate or
(except as contemplated by the Documents) would subject the Trust
Estate to any lien under any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license
or contract or other material agreement or instrument to which the
Owner Participant is a party or by which it or any of its properties
is bound.
6. Neither the execution of and delivery by the Guarantor of
the Guaranty nor the performance by the Guarantor of any of its
obligations thereunder: (a) requires the consent or approval of, the
giving of notice to, the registration with, the recording or filing
of any document with, or the taking of any other action with respect
to any governmental authority or agency of the State of Missouri or
of the federal government of the United States; or (b) violates any
law, governmental rule or regulation of the State of Missouri or of
the federal government of the United States or any governmental
authority or agency thereof; or (c) conflicts with or results in a
breach of any of the terms, conditions or provisions of the Articles
of Association or Bylaws of the Guarantor; or (d) to the best of our
knowledge, based solely on the Guarantor Certificate, is in violation
of any order or judgment applicable to or binding upon the Guarantor
or any of its properties, or would violate or (except as contemplated
by the Documents) would subject the Trust Estate to any lien under any
indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or contract or other material
agreement or instrument to which the Guarantor is a party or by which
it or any of its properties is bound.
7. Based solely on the Owner Participant Certificate and the
Guarantor Certificate, there are no actions, suits or proceedings
pending or threatened against or affecting the Owner Participant or
the Guarantor before any court, administrative agency or other
governmental body or arbitration board or tribunal which, if
adversely determined, would materially and adversely affect the Owner
Participant's or the Guarantor's ability, as the case may be, to
perform its obligations under the Documents to which it is a party.
Based solely on the Owner Participant Certificate and the Guarantor
Certificate, we are not aware of any pending or threatened actions or
proceedings before any court, administrative agency or tribunal
involving the Owner Participant or the Guarantor, as the case may be,
in connection with the transactions contemplated by the Documents.
This opinion is subject to the additional exceptions,
limitations and qualifications set forth below.
Each of the "Bankruptcy and Insolvency Exception," the
"Equitable Principles Exception" and the "Other Common Qualifications," as
those terms are set forth and defined in Sections 12, 13 and 14, respectively,
of the Legal Opinion Accord (the "Accord") of the Business Law Section of the
American Bar Association (1991), which sections are hereby incorporated herein
as though fully set forth at length. Our opinion is governed by and shall be
interpreted in accordance with the Accord solely for the purpose of
incorporating the qualifications, exceptions and limitations to which
reference is made above, and not in any other respect.
We express no opinion on any other matters pertaining to the
transactions contemplated by or related to the Documents except as hereinabove
specifically provided, and no further or other opinion shall be implied. The
opinion above is subject to each and every assumption, exception,
qualification and limitation, factual or legal, set forth herein, whether or
not customarily appropriate under the circumstances. The matters set forth
herein or upon which this opinion is based are as of the date hereof, and we
hereby undertake no, and disclaim any, obligation to advise you of any change
in any matters set forth herein, or any matters upon which this opinion is
based, or of changes in fact or law arising after the date hereof.
We are qualified to practice law in the State of Missouri and
we do purport to be experts on or to express any opinion concerning any laws
other than the laws of the State of Missouri and the federal laws of the
United States of America, where applicable. Further, we have made no
investigation and express no opinion, as to any aviation law or other laws,
statutes, rules or regulations applicable due to the particular nature of the
equipment subject to the Lease (as defined in the Participation Agreement),
and we express no opinion as to securities laws, including but not limited to
the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended.
This opinion is rendered to you pursuant to Section 4.01(l)(ii)
of the Participation Agreement and is solely for your benefit in the
above-captioned transaction. This opinion may not be relied upon by you for
any other purpose or relied upon by any other person, firm or corporation for
any purpose without this Firm's prior written consent.
We rendered an opinion dated April 22, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Bryan Cave LLP
EXHIBIT A
CERTIFICATE
OF
BOATMEN'S EQUIPMENT FINANCE, INC.
The undersigned, ________________, _______________
_____________________ of Boatmen's Equipment Finance, Inc., a Missouri
corporation (the "Owner Participant"), in connection with the consummation of
the transactions contemplated in (a) the Participation Agreement (Federal
Express Corporation Trust No. N582FE), dated as of April 1, 1996, as amended
and restated as of June 1, 1996 (the "Participation Agreement"), among Federal
Express Corporation, as Lessee (the "Lessee"), the Owner Participant, Morgan
Guaranty Trust Company of New York, Bank of America NT & SA, The Chase
Manhattan Bank (National Association), Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as Original Loan Participants (the "Original Loan
Participants"), First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement (the
"Owner Trustee"), State Street Bank and Trust Company, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under the
Indenture (the "Indenture Trustee") and State Street Bank and Trust Company,
not in its individual capacity, except as otherwise stated, but solely as Pass
Through Trustee (the "Pass Through Trustee"), (b) the Trust Agreement (Federal
Express Corporation Trust No. N582FE), dated as of April 1, 1996, as amended
and restated as of June 1, 1996 (the "Trust Agreement"), by and between the
Owner Participant and the Owner Trustee, (c) Amendment No. 1 to the Tax
Indemnity Agreement (Federal Express Corporation Trust No. N582FE), dated as
of June 1, 1996 (the "Indemnity Agreement"), by and between the Owner
Participant and the Lessee, (d) Ancillary Agreement I (Federal Express
Corporation Trust No. N582FE), dated April 22, 1996, as amended and restated
on the date hereof ("Ancillary Agreement I"), by and among the Lessee, the
Owner Participant, the Owner Trustee and the Indenture Trustee, and (e)
Ancillary Agreement II (Federal Express Corporation Trust No. N582FE), dated
the date hereof ("Ancillary Agreement II"), by and among the Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee (the Participation
Agreement, the Trust Agreement, the Indemnity Agreement, Ancillary Agreement
I, and Ancillary Agreement II are collectively referred to herein as the
"Documents"; capitalized terms used herein but not otherwise defined herein
shall have the meaning given thereto in the Participation Agreement), hereby
certifies that he is the _______________ of the Owner Participant and that, as
such, he is authorized to execute and deliver this Certificate in the name and
on behalf of the Owner Participant. The undersigned hereby further certifies
that:
1. Attached hereto as Exhibit A is a true, correct and complete
copy of the Articles of Incorporation of the Owner Participant,
including any and all amendments thereto, which Articles of
Incorporation are in full force and effect as of the date
hereof and no action has been taken by the Owner Participant in
contemplation of any amendment of said Articles of
Incorporation or any liquidation, dissolution, merger or
consolidation of the Owner Participant.
2. Attached hereto as Exhibit B is a true, correct and complete
copy of the By-Laws of the Owner Participant which By-Laws are
in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete
copy of the Certificate of Good Standing issued by the
Secretary of State of the State of Missouri pertaining to the
Owner Participant.
4. Attached hereto as Exhibit D is a true and complete copy of the
resolutions adopted by unanimous written consent of the Board of
Directors of the Owner Participant authorizing, confirming and
ratifying the execution, delivery and performance of the
Documents and the consummation of the transactions contemplated
thereby, which resolutions are in full force and effect as of
the date hereof and have not been rescinded, modified or
supplemented and no other corporate resolutions have been
adopted by the Owner Participant in connection with the
Documents.
5. There are no actions, suits or proceedings pending or threatened
against or affecting the Owner Participant before any court,
administrative agency or other governmental body or arbitration
board or tribunal which, if adversely determined, would
materially and adversely affect the Owner Participant's ability
to perform its obligations under the Documents. There are no
pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving the Owner
Participant in connection with the transactions contemplated by
the Documents.
6. Neither the execution of and delivery by the Owner Participant
of the Documents nor the performance by the Owner Participant of
any of its obligations thereunder, nor the consummation of the
transactions contemplated therein is in violation of any order
or judgment applicable to or binding upon the Owner Participant
or any of its properties, or would violate, or (except as
contemplated by the Documents) would subject the Trust Estate
to any lien under, any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease,
license or contract or other material agreement or instrument
to which the Owner Participant is a party or by which it or any
of its properties is bound.
7. There is no writ, injunction or decree or other requirement
(other than published rules and regulations) or restriction of
any court or governmental agency or body applicable to the
Owner Participant or by which the Owner Participant is bound or
affected or to which any of its properties is subject which
prohibits or restricts, or which might otherwise be breached by
virtue of the execution of the Documents and compliance by the
Owner Participant with the provisions thereof, and the
consummation of the transactions contemplated therein.
8. The President of Owner Participant and at least two-thirds of
the Board of Directors and other managing officers of Owner
Participant are citizens of the United States of America, and at
least 75% of the voting interest in Owner Participant is owned
or controlled by The Boatmen's National Bank of St. Louis, a
national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand on this ____
day of June, 1996.
__________________________
___________
I, ______________, ________________ of the Owner Participant, do
hereby certify that ________________ is the duly elected, qualified and acting
_______________ of the Owner Participant and that the signature above is his
true and genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand on this _____
day of June, 1996.
__________________________
___________
EXHIBIT B
CERTIFICATE
OF
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
The undersigned, ________________, _______________
_____________________ of The Boatmen's National Bank of St. Louis, a national
banking association (the "Guarantor"), in connection with the consummation of
the transactions contemplated in the Owner Participant Guaranty, dated April
22, 1996, as amended and restated on the date hereof (the "Guaranty"), from
the Guarantor to each of the beneficiaries named therein (capitalized terms
used herein but not otherwise defined herein shall have the meaning given
thereto in the Participation Agreement (Federal Express Corporation Trust No.
N582FE), dated as of April 1, 1996, as amended and restated as of June 1, 1996
among Federal Express Corporation, as Lessee, Boatmen's Equipment Finance,
Inc., Morgan Guaranty Trust Company of New York, Bank of America NT & SA, The
Chase Manhattan Bank (National Association), Commerzbank AG, Atlanta Agency
and NationsBank, N.A. (South), as Original Loan Participants, First Security
Bank of Utah, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement, State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but
solely as Indenture Trustee under the Indenture and State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but solely
as Pass Through Trustee), hereby certifies that he is the _________________ of
the Guarantor and that, as such, he is authorized to execute and deliver this
Certificate in the name and on behalf of the Guarantor. The undersigned hereby
further certifies that:
1. Attached hereto as Exhibit A is a true, correct and complete
copy of the Articles of Association of the Guarantor, including
any and all amendments thereto, which Articles of Association
are in full force and effect as of the date hereof and no
action has been taken by the Guarantor in contemplation of any
amendment of said Articles of Association or any liquidation,
dissolution, merger or consolidation of the Guarantor.
2 Attached hereto as Exhibit B is a true, correct and complete
copy of the By-Laws of the Guarantor which By-Laws are in full
force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete
copy of the Certificate of Corporate Existence issued by the
Office of the Comptroller of the Currency pertaining to the
Guarantor.
4. Attached hereto as Exhibit D is a true and complete copy of the
resolutions adopted by the Board of Directors of the Guarantor
authorizing, confirming and ratifying the execution, delivery
and performance of the Guaranty and the consummation of the
transactions contemplated thereby, which resolutions are in full
force and effect as of the date hereof and have not been
rescinded, modified or supplemented and no other corporate
resolutions have been adopted by the Guarantor in connection
with the Guaranty.
5. There are no actions, suits or proceedings pending or threatened
against or affecting the Guarantor before any court,
administrative agency or other governmental body or arbitration
board or tribunal which, if adversely determined, would
materially and adversely affect the Guarantor's ability to
perform its obligations under the Guaranty. There are no
pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving the Guarantor in
connection with the transactions contemplated by the Guaranty.
6. Neither the execution of and delivery by the Guarantor of the
Guaranty nor the performance by the Guarantor of any of its
obligations thereunder, nor the consummation of the transactions
contemplated therein is in violation of any order or judgment
applicable to or binding upon the Guarantor or any of its
properties, or would violate, or (except as contemplated by the
Guaranty) would subject the Trust Estate to any lien under, any
indenture, mortgage, bank credit agreement, note or bond
purchase agreement, long-term lease, license or contract or
other material agreement or instrument to which the Guarantor
is a party or by which it or any of its properties is bound.
7. There is no writ, injunction or decree or other requirement
(other than published rules and regulations) or restriction of
any court or governmental agency or body applicable to the
Guarantor or by which the Guarantor is bound or affected or to
which any of its properties is subject which prohibits or
restricts, or which might otherwise be breached by virtue of
the execution of the Guaranty and compliance by the Guarantor
with the provisions thereof, and the consummation of the
transactions contemplated therein.
8. The President of Guarantor and at least two-thirds of the Board
of Directors and other managing officers of Guarantor are
citizens of the United States of America, and at least 75% of
the voting interest in Guarantor is owned or controlled by
Boatmen's Bancshares, Inc., a Missouri bank holding company.
The President of Boatmen's Bancshares, Inc. and at least
two-thirds of the Board of Directors and other managing
officers of Boatmen's Bancshares, Inc. are citizens of the
United States of America, and at least 75% of the voting
interest in Boatmen's Bancshares, Inc. is owned or controlled
by persons that are citizens of the United States.
IN WITNESS WHEREOF, I have hereunto set my hand on this ____
day of June, 1996.
__________________________
___________
I,__________________, __________________ of the Guarantor, do
hereby certify that ________________ is the duly elected, qualified and acting
_______________ of the Guarantor and that the signature above is his true and
genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand on this _____
day of June, 1996.
__________________________
___________
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N582FE), dated as
of April 1, 1996, as amended and restated as of June 1, 1996 (the "Indenture")
between First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee") and the
Indenture Trustee, in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N582FE), dated as of April 1, 1996, as amended and restated as of June 1, 1996
(the "Participation Agreement"), among Federal Express Corporation, as Lessee
(the "Lessee"); Boatmen's Equipment Finance, Inc., as Owner Participant (the
"Owner Participant"); Morgan Guaranty Trust Company of New York, Bank of
America NT & SA, The Chase Manhattan Bank (National Association), Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as Loan Participants (the
"Loan Participants"); the Owner Trustee; and the Indenture Trustee. This
opinion is being delivered pursuant to Section 4.01(l)(iii) of the
Participation Agreement. Except as otherwise defined herein, all capitalized
terms used herein shall have the respective meanings set forth in Schedule II
to the Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Indenture Trustee, as the case may be, is a party (collectively, the
"Indenture Trustee Documents"), the Certificate of the Massachusetts
Commissioner of Banks relating to State Street and originals, or copies
certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates, or other instruments as we have
deemed necessary or advisable for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Indenture Trustee), the conformity to
the originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts, is
a "citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Refunding Date and to perform its other
obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee
Documents by State Street, in its individual capacity or as Indenture Trustee,
as the case may be, and compliance by State Street or the Indenture Trustee, as
the case may be, individually or as Indenture Trustee, with all of the
provisions thereof do not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the
Indenture Trustee, or any order or judgment known to us, of any Massachusetts
or Federal court or governmental authority applicable to or binding on State
Street, individually or as Indenture Trustee, or contravene the provisions of,
or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Indenture Trustee under, its charter documents
or By-Laws or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, in each case known
to us, or any other agreement or instrument, in each case known to us, to
which State Street, individually or as Indenture Trustee, is a party or by
which it or any of its property may be bound or affected, other than the Lien
of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document constitutes
a legal, valid and binding obligation of State Street, in its individual
capacity or as Indenture Trustee, as the case may be, enforceable against
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, in accordance with its terms.
5. The Certificates issued and dated the Refunding Date have
been duly authenticated and delivered by the Indenture Trustee pursuant to the
terms of the Indenture.
6. There are no fees, taxes or other governmental charges
payable by the Owner Trustee, the Indenture Trustee (except taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders to the Commonwealth of Massachusetts or any political
subdivision thereof in connection with the execution, delivery or performance
of any of the Operative Agreements or in connection with the issuance and
acquisition of the Certificates by the Certificate Holders or the beneficial
interests of the Certificate Holders in the Trust Indenture Estate solely
because the Indenture Trustee in its individual capacity (a) is incorporated
under the laws of the Commonwealth of Massachusetts, (b) has its principal
place of business in the Commonwealth of Massachusetts, (c) performs (in its
individual capacity or as Indenture Trustee) any or all of its duties under
the Indenture Trustee Documents in the Commonwealth of Massachusetts, and (d)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee Documents in the Commonwealth of Massachusetts. Neither the
Indenture Trustee nor the trust created under the Indenture will be subject to
any fee, tax or other governmental charge (except for taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof in
existence on the date hereof, on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Indenture
Estate solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
There is no fee, tax or other governmental charge (except for taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) under the
laws of the Commonwealth of Massachusetts or any political subdivision thereof
in existence on the date hereof, on, based on or measured by any payments under
the Certificates by reason of the creation of the trust under the Indenture
solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts. We
express no opinion as to whether or not any fees, taxes or other charges are
now or hereafter may be payable by the Original Loan Participant or the Owner
Participant to the Commonwealth of Massachusetts or any political subdivision
thereof in connection with (a) the execution, delivery or performance by any of
the Indenture, the Participation Agreement or any of the other Operative
Agreements and (b) the making by the Owner Participant of its investment in
the Aircraft.
7. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State Street,
individually or as Indenture Trustee, to perform its obligations under the
Indenture Trustee Documents.
We rendered an opinion dated April 22, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
4.01(l)(iv) of the Participation Agreement (Federal Express Corporation Trust
No. N582FE), dated as of April 1, 1996, as amended and restated as of June 1,
1996 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"), Boatmen's Equipment Finance, Inc., as Owner Participant
(the "Owner Participant"), Morgan Guaranty Trust Company of New York, Bank of
America NT & SA, The Chase Manhattan Bank (National Association), Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as the Original Loan
Participants (the "Original Loan Participants"), First Security Bank of Utah,
National Association, not in its individual capacity but solely as Owner
Trustee (the "Owner Trustee"), State Street Bank and Trust Company, as
Indenture Trustee (the "Indenture Trustee") and State Street Bank and Trust
Company, as Pass Through Trustee, with respect to that portion of Subtitle VII
of Title 49 of the United States Code relative to the recordation of
instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal
Aviation Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N582FE) dated as of April 1, 1996, as amended and
restated as of June 1, 1996 (the "Trust Agreement")
between the Owner Participant and the Owner Trustee,
which Trust Agreement amends and restates the Original
Trust Agreement, which Trust Agreement was filed at ____
_.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N582FE) dated as of April 1, 1996,
as amended and restated as of June 1, 1996 and executed
on June __, 1996 (the "Trust Indenture") between the
Owner Trustee and the Indenture Trustee, which Trust
Indenture amends and restates the Original Indenture,
which Trust Indenture was filed at ____ _.m., C._.T.;
and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N582FE) dated as of April 1, 1996, as amended and
restated as of June 1, 1996 (the "Lease") between the
Owner Trustee, as lessor, and the Lessee, as lessee, which
Lease amends and restates the Original Lease, with the
Trust Indenture attached thereto, which Lease with the
Trust Indenture attached thereto was filed at ____ _.m.,
C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture, as containing
confidential financial information.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated April 22, 1996 (the
"FAA Bill of Sale") from the Lessee, as seller, conveying title
to the Airframe to the Owner Trustee has been duly recorded by
the FAA on April 22, 1996 and assigned Conveyance No. ____;
2. the Trust Indenture and the Lease with the Trust Indenture
attached are in due form for recordation by and have been duly
filed for recordation with the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on
April 22, 1996 pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded
by the FAA pursuant to and in accordance with the provisions of
49 U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Trust Indenture and Security Agreement
Supplement attached was duly filed with and duly recorded by the
FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the
security interest created by the Original Indenture, as amended
and restated by the Trust Indenture, as supplemented by the
Indenture and Security Agreement Supplement, and (ii) the
rights of the parties under the Original Lease, as amended and
restated by the Lease, as supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Trust
Indenture, as supplemented by the Indenture and Security
Agreement Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly perfected
first assignment of all the right, title and interest of the
Owner Trustee in, to and under the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which have
been duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the Owner
Trustee's title to the Airframe or (B) such security interest
and assignment (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), it being understood that no
opinion is herein expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and performance
of the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture,
as amended and restated by the Trust Indenture, as supplemented
by the Indenture and Security Agreement Supplement, or the
Original Trust Agreement, as amended and restated by the Trust
Agreement, except for such filings as are referred to in our
opinion dated April 22, 1996 (which have been duly effected)
and the filings referred to in clauses (a), (b) and (c) above;
and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto
of the Original Trust Agreement, the Trust Agreement, the
Original Indenture, the Trust Indenture, the Indenture and
Security Agreement Supplement, the Original Participation
Agreement, the Participation Agreement, the FAA Bill of Sale,
the Original Lease, the Lease and the Lease Supplement or the
performance by the parties thereto of: (i) the Original Trust
Agreement, as amended and restated by the Trust Agreement; (ii)
the Original Indenture, as amended and restated by the Trust
Indenture, as supplemented by the Indenture and Security
Agreement Supplement; (iii) the Original Participation
Agreement, as amended and restated by the Participation
Agreement; and (iv) the Original Lease, as amended and restated
by the Lease, as supplemented by the Lease Supplement, in
accordance with the provisions thereof, nor the consummation by
the parties thereto of any of the transactions contemplated
thereby, requires the consent or approval of, or the giving of
notice to, or the registration with, or the taking of any other
action in respect of, the FAA except for the filings, the
recordations and the filings for recordation specified
elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of
the United States. In rendering this opinion, we were subject to the accuracy
of the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties had actual notice.
In rendering this opinion we are assuming that there are no documents with
respect to the Aircraft which have been filed for recording under the
recording system of the FAA but have not yet been listed in the available
records of such system as having been so filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated April ___, 1996 and
have continued to rely upon the opinion of the Assistant Chief Counsel of the
Aeronautical Center dated __________, 1996, copies of which are attached
hereto.
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) McDonnell Douglas MD-11F aircraft bearing
manufacturer's serial number 48420 and U.S. Registration No. N1751A (the
"Airframe") and three (2) General Electric CF6-80C2-D1F aircraft engines
bearing manufacturer's serial numbers 702-657, 702-294 and 702-365 (the
"Engines") (the Airframe and the Engines are referred to collectively as the
"Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N582FE)
dated as of April 1, 1996 between the Owner Participant and the Owner Trustee,
which was filed with the FAA on April 22, 1996.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N582FE) dated as of April 1, 1996 between the
Owner Trustee and the Indenture Trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on ______, 1996 and assigned
Conveyance No. ______.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N582FE) dated April 22, 1996 between the Owner
Trustee and the Indenture Trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N582FE)
dated as of April 1, 1996 between the Owner Trustee, as lessor, and the
Lessee, which together with the Lease Supplement (as hereinafter defined), the
Original Indenture and the Indenture and Security Agreement Supplement
attached thereto was recorded as one instrument by the FAA on ______, 1996
and assigned Conveyance No. ______.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N582FE) dated April 22, 1996 between the Owner Trustee, as lessor, and the
Lessee, with respect to the Aircraft, which was attached to and recorded by the
FAA as one instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) the Excess Amount and
Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule III),
(iii) the Termination Values (Schedule IV), (iv) the Purchase Option Schedule
(Schedule V) omitted from the FAA filing counterpart thereof as containing
confidential financial information; and (v) the purchase price under Section
4.02(a)(F) of the Lease set forth in Ancillary Agreement I, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of Utah,
National Association, a national banking association ("First Security"), in
connection with the Trust Agreement (Federal Express Corporation Trust No.
N582FE), dated as of April 1, 1996, as amended and restated as of June 1, 1996
(the "Trust Agreement"), between First Security and Boatmen's Equipment
Finance, Inc., a Missouri corporation (the "Owner Participant"). Pursuant to
the Participation Agreement (Federal Express Corporation Trust No. N582FE),
dated as of April 1, 1996, as amended and restated as of June 1, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee, the
Owner Participant, Morgan Guaranty Trust Company of New York, Bank of America
NT & SA, The Chase Manhattan Bank (National Association), Commerzbank AG,
Atlanta Agency and NationsBank, N.A. (South), as Original Loan Participants,
First Security, not in its individual capacity except as otherwise expressly
set forth therein but solely as Owner Trustee (the "Owner Trustee") under the
Trust Agreement, State Street Bank and Trust Company, as Indenture Trustee and
State Street Bank and Trust Company, as Pass Through Trustee, one McDonnell
Douglas MD-11F aircraft bearing U.S. Registration No. N1751A (the "Aircraft")
is being refinanced. This opinion is furnished pursuant to Section
4.01(l)(vii) of the Participation Agreement. Capitalized terms used herein
and not otherwise defined are used as defined in the Participation Agreement,
except that references herein to any instrument shall mean such instrument as
in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1
dated April 22, 1996;
(e) The Lease;
(f) The Ancillary Agreement I;
(g) The Ancillary Agreement II:
(h) The Lease Supplement dated April 22, 1996 (each of the
documents identified in paragraphs (a) through (g) above
being collectively referred to as the "Owner Trustee
Documents"); and
(h) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national
banking association, with banking and trust powers, is a Citizen of
the United States within the meaning of Section 40102(a)(15) of the
Transportation Code, and each of First Security and the Owner
Trustee, as the case may be, has or had, on the date of execution
thereof, full corporate power, authority and legal right to execute,
deliver and perform each of the Owner Trustee Documents to which it
is or is to be a party and to issue, execute, deliver and perform the
Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner Trustee
Document to which it is a party; each such document constitutes a
legal, valid and binding obligation of the Owner Trustee (and, to the
extent set forth in the respective Owner Trustee Document, of First
Security) enforceable against the Owner Trustee (and, to the extent
set forth in the respective Owner Trustee Document, against First
Security) in accordance with its terms; and assuming the Trust
Agreement was properly authorized, executed and delivered by the
Owner Participant and that the terms of the Trust Agreement are not
in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement
constitutes, under the laws of the State of Utah, a legal, valid and
binding obligation of the Owner Participant enforceable against the
Owner Participant in accordance with its terms. The Certificates
have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and
constitute the legal, valid and binding obligations of the Owner
Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture; and the Certificates are
entitled to the benefits and security afforded by the Indenture in
accordance with their terms and the terms of the Indenture.
3. On the Delivery Date, the Owner Trustee received from the
Lessee such title to the Aircraft as the Lessee conveyed to the Owner
Trustee, subject to the rights of the Owner Trustee and the Lessee
under the Original Lease and the security interest created pursuant
to the Original Indenture and the Indenture Supplement; and to our
knowledge, there exist no Liens affecting the title of the Owner
Trustee to the Lessor's Estate resulting from claims against First
Security not related to the ownership of the Lessor's Estate or the
administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust
Indenture Estate.
4. Under the laws of the State of Utah, all of the properties
which are part of the Trust Indenture Estate have been pledged and
mortgaged with the Indenture Trustee as part of the Trust Indenture
Estate and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent
provided in the Indenture, to the Lien of the Indenture in favor of
the holders of the Certificates issued and to be issued under the
Indenture.
5. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture Trustee's
taking possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including
the filing or recording of any document, is necessary (i) to create
under the UCC the security interest in the Trust Indenture Estate
(including the grant and assignment unto the Indenture Trustee of the
security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation
Agreement) which the Indenture by its terms purports to create in
favor of the Indenture Trustee, and (ii) to perfect in the State of
Utah such security interest, except for the filing of a UCC financing
statement complying with the formal requisites of Section 9-402 of
the UCC in the office of the Division of Corporations and Commercial
Code of the State of Utah with respect to the security interest,
which filing has been duly effected, and the filing of continuation
statements with respect thereto required to be filed at periodic
intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust
under Utah law, the trust created by the Trust Agreement has been duly
created and exists for the benefit of the Owner Participant, and the
Trust Agreement create for the benefit of the Owner Participant the
interest in the properties referred to in Section 1.02 of the Trust
Agreement which the Trust Agreement by its terms purports to create,
which interest is subject and subordinate to the security interests
created by the Indenture to the extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any court or administrative or governmental authority or
agency of the State of Utah or the United States of America governing
the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement.
9. The execution, delivery and performance by the Owner Trustee
or First Security, as the case may be, of each of the Owner Trustee
Documents and the issuance, execution, delivery and performance of the
Certificates by the Owner Trustee are not or were not, on the date of
execution thereof, in violation of the charter or by-laws of First
Security or of any law, governmental rule, or regulation of the State
of Utah or the United States of America governing the banking or
trust powers of First Security or, to our knowledge, of any
indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument
to which it is a party or by which it is bound or, to our knowledge,
of any judgment or order of the State of Utah or the United States of
America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the
laws of the State of Utah or any political subdivision thereof in
existence on the date hereof on, based on or measured by any payments
under the Certificates or the beneficial interests in the Lessor's
Estate, by reason of the creation of the trust under the Trust
Agreement, pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement, within
the State of Utah, which would not have been imposed if First
Security did not have its principal place of business and did not
perform its obligations under the Owner Trustee Documents in the
State of Utah.
11. Neither a Utah court nor a federal court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms or
with the consent of the Indenture Trustee, as long as the Lien of the
Indenture on the Trust Indenture Estate has not been released or
payment of the principal of, and premium, if any, and interest on,
the Certificates have not been made in full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner
Participant, holders of a lien against the assets of any such person
that is an Owner Participant, holders of a lien against the assets of
any such person, such as trustees, receivers or liquidators (whether
or not any insolvency proceeding has been commenced) (collectively,
the "Creditors") may acquire valid claims and liens, as to the Trust
Estate, only against the rights of such Owner Participant under the
Trust Agreement or in the Trust Estate, and do not have, and may not
through the enforcement of such Creditor's rights acquire, any
greater rights than such Owner Participant with respect to the Trust
Agreement or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its
properties in any court or before any administrative agency or
arbitrator, which, if adversely determined, would materially
adversely affect the ability of First Security or the Owner Trustee,
as the case may be, to perform its obligations under any of the Owner
Trustee Documents, and there are no pending or, to our knowledge,
threatened actions or proceedings before any court, administrative
agency or tribunal involving First Security or the Owner Trustee, as
the case may be, in connection with the transactions contemplated by
any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah, the federal laws of the United States of America governing the banking
and trust powers of First Security and Title II of the United States Code
entitled "Bankruptcy". However, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended (except
with respect to the opinion set forth in paragraph 1 above concerning the
citizenship of First Security) and (iii) state securities or blue sky laws.
Insofar as the foregoing opinions relate to the validity and enforceability in
the State of Utah of the Certificates and the other Owner Trustee Documents
expressed to be governed by the laws of the State of New York, we have assumed
that the laws of New York are identical to the laws of Utah in all material
respects, and that the Certificates and such Owner Trustee Documents
constitute legal, valid, binding and enforceable documents or instruments
under such laws (as to which we express no opinion). No opinion is expressed
as to the priority of any security interest or as to title to any part of the
Trust Estate.
B. The foregoing opinions regarding enforceability of any
document or instrument, except for the opinions set forth in paragraphs 11 and
12 above, are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of the
Owner Trustee or First Security) on documents and instruments examined by us
are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated April 22, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(6)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N582FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of February 1, 1993, as amended and restated
as of October 1, 1995 (the "Pass Through Trust Agreement"), as supplemented by
the Series Supplements dated the date hereof between Federal Express
Corporation and the Pass Through Trustee, designated as Series Supplement
1996-A1 and 1996-A2, respectively (the "Series Supplements") and the
Participation Agreement (Federal Express Corporation Trust No. N582FE) dated
as of April 1, 1996, as amended and restated as of June 1, 1996 (as amended
and restated, the "Participation Agreement") among Federal Express, as Lessee,
Boatmen's Equipment Finance, Inc., as Owner Participant, Morgan Guaranty Trust
Company of New York, Bank of America NT & SA, The Chase Manhattan Bank
(National Association), Commerzbank AG, Atlanta Agency and NationsBank, N.A.
(South), as Original Loan Participants, First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as otherwise stated, but solely as Owner Trustee under the Trust
Agreement, State Street Bank and Trust Company, a Massachusetts trust company,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee under the Indenture and State Street Bank and Trust Company,
a Massachusetts trust company, not in its individual capacity, except as
otherwise stated, but solely the Pass Through Trustee. This opinion is being
delivered pursuant to Section 4.01(l)(ix) of the Participation Agreement.
Except as otherwise defined herein, all capitalized terms used herein shall
have the respective meanings set forth in Schedule II to the Participation
Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Pass Through Trustee, as the case may be, is a party, the Pass Through
Trust Agreement and the Series Supplements (collectively, the "Pass Through
Trustee Documents"), the Certificate of the Massachusetts Commissioner of
Banks relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Pass Through Trustee), the conformity
to the originals of all documents reviewed by us as copies, the authenticity
and completeness of all original documents reviewed by us in original or copy
form and the legal competence of each individual executing any document (other
than on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Pass Through Trustee,
as applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Pass Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts with
full corporate power and authority to execute, deliver and carry out,
individually or as Pass Through Trustee, as the case may be, the terms of the
Pass Through Trustee Documents and, in its capacity as Pass Through Trustee,
to authenticate the Pass Through Certificates delivered on the Refunding Date.
Upon execution of the Series Supplements, the Pass Through Trustee will be
deemed to have duly executed the Pass Through Trust Agreement and thereupon
become the Pass Through Trustee under the Pass Through Trust Agreement and the
Series Supplements for all purposes thereof.
2. The execution and delivery of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) by State Street, in
its individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not contravene any Massachusetts or Federal law, rule or regulation governing
the banking or trust powers of State Street or the Pass Through Trustee, or any
order or judgment known to us, of any Massachusetts or Federal court or
governmental authority applicable to or binding on State Street, individually
or as Pass Through Trustee, or contravene the provisions of, or constitute a
default under, or result in the creation of a Lien on any property of State
Street or the Pass Through Trustee under, its charter documents or By-Laws or
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, in each case known to us, or any other
agreement or instrument, in each case known to us, to which State Street,
individually or as Pass Through Trustee, is a party or by which it or any of
its property may be bound or affected, or any Massachusetts or Federal law,
rule or regulation governing the Pass Through Trustee's banking or trust
powers, or any judgement, order or decree known to us as to be applicable to
the Pass Through Trustee, in its individual or trust capacity, of any court,
regulatory body, administrative agency, government or governmental body having
jurisdiction over the Pass Through Trustee, in its individual or trust
capacity, other than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than
the Pass Through Trust Agreement) has been duly authorized, executed and
delivered by State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, and each Pass Through Trust Document constitutes
a legal, valid and binding obligation of State Street, in its individual
capacity or as Pass Through Trustee, as the case may be, enforceable against
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, in accordance with its terms.
5. The Pass Through Certificates have been duly authorized
and validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates acquired by the Underwriters
under the Underwriting Agreement are enforceable against the Pass Through
Trustee and are entitled to the benefits of the related Pass Through Trust
Agreement and the related Series Supplements, except as the enforceability
thereof may be limited by (a) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), (b) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
6. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State Street,
individually or as Pass Through Trustee, to perform its obligations under the
Pass Through Trustee Documents.
7. There are no taxes, fees or other governmental charges
payable under the laws of the State of New York or any political subdivision
thereof in connection with the execution, delivery and performance by the Pass
Through Trustee, in its individual or trust capacity, as the case may be, of
the Pass Through Trustee Documents to which it is a party or in connection with
the execution, issuance and delivery of the Pass Through Certificates by the
Pass Through Trustee, pursuant to the Series Supplements.
8. Neither the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee, in its
individual or trust capacity, as the case may be, nor their respective
Affiliates, successors or assigns, will be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of New York or any political subdivision
thereof (other than taxes imposed on the fees received by State Street Bank
and Trust Company for acting as Pass Through Trustee under the Series
Supplements). Certificate holders who are not residents of or otherwise
subject to tax in New York will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net worth,
capital, franchise or doing business tax), fee or other governmental charge
under the laws of the State of New York or any political subdivision thereof
as a result of purchasing, owning (including receiving payments with respect
to) or selling a Pass Through Certificate. There are no applicable taxes
under the laws of the State of New York or any political subdivision thereof
upon or with respect to (a) the construction, mortgaging, financing,
refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, location, ownership, insurance, control, assembly,
possession, repossession, operation, use, condition, maintenance, repair, sale,
return, abandonment, replacement, preparation, installation, storage,
redelivery, manufacture, leasing, subleasing, modification, rebuilding,
importation, transfer of title, transfer of registration, exportation or other
application or disposition of the Aircraft or any interest in any thereof, (b)
payments of Rent or other receipts, income or earnings arising therefrom or
received with respect to the Aircraft or any interest in any thereof or
payable pursuant to the Lease, (c) any amount paid or payable pursuant to any
Operative Agreements, (d) the Aircraft or any interest therein or the
applicability of the Lease to the Aircraft or any interest in any thereof, (e)
any or all of the Operative Agreements, any or all of the Pass Through
Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification, assumption,
reissuance, refinancing or refunding of any or all thereof, and any other
documents contemplated thereby and amendments or supplements hereto and
thereto, (f) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to, any or all of the Pass Through
Certificates, whether as originally issued or pursuant to any refinancing,
refunding, assumption, modification or reissuance, or any other obligation
evidencing any loan in replacement of the loan evidenced by any or all of the
Pass Through Certificates, or (g) otherwise with respect to or in connection
with the transactions contemplated by the Pass Through Trust Agreement, the
Series Supplements, the Pass Through Certificates and the Operative Agreements,
which would not have been imposed if the Pass Through Trustee had not had its
principal place of business in, had not performed (either in its individual
capacity or as Pass Through Trustee) any or all of its administrative duties
under the Pass Through Trust Agreement, the Series Supplements, the Pass
Through Certificates and the Operative Agreements in, and had not engaged in
any activities unrelated to the transactions contemplated by the Pass Through
Trust Agreement, the Series Supplements, the Pass Through Certificates and the
Operative Agreements in, the State of New York.
With respect to the opinions set forth in paragraphs 7 and 8
above, with your permission we have relied upon, and this opinion is limited
by, the assumptions set forth in the discussion entitled "Certain Massachusetts
Taxes" in the Prospectus Supplement to the Prospectus forming part of
Registration Number No. 33-56569 (the "Registration Statement") for the
registration of the Pass Through Certificates with the Securities and Exchange
Commission. In addition, we have assumed that each Pass Through Trust (as
defined in the Registration Statement) will constitute a grantor trust under
Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended (the "Code"), and will not be classified as a corporation or as a
Partnership (as defined in Section 7701 of the Code), and each Pass Through
Trust does not otherwise engage in business in New York. We express no
opinion as to the correctness of the foregoing assumptions and we have
conducted no independent investigation in this regard.
Very truly yours,
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
Boatmen's Equipment Finance, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, MO 63166
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.g]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.c.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.f]
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N668FE)
Dated as of May 1, 1996
Amended and Restated as of June 1, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
PMCC LEASING CORPORATION,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BANK OF AMERICA NT & SA
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
COMMERZBANK AG, ATLANTA AGENCY and
NATIONSBANK, N.A. (SOUTH),
Original Loan Participants
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 772, REGISTRATION NO. N668FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
Section 2.03. Owner Participant Payment................................ 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 17
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 17
Section 6.02. Offering by Lessee....................................... 23
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 31
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 31
Section 7.02. Citizenship.............................................. 32
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 33
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee........................................ 38
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 40
Section 7.06. Indenture Trustee's Notice of Default.................... 42
Section 7.07. Releases from Indenture.................................. 42
Section 7.08. Covenant of Quiet Enjoyment.............................. 42
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties........................... 43
Section 7.10. Survival of Representations, Warranties and Covenants.... 44
Section 7.11. Lessee's Assumption of the Certificates.................. 44
Section 7.12. Indebtedness of Owner Trustee............................ 46
Section 7.13. Compliance with Trust Agreement, Etc..................... 46
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 47
Section 8.02. After-Tax Basis.......................................... 53
Section 8.03. Time of Payment.......................................... 54
Section 8.04. Contests................................................. 54
Section 8.05. Refunds.................................................. 56
Section 8.06. Lessee's Reports......................................... 57
Section 8.07. Survival of Obligations.................................. 57
Section 8.08. Payment of Taxes......................................... 57
Section 8.09. Reimbursements by Indemnitees Generally.................. 58
Section 8.10. Obligations of Lessee Unsecured.......................... 58
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 58
Section 9.02. After-Tax Basis.......................................... 62
Section 9.03. Subrogation.............................................. 63
Section 9.04. Notice and Payment....................................... 63
Section 9.05. Refunds.................................................. 63
Section 9.06. Defense of Claims........................................ 64
Section 9.07. Survival of Obligations.................................. 64
Section 9.08. Effect of Other Indemnities.............................. 65
Section 9.09. Interest................................................. 65
Section 9.10. Obligations of Lessee Unsecured.......................... 65
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 65
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 68
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 69
Section 12.02. Interest of Holders of Certificates..................... 69
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 70
Section 13.02. Further Assurances...................................... 70
Section 13.03. No Retroactive Application.............................. 70
Section 13.04. Pass Through Trustee's Acknowledgement.................. 70
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 71
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 72
Section 15.02. Reoptimization.......................................... 75
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 77
Section 17.02. [Intentionally Left Blank.]............................. 77
Section 17.03. Counterparts............................................ 77
Section 17.04. No Oral Modifications................................... 77
Section 17.05. Captions................................................ 78
Section 17.06. Successors and Assigns.................................. 78
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and the
Pass Through Trustee.................................... 78
Section 17.08. Severability............................................ 78
Section 17.09. Public Release of Information........................... 79
Section 17.10. Certain Limitations on Reorganization................... 79
Section 17.11. GOVERNING LAW........................................... 79
Section 17.12. Section 1110 Compliance................................. 79
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 80
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E-1 Form of Assignment and Assumption Agreement
EXHIBIT E-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N668FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N668FE) dated as of May 1, 1996, as amended and restated as of June 1, 1996
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"),
PMCC LEASING CORPORATION, a Delaware corporation (herein, together with its
successors and permitted assigns, the "Owner Participant"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, BANK OF AMERICA NT & SA, THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), COMMERZBANK AG, ATLANTA AGENCY and NATIONSBANK, N.A.
(SOUTH), (individually, together with its successors and permitted assigns, an
"Original Loan Participant" and collectively the "Original Loan
Participants"), FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as otherwise
expressly stated herein, but solely as owner trustee under the Trust Agreement
referred to below (in such capacity as trustee, together with its successors
and permitted assigns, the "Owner Trustee"), STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, not in its individual capacity, except
as otherwise expressly stated herein, but solely as indenture trustee under
the Indenture referred to below (in such capacity as trustee, together with
its successors and permitted assigns, the "Indenture Trustee") and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with FSBU in its individual capacity,
pursuant to which FSBU agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend and restate the Original Ancillary
Agreement I, to amend the Original Tax Indemnity Agreement and to amend and
restate the Original Trust Agreement, each such amendment and restatement to
be executed and delivered simultaneously with the purchase of the Certificates
by the Pass Through Trustee for the Pass Through Trusts and the Refinancing in
full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Owner Participant shall on behalf of the Owner Trustee
execute a wire transfer or intra-bank transfer in favor of the Agent in the
amount of (x) all accrued and unpaid interest on the Original Loan
Certificates to but excluding the Refunding Date, which transfer shall
constitute the payment of a like amount of such accrued and unpaid interest
and (y) the excess of the outstanding principal amount of the Original Loan
Certificates over the proceeds of the sale of the related Pass Through
Certificates referred to in paragraph (iii) below;
(ii) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii) for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv) the aggregate amount payable by the Pass Through Trustee
pursuant to paragraph (iii) above shall be payable by wire transfer or
intra-bank transfer in favor of the Agent on behalf of the Owner Trustee
in the amount of the outstanding principal amount of the Original Loan
Certificates less an amount equal to the excess amount referred to in
clause (y) in paragraph (i) above;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi) the Owner Trustee shall cause the Certificates to be
delivered to the applicable Pass Through Trustee in accordance with
Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass
Through Trustee, upon the request of the Owner Trustee, the Certificates as
provided in Section 2.02 hereof. The Owner Participant hereby requests and
directs the Owner Trustee to execute and deliver this Agreement and,
subject to the terms hereof, to take the actions specified herein. The
Original Loan Participants by their execution and delivery hereof, request
and direct the Indenture Trustee to execute and deliver this Agreement and
concurrently with the events specified in clauses (iii) through (v) of this
Section 2.01(b) and subject to the terms and conditions hereof to take the
actions contemplated herein. The parties hereto, including, without
limitation, the Original Loan Participants, confirm that, as provided in
Section 2.06 of the Original Indenture, upon payment in full of the
principal amount, Breakage Costs, if any, and interest on the Original Loan
Certificates and all other sums then payable to the Original Loan
Participants under the Original Agreements to the extent specified in
subsection (c) below, the Original Loan Participants shall have no further
interest in, or other right or obligation with respect to, the Trust
Indenture Estate, the Original Agreements or the Operative Agreements (it
being understood that the foregoing shall not limit or detract from any
claim that any Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement)
and, accordingly, have no obligation to, and will not attempt to direct any
future actions of the Indenture Trustee with respect to the Trust Indenture
Estate, provided that the rights and obligations of the Original Loan
Participants shall, until the payment in full of such amounts to the Agent
on behalf of the Original Loan Participants on the Refunding Date, be
governed by the Original Participation Agreement and the other Operative
Agreements contemplated thereby or in effect immediately prior to the
effectiveness of this Agreement and shall, upon such payment and
thereafter, be governed by this Agreement. The Lessee hereby consents to
the foregoing.
(c) Not less than four (4) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this
Section 2.01 do not occur on or before June 30, 1996, then the rights and
obligations of the parties to the Original Participation Agreement,
including, without limitation, the Original Loan Participants, shall be
governed by the Original Participation Agreement and the other Operative
Agreements contemplated thereby or in effect immediately prior to the
effectiveness of this Agreement and this Agreement shall be of no further
force and effect, except that the Lessee shall be obligated hereby to pay
all fees and expenses of the Original Loan Participants, the Indenture
Trustee, the Owner Participant, the Owner Trustee, the Pass Through Trustee
and their respective counsel relating to the transactions contemplated
hereby. Each of the parties hereto agrees to execute and deliver to the
other parties such documents and instruments as may be necessary to give
effect to the foregoing provisions of this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
Section 2.03. Owner Participant Payment. The Owner Participant
agrees with the Lessee and only with the Lessee on behalf of the Owner
Trustee to make available to the Owner Trustee funds sufficient to pay to
the Indenture Trustee on the Commencement Date an amount equal to the
difference between the amounts of principal (if any) and interest scheduled
to be paid on the Certificates on such date, and the amount of Basic Rent,
if any, scheduled to be paid by the Lessee on such date (the "Owner
Participant Amount"), and the Owner Trustee shall upon receipt thereof make
such funds available to the Indenture Trustee to pay amounts due and owing
under the Certificates on the Commencement Date. If the Owner Participant
does not make such funds available when otherwise required to do so, the
Lessee shall be obligated to make an advance pursuant to Section 3.05 of
the Lease in an amount sufficient to pay in full the amounts of principal
and interest due on the Certificates on such date. Such obligations shall
not, nor shall they be construed to, make the Owner Participant directly
liable on the Certificates or in any way convert the Certificates to
recourse loans against the Owner Participant.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been
duly issued and delivered by the Owner Trustee to the Pass Through
Trustee for each Pass Through Trust, against payment therefor, a
Certificate, substantially in the form set forth in Exhibit B to the
Indenture, duly authenticated, dated the Refunding Date and registered
in the name of the Pass Through Trustee on behalf of such Pass Through
Trust, in the principal amounts, Maturity, bearing the interest rate and
the other economic terms specified in the Series Supplements and
otherwise as provided in Section 2.04 of the Indenture. The Pass
Through Certificates shall be registered under the Securities Act, any
applicable state securities laws shall have been complied with, and the
Pass Through Agreement shall have been qualified under the Trust
Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Owner Participant or its
special counsel, the Pass Through Trustee or the Indenture Trustee or
their special counsel, would make it illegal for the Owner Participant,
the Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, and no change in circumstances shall have occurred which would
otherwise make it illegal or otherwise in contravention of guidance
issued by regulatory authorities for the Owner Participant, the Lessee,
the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, to
participate in the transaction to be consummated on the Refunding Date;
and no action or proceeding shall have been instituted nor shall
governmental action before any court, governmental authority or agency
be threatened which in the opinion of counsel for the Owner Participant,
the Indenture Trustee or the Pass Through Trustee is not frivolous, nor
shall any order have been issued or proposed to be issued by any court,
or governmental authority or agency, as of the Refunding Date, to set
aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other
Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the
Owner Participant, as the case may be, of such documents shall have been
delivered to the Owner Participant, the Lessee, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of each of the Lease, the Lease Supplement and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Ancillary Agreement I; and
(vi) the Ancillary Agreement II.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participants, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its counsel) shall have
received the following, in each case in form and substance satisfactory to
it:
(i) a copy of the certificate of incorporation and by-laws of
the Lessee, certified by the Secretary or an Assistant Secretary of
the Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Refunding Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Refunding Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which the Owner
Participant is or is to be a party and each other document to be
executed and delivered by the Owner Participant in connection with
the transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws
and other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of
each of the Original Agreements to which it is party, this
Agreement, the Indenture and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Indenture Trustee in
connection with the transactions contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws
and other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee as of
the Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant
as the Indenture Trustee, the Pass Through Trustee or the Owner
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft;
(ii) the Aircraft has been duly certificated by the
Aeronautics Authority as to type and airworthiness in accordance
with the terms of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1995, November 30, 1995 and
February 29, 1996) and (ii) in the Lessee's Current Report on Form
8-K dated April 30, 1996, as to which such officer will make no
certification concerning the liability of the Lessee (if any), or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, no material adverse
change has occurred in the financial condition, business or
operations of the Lessee from that shown in the audited financial
statements of the Lessee as of May 31, 1995 or the unaudited
consolidated financial statements of the Lessee as of February 29,
1996 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant. On the Refunding
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Refunding Date,
stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto, are true and correct on and as of the Refunding Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSBU and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSBU and SSB, respectively, dated the
Refunding Date, stating with respect to FSBU and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSBU in its
individual capacity and as Owner Trustee, of SSB in its individual
capacity and as Indenture Trustee and of SSB in its individual
capacity and as Pass Through Trustee contained in this Agreement, the
Lease, the Trust Agreement and the Indenture and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) to the best of its knowledge, no event has occurred and
is continuing, which constitutes or which, but for the lapse of
time or the giving of notice, or both, would constitute, due to
any action or omission on the part of FSBU in its individual
capacity or as Owner Trustee, of SSB in its individual capacity or
as Indenture Trustee and of SSB in its individual capacity or as
Pass Through Trustee, an Event of Default or an Indenture Event of
Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSBU and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participants, the Underwriters, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participants, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate
and Business Transactions of the Lessee, in the form of Exhibit
A(1)(a) hereto and addressed to the Agent, the Original Loan
Participants, the Underwriters, the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee;
(ii) Simpson Thacher & Bartlett, special counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and the General
Counsel's Office of the Owner Participant, in the form of Exhibit
A(2)(b) hereto, each addressed to the Agent, the Original Loan
Participants, the Underwriters, the Owner Participant, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Agent, the Original Loan Participants, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(vi) Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto and addressed to the Agent, the
Original Loan Participants, the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee; and
(vii) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(6) hereto and addressed
to the Agent, the Original Loan Participants, the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee and the Lessee.
(m) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(n) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee
shall have entered into the Pass Through Agreement and the Series
Supplements, all conditions to the effectiveness of each thereof shall
have been satisfied or waived, and the Pass Through Certificates shall
have been issued pursuant to the Series Supplements. The Lessee and the
Underwriters shall have entered into the Underwriting Agreement, all
conditions to the effectiveness thereof shall have been satisfied or
waived, and the Pass Through Certificates shall have been delivered
pursuant to the Underwriting Agreement.
(q) Notice, Etc. The Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Pass Through Trustee shall have
received a refunding notice pursuant to Section 2.01(c) hereof.
(r) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraph (f) of this
Section 4.01; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
then due and payable shall have been duly paid in full.
(s) Governmental Compliance. All appropriate action required to have
been taken by the FAA, or any governmental or political agency, subdivision
or instrumentality of the United States, prior to the Certificate
Closing Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Certificate Closing Date in
connection with the transactions contemplated by this Agreement shall
have been issued, and all such permits shall be in full force and
effect on the Certificate Closing Date.
(t) Compliance with Original Participation Agreement. All conditions
precedent set forth in Section 15.01 of the Original Participation
Agreement shall be met to the satisfaction of the Owner Participant.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to
(i) the due recording of such documents and the documents identified in
Section 4.01(i) of the Original Participation Agreement and (ii), subject to
customary qualifications, the lack of any intervening documents with respect
to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l)(ii), (iii), (iv),
(v), (vi) and (vii) of Section 4.01 hereof and the Underwriters and the Owner
Participant shall have made available the amounts required to be paid by them
pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or
any of its Property before or by any court or administrative agency
which (A) involve the Aircraft, (B) except for the matters described (i)
under "Legal Proceedings" in the Lessee's Annual Report on Form 10-K for
the fiscal year ended May 31, 1995 (as updated by Note 7 to the
financial statements included in the Lessee's Quarterly Reports on Form
10-Q for the fiscal quarters ended August 31, 1995, November 30, 1995
and February 29, 1996) and (ii) in the Lessee's Current Report on Form
8-K dated April 30, 1996, as to which no representation is made
concerning the Lessee's liability (if any) or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, if adversely determined, would materially and
adversely affect the consolidated financial condition, business or
operations of the Lessee, or (C) if adversely determined would adversely
affect the ability of the Lessee to perform its obligations under the
Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns
which are required to be filed and has paid or caused to be paid all
taxes shown to be due and payable pursuant to such returns or pursuant
to any assessment received by the Lessee (other than assessments the
payment of which is being contested in good faith by the Lessee by
appropriate proceedings that do not involve any material danger of sale,
forfeiture or loss of the Aircraft or any part thereof), and the Lessee
has no knowledge of any related actual or proposed deficiency or
additional assessment which either in any case or in the aggregate would
materially adversely affect the Lessee's consolidated financial
condition (other than, in any such case, assessments, the payment of
which is being contested in good faith by the Lessee, as to which no
representation is made concerning the Lessee's liability (if any) or the
effect of any adverse determination upon the Lessee's consolidated
financial condition);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Transportation Code of the Indenture, the Trust Agreement
and the Lease, (B) the filing of the financing statements referred to in
Section 4.01(f) hereof and (C) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document, is necessary or advisable in order (i) to establish the Owner
Trustee's title to and interest in the Aircraft and the Lessor's Estate as
against the Lessee and any third parties, or (ii) to perfect the first
security interests in and mortgage Lien on the Trust Indenture Estate in
favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1995, November 30, 1995 and February
29, 1996, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1995 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1995, November 30, 1995 and February
29, 1996, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur
Andersen, LLP, independent public accountants; said financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly the financial position
of the Lessee as of such dates and the results of its operations and
cash flows for such periods and such Annual Report, Quarterly Reports and
financial statements did not, as of their respective dates of filing with
the SEC, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Refunding Date under Article 13 of the Lease have been paid by the
Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type
and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant
to the Transportation Code; and there is no fact known to the Lessee
which materially adversely affects the value, utility or condition of
the Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in
the performance of any term or condition of the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Warranty Assignment and the
GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof; and
(y) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will promptly take, or cause to be taken, at
the Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary, or as
requested by the Indenture Trustee and appropriate, to maintain the
perfection of the first security interest and the Lien created by the
Indenture, and the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties or if
the Lessee cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee and the Owner Trustee timely notice of the necessity
of such action, together with such instruments, in execution form, and such
other information as may be required to enable either of them to take such
action at the Lessee's cost and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered, in the name of the Owner Trustee, under the Transportation
Code; provided, however, that the Owner Participant, the Owner Trustee and
the Indenture Trustee agree that if at any time after December 31, 2003, so
long as no Event of Default shall have occurred and be continuing, the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate under the laws of such
jurisdiction of reregistration, in the name of the Lessee or a sublessee as
a "lessee" or a "sublessee"), at the Lessee's expense, in a country listed
in Schedule III hereto with which the United States then maintains normal
diplomatic relations (and which is not then experiencing war or substantial
civil unrest), the Owner Participant, upon receipt by the Owner
Participant, the Owner Trustee and the Indenture Trustee of the assurances
and opinion described below, shall not unreasonably withhold their consent
to such change in registration (it being agreed, without limitation, that
the inability of the Lessee to deliver such assurances or such opinion
shall constitute reasonable grounds to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required) and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity, and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity, and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Tax Indemnity Agreement) for which the Lessee has not agreed to
indemnify the Owner Participant to its reasonable satisfaction, the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee (or
any successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(L) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(M) that appropriate deregistration powers of attorney in favor
of the Owner Trustee and the Indenture Trustee have been executed and
delivered by the Lessee and any sublessee and, if necessary or
desirable for the effectiveness thereof, filed with the relevant
aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee
to register or qualify to do business or meet other requirements
not already met in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of the Indenture or Lease) and the exercise of
any rights or remedies with respect to the Aircraft pursuant to
the Lease or the Indenture or in order to maintain such
registration and the Lien of the Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might reasonably have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any state
thereof (it being understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to cover
such risk and the Lessee undertakes to keep such insurance in full
force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft or under the Lease and
(unless the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft;
(G) to such further effect with respect to such other matters
as the Owner Participant, the Owner Trustee, or the Indenture
Trustee may reasonably request; and
(H) the Lien of the Indenture continues to constitute a first
priority, duly perfected Lien on the Aircraft.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company (or Person which acquires
by conveyance, transfer or lease the assets of the Lessee) is in compliance
with all of the terms and conditions of this Agreement and the Lease and
each other Operative Agreement and each other document contemplated hereby
or thereby; provided that no such merger, consolidation or conveyance,
transfer or lease shall be permitted if the same gives rise to an Event of
Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become the Lessee
hereunder in the manner prescribed in this Section 6.03(g) from its
liability hereunder or under the other Operative Agreements. Nothing
contained herein shall permit any lease, sublease, or other arrangement for
the use, operation or possession of the Aircraft except in compliance with
the applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to its stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any officer of the Lessee obtaining knowledge of any
condition or event which constitutes a Default or an Event of
Default, an officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is taking
or proposes to take with respect thereto;
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may
reasonably request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and
6.02 hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Section 7.03(d) hereof, at all
times be within its control and the foregoing representation shall not limit
the Owner Participant's right to transfer or sell such interests pursuant to
the terms of this Agreement. Neither the Owner Participant nor anyone
authorized to act on its behalf has directly or indirectly offered any
interest in the Lessor's Estate or the Trust Agreement, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from,
anyone. The Owner Participant further represents and warrants that neither it
nor anyone authorized to act on its behalf has made or will make any offer,
solicitation or sale of any interest in the Lessor's Estate or the Trust
Agreement in violation of the provisions of Section 5 of the Securities Act of
1933, as amended. No representation in this Section 7.01(b) shall include any
action or inaction of the Lessee, the Agent, First Chicago Leasing Corporation
or the Underwriters whether or not such action or inaction is purportedly on
behalf of the Owner Trustee, the Owner Participant or any of their Affiliates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee or
the Owner Participant that such lack of United States citizenship would have
any adverse effect on the Lessee or the Owner Participant. The Owner Trustee,
in its individual capacity, further covenants that if at any time it appears
reasonably probable that it will cease to be a Citizen of the United States
based on information that is (i) known to a Responsible Officer or (ii)
generally known to the public, it will promptly so notify, to the extent
permitted by law, all parties to this Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for
the benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee
and the Owner Trustee, that if at any time when the Aircraft is registered
or the Lessee proposes to register the Aircraft in the United States (i)
either it shall cease to be, or an event which has been publicly disclosed
has occurred of which the Owner Participant has knowledge and which will
cause the Owner Participant to cease to be, a Citizen of the United States
and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Transportation Code
and regulations then applicable thereunder, then the Owner Participant
shall give notice thereof to the Lessee, the Owner Trustee and the
Indenture Trustee and shall (at its own expense and without any
reimbursement or indemnification from the Lessee) immediately (and in any
event within a period of 20 days) (x) effect a voting trust or other
similar arrangement, (y) transfer in accordance with the terms of this
Agreement and the Trust Agreement all its rights, title and interest in and
to such Trust Agreement, the Lessor's Estate and this Agreement, or (z)
take any other alternative action that would prevent any deregistration, or
maintain or permit the United States registration, of the Aircraft. It is
agreed that the Owner Participant shall be liable to pay promptly on
request (A) to each of the other parties hereto any actual damages (but not
consequential damages) suffered by any such other party to the extent the
same shall result from the representation and warranty of the Owner
Participant in the first sentence of Section 7.02(a) hereof proving to be
untrue as of the Refunding Date; and (B) to the Lessee, the Indenture
Trustee or the Pass Through Trustee for any damages actually (but not
consequentially) incurred by the Lessee, the Indenture Trustee and the Pass
Through Trustee as a result of the Owner Participant's failure to comply
with its obligations pursuant to the first sentence of this Section
7.02(c); provided, that, the foregoing shall not restrict the Pass Through
Trustee or the Indenture Trustee from asserting against the Owner
Participant any damages actually incurred by the holders of any Pass
Through Certificates. Each party hereto agrees, upon the request and at
the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the
first sentence of this Section 7.02(c), but without any obligation on the
part of such other party to take any action believed by it in good faith to
be unreasonably burdensome to such party or materially adverse to its
business interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement;
(ii)the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary corporate action on its part and, assuming the accuracy of the
Lessee's representations in Section 6.01(o) hereof, do not require any
governmental approvals that would be required to be obtained by the Owner
Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii), 6.02 and 7.09 hereof and compliance
with Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, and the
Trust Agreement nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under any law, governmental rule or
regulation applicable to the Owner Participant or the charter documents,
as amended, or bylaws, as amended, of the Owner Participant or any
order, writ, injunction or decree of any court or governmental authority
against the Owner Participant or by which it or any of its Properties is
bound or any indenture, mortgage or contract or other agreement or
instrument to which the Owner Participant is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any
Lien upon any of its Properties;
(iv) the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Owner Participant or an adverse effect on the ability
of the Owner Participant to perform its obligations under the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party and the Owner Participant
knows of no pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving it in connection with the
transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is nor the performance of its obligations hereunder
or thereunder requires the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any governmental authority or agency that would be required to be obtained
or taken by the Owner Participant except for filings contemplated by this
Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and is not a tax resident of another country;
(x) it has a consolidated tangible net worth of not less than
$75,000,000; and
(xi) the representations and warranties of the Owner Participant
set forth in the Original Agreements to which it is a party were correct
on and as of the Delivery Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee that the Owner Participant
will, at its own cost and expense, take such action as may be necessary (by
bonding or otherwise, so long as neither the Lessee's operation and use of the
Aircraft nor the validity and priority of the Lien of the Indenture is
impaired) to duly discharge and satisfy in full, promptly after the same first
becomes known to the Owner Participant, any Lessor's Lien against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to the Owner Participant (or an Affiliate thereof), provided,
however, that the Owner Participant shall not be required to discharge or
satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do
not involve any material danger of the sale, forfeiture or loss of the
Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest
in any thereof or otherwise materially adversely affect the validity or
priority of the Lien of the Indenture.
(c) Reimbursement. Without limiting any other rights the parties
hereto may have as a result of any breach by the Owner Participant of its
obligations in Section 7.03(b) hereof, the Owner Participant agrees to
reimburse each other party hereto for all reasonable legal fees and expenses
of counsel that may be incurred by any such party as a result of the failure
of the Owner Participant to discharge and satisfy any such Lessor's Lien in
accordance with the terms of Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after
all obligations of the Owner Participant under Section 2.01(d) hereof have
been satisfied in full, and subject to the conditions set forth in this
Section 7.03(d), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee and the Indenture Trustee at least 10
Business Days' notice of such assignment, conveyance or other transfer and
provided further that the Owner Participant and any Owner Participant
Guarantor shall remain liable for all obligations of the Owner Participant
under the Trust Agreement and the Operative Agreements to which the Owner
Participant is a party to the extent (but only to the extent) relating to the
period on or before the date of such transfer and provided that the transferee
agrees by a written instrument substantially in the form attached hereto as
Exhibit E-1 to assume primary liability for all obligations as an Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party relating to the period after the date
of transfer. Any such transferee shall (a) be (i) a bank, savings
institution, finance company, leasing company or trust company, national
banking association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or similar
trust or fund, insurance company, fraternal benefit society or corporation
acting for its own account having a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent) of not less
than $75,000,000, (ii) a subsidiary of any Person described in clause (i)
where such Person provides (A) support for the obligations assumed by such
transferee subsidiary reasonably satisfactory to the Lessee, the Owner Trustee
and the Indenture Trustee or (B) an unconditional guaranty substantially in
the form of Exhibit E-2 attached hereto of such transferee subsidiary's
obligations, or (iii) an Affiliate of the transferring Owner Participant, so
long as such Affiliate has a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (b) be legally capable of binding itself to the obligations of
the Owner Participant and shall expressly agree to assume all obligations of
the Owner Participant under the Trust Agreement and this Agreement and (c)
provide representations substantially similar to those contained in Sections
7.02(a) and 7.03(a) hereof. In the event of any such assignment, conveyance
or transfer, the transferee shall become a party to the Trust Agreement and
shall agree to be bound by all the terms of and will undertake all of the
obligations of the Owner Participant contained in the Trust Agreement and the
other Operative Agreements in the manner set forth in the form attached as
Exhibit G-1. A transferee hereunder shall be (i) a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (or any successor provision thereto) and
(B) such transferee shall be personally liable for any debt service to the
extent that its receipt of rentals is reduced by reason of any withholding
Taxes that result from such transferee's failure to be such a "U.S. Person"
and (ii) a Citizen of the United States or has established a voting trust,
voting powers or other arrangement reasonably satisfactory to the Indenture
Trustee and the Lessee to permit the Owner Trustee to be the registered owner
of the Aircraft under the Transportation Code. A transferee hereunder shall
not be, and in acquiring the Beneficial Interest shall not use the assets of,
an employee benefit plan subject to Title I of ERISA or an individual
retirement account or a plan subject to Section 4975 of the Code. Assuming
the truth of the representations made in Sections 6.01(m) and 7.06 hereof and
compliance with Section 10.06 of the Indenture, no such assignment, conveyance
or transfer shall violate any provision of law or regulation or create a
relationship which would be in violation thereof. The Owner Trustee shall not
be on notice of or otherwise bound by any such assignment, conveyance or
transfer unless and until it shall have received an executed counterpart of
the instrument of such assignment, conveyance or transfer. Upon any such
disposition by the Owner Participant to a transferee as above provided, the
transferee shall be deemed the "Owner Participant" or "Trustor" for all
purposes of the Operative Agreements, and shall be deemed to have made all the
payments previously made by its transferor and to have acquired the same
interest in the Lessor's Estate as theretofore held by its transferor; and
each reference therein to the "Owner Participant" or "Trustor" shall
thereafter be deemed a reference to such transferee. Notwithstanding anything
to the contrary contained in this Section 7.03(d), in no event shall the Owner
Participant transfer its interest in the Beneficial Interest to any entity
whose business is that of a nationwide or worldwide overnight or expedited
delivery small package air courier, cargo or freight deliverer or which
competes with the Lessee in such lines of business. The Lessee agrees that it
will reasonably cooperate with the Owner Participant in effecting an
assignment of the Owner Participant's interests including, without limitation,
providing letters to any successor Owner Participant permitting such successor
Owner Participant to rely on any opinions provided by the Lessee on the
Delivery Date.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSBU represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to
execute, deliver and perform this Agreement, the Original Agreements to
which it is a party and the Operative Agreements to which it is or is to be
a party;
(ii) the execution, delivery and performance by FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the other
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSBU, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSBU's performance of or compliance with
any of the terms and provisions thereof will violate any Federal or state
or local law or regulation governing FSBU's banking or trust powers;
(iii)(A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSBU in its individual capacity, constitute the legal,
valid and binding obligation of FSBU in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSBU in its individual capacity
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on FSBU in its individual
capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against FSBU before any court or administrative agency which
would materially and adversely affect the ability of FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSBU in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii) on the Refunding Date the Owner Trustee be holding whatever
title to the Aircraft as was conveyed to it by AVSA on the Delivery Date,
the Aircraft shall be free of Lessor's Liens attributable to FSBU in its
individual capacity and FSBU in its individual capacity and as Owner
Trustee is a Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on
and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
(b) Lessor's Liens. FSBU, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSBU, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSBU, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSBU to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSBU, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as follows:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii) the Indenture and this Agreement, the Original Agreements to
which it is a party and the other Operative Agreements to which it is or is
to be a party, and the authentication of the Certificates to be delivered
on the Refunding Date, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or Massachusetts law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, the Original
Agreements to which it is a party and the other Operative Agreements to
which it is or is to be a party, has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights (regardless of whether enforceability is considered in
a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement, the Original Agreements to which it is a party and the
other Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any Federal or state governmental authority or agency governing its
banking and trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi) the Indenture Trustee holds the original counterparts of the
Original Lease, the Lease Supplement, Ancillary Agreement I and AVSA's
Warranty Bill of Sale.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days, after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither the Owner Participant
(or the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as
the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, as the case may be).
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement,
the Pass Through Agreement and the Series Supplements and the
performance of its obligations hereunder and thereunder (including the
execution and authentication of the Pass Through Certificates to be
delivered on the Pass Through Closing Date) have been fully authorized
by all necessary corporate action on its part, and, subject to (A) the
registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (B) compliance with any applicable state
securities laws and (C) the qualification of the Pass Through Agreement
under the Trust Indenture Act, neither the execution and delivery
thereof nor its performance of any of the terms and provisions thereof
will violate any Federal or Massachusetts law or regulation relating to
its banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or
the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it or its properties may be bound or
affected; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a)
Subject to compliance by the Lessee with all of its obligations under the
Operative Agreements, each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Lessee covenants and
agrees that if the Lessee elects to terminate the Lease and to purchase the
Aircraft pursuant to Section 4.02(a)(A), (D) or (E) of the Lease, and so
long as no Event of Default shall have occurred and be continuing then,
upon compliance with the applicable provisions of said Section 4.02(a) of
the Lease, the Owner Trustee will transfer to the Lessee, without recourse
or warranty (except as to the absence of Lessor's Liens attributable to the
Owner Trustee) but subject to the Lien of the Indenture, all of the Owner
Trustee's right, title and interest in and to the Aircraft, and if the
Lessee, in connection with such purchase, elects pursuant to Section
4.02(a)(A), (D) or (E) of the Lease to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Certificates and hereunder, then the Lessee shall so notify the Indenture
Trustee (such notice to be given at least 30 and not more than 60 days
prior to the effective date of such assumption), and each of the parties
shall execute and deliver appropriate documentation permitting the Lessee
to assume such obligations on the basis of full recourse to the Lessee,
maintaining for the benefit of the Holders the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions
of this Section 7.11 releasing the Owner Participant and the Owner Trustee
from all obligations in respect of the Certificates, the Indenture, this
Agreement and the other Operative Agreements, except any obligations
relating to the period prior to such assumption and take all such other
actions, at the Lessee's expense, as are reasonably necessary to permit
such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Holders and the Indenture Trustee, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel
for the Lessee (who may be the Lessee's General Counsel) a legal
opinion, in form and substance satisfactory to the Indenture Trustee (w)
with respect to the compliance of the assumption contemplated hereby
with the terms, provisions and conditions hereof, (x) with respect to
the due authorization, execution, delivery, validity and enforceability
of the instrument referred to in paragraph (i) of this Section 7.11(b),
(y) with respect to the continued perfection of the first and prior Lien
and security interest in the Aircraft for the benefit of the Holders of
the Certificates (or the Lessee's substituted obligations) referred to
in paragraph (ii) of this Section 7.11(b) and (z) with respect to the
continued availability of the benefits of Section 1110 of the Bankruptcy
Code to the Indenture Trustee for the benefit of the Holders with
respect to the Aircraft after giving effect to such assumption, (B) from
counsel to the Indenture Trustee and Special Aviation Counsel, a legal
opinion comparable to the respective opinions delivered on the Delivery
Date with such changes therein as may be appropriate in light of such
assumption, and (C) in the case of each opinion described in clause (A)
or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity,
but solely as trustee under the Trust Agreement, shall not incur any
indebtedness for borrowed money except as expressly contemplated herein or
in any other Operative Agreement (excluding the Tax Indemnity Agreement)
and shall not engage in any business or other activity other than the
transactions contemplated herein or in any other Operative Agreement
(excluding the Tax Indemnity Agreement) and all necessary or appropriate
activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSBU and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would materially
adversely affect any such party without the prior written consent of such
party. The Owner Trustee confirms for the benefit of the Lessee, the
Indenture Trustee and the Pass Through Trustee that it will comply with the
provisions of Article 2 of the Trust Agreement. Notwithstanding anything else
to the contrary in the Trust Agreement, so long as the Lease remains in
effect, the Owner Participant agrees not to terminate or revoke the trust
created by the Trust Agreement without the consent of the Lessee. If and so
long as the Indenture shall not have been discharged the consent of the
Indenture Trustee shall also be required prior to any termination or
revocation of such trust and in addition, the Owner Participant will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement or Original Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or
local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements or Original
Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, held by the Owner
Trustee under the Trust Agreement or after an Event of Default under the
Lease, or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or Original
Agreement, any interest therein or by reason of the transactions described
in or contemplated by the Operative Agreements or the Original Agreements;
(v) the principal or interest or other amounts payable with respect
to the Original Loan Certificates, the Pass Through Certificates or the
Certificates;
(vi) the Original Loan Certificates, the Pass Through Certificates or
the Certificates or the issuance, sale, acquisition, reoptimization, or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and Supplemental
Rent), receipts or earnings arising from the Operative Agreements or the
Original Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value-added taxes, capital, franchise, net worth (whether
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes"), provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 8.01(a) above any such Income Taxes to the extent such
taxes are imposed by any jurisdiction in which the Indemnitee would not be
subject to such taxes but for, or would be subject to such taxes solely as
a result of, (x) the operation, registration, location, presence, or use of
the Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or the
activities of the Lessee or any sublessee in such jurisdiction (it being
understood that (A) any such indemnity would be payable only to the extent
of the net harm incurred by the Indemnitee from such Income Taxes, taking
into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements or the Original Agreements were the Indemnitee's sole
nexus to the jurisdiction); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii) With respect to an Original Loan Participant, Income Taxes
(other than in the case of a Non-U.S. Person, U.S. federal withholding
taxes on amounts payable with respect to such Original Loan
Participant's Loan Certificate) except to the extent such Income Tax is
imposed (including by way of increase) by any jurisdiction in which the
Indemnitee is subject to tax (A) on or with respect to any gain
resulting from the assumption of any Loan Certificate by the Lessee, (B)
as a result of the operation, registration, location, presence, basing
or use of the Aircraft, Airframe, any Engine or any Part thereof, in
such jurisdiction (it being understood that (I) the incremental Income
Taxes described in this clause (B) shall not include any U.S. Federal
income taxes and (II) that to the extent such incremental Income Taxes
give rise to any incremental current Tax benefit in another tax
jurisdiction, that such incremental benefit shall offset and decrease
the incremental Income Taxes determined under this clause (B)) or (C)
solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant,
the Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in
such jurisdiction (it being understood that to the extent that any
Income Taxes described under this clause (C) give rise to any
incremental current Tax benefit in another tax jurisdiction or another
tax period, that such incremental Tax benefit shall offset and decrease
the Income Taxes determined under this clause (C)); provided, however,
that the provisions of this paragraph (b)(ii) relating to Income Taxes
shall not exclude from the indemnity described in Section 8.01(a) any
Income Taxes for which the Lessee would be required to indemnify an
Indemnitee (x) so that any payment under the Operative Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02 of
this Agreement;
(iii) Taxes imposed with respect to the Aircraft and arising out
of or measured by acts, omissions, events or periods (or any combination
of the foregoing) which occur after the later of (A) the payment in full
of all amounts payable by the Lessee pursuant to and in accordance with
the Operative Agreements, or the earlier discharge in full of the
Lessee's payment obligations under and in accordance with the Lease and
the Operative Agreements (and the Original Loan Certificates in the case
of an Original Loan Participant, the Indenture Trustee or the Trust
Indenture Estate if the Lessee shall have assumed the Certificates
pursuant to Section 7.11 of this Agreement), and (B) the earliest of (x)
the expiration of the Term of the Lease and return of the Aircraft in
accordance with Article 12 of the Lease, (y) the termination of the
Lease in accordance with the applicable provisions of the Lease and
return of the Aircraft in accordance with the Lease, or (z) the
termination of the Lease in accordance with the applicable provisions of
the Lease and the transfer of all right, title and interest in the
Aircraft to the Lessee pursuant to its exercise of any of its purchase
options set forth in Section 4.02(a) of the Lease, provided that this
exclusion (iii) shall not apply in respect of any payment made after the
dates set forth in clauses (A) and (B) above unless such payment is made
with respect to any event or circumstance occurring on, with or prior to
such return or transfer or period prior to such return or transfer, or
Taxes incurred in connection with the exercise of any remedies pursuant
to Article 17 of the Lease following the occurrence of an Event of
Default;
(iv) As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been
imposed but for the willful misconduct or gross negligence of such
Indemnitee (other than gross negligence or willful misconduct not
actually committed by but instead imputed to such Indemnitee by reason
of such Indemnitee's participation in the transactions contemplated by
the Operative Agreements or the Original Agreements) or the breach by
such Indemnitee of: (i) in the case of an Indemnitee other than the
Owner Participant, any representation, warranty or covenant contained in
the Operative Agreements or the Original Agreements or any document
delivered in connection therewith and (ii) in the case of the Owner
Participant, the representations or covenants in Sections 7.02(a), (c);
7.03(a)(i), (ii), (iii), (iv), (vii), (ix); and 7.03(b), (c), (d), (e)
of the Original Participation Agreement or this Agreement (in either
case unless attributable to a breach of representation, warranty or
covenant of the Lessee);
(vi) Taxes imposed on, and not collected by withholding from payments
of Rent, the Owner Trustee or the Owner Participant or any successor,
assign or Affiliate thereof which became payable by reason of any voluntary
or involuntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including revocation of the Trust, of any interest in some
or all of the Aircraft, Airframe, Engines or Parts thereof or its interest
in the Lessor's Estate (not including any transfers of any Certificates
pursuant to Section 15.01(a) hereof) or a disposition in connection with a
bankruptcy or similar proceedings involving either the Lessor or the Owner
Participant other than (A) transfers resulting from a loss, substitution or
modification of the Aircraft, Engines or any Part, (B) any transfer of the
Aircraft, Engines or any Part (in each case other than at Fair Market
Value) to the Lessee or other person in possession thereof, (C) transfers
attributable to an Event of Default or (D) a transfer pursuant to the
Lessee's exercise of its rights under Section 10.01 of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or of any
other Indemnitee under the Original Agreements or an Indemnitee as of the
date hereof under the Operative Agreements (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) which
on the Delivery Date is an Indemnitee (for purposes of this clause (viii),
an "original Indemnitee") or such original Indemnitee to the extent that
such Taxes exceed the amount of Taxes that would have been imposed (in the
case of an Original Loan Participant, immediately after giving effect to
such succession, assignment or other transfer) and would have been
indemnifiable pursuant to Section 8.01(a) had there not been a succession,
assignment or other transfer by such original Indemnitee of any such
interest of such Indemnitee in the Aircraft or any Part, any interest in or
under any Operative Agreement, or any proceeds thereunder (it being
understood that for purposes of determining the amount of indemnification
that would have been due to such original Indemnitee with respect to a net
income Tax, it shall be assumed that such original Indemnitee would be
subject to taxation on its income at the highest marginal statutory rate
applicable to it), provided, however, that the exclusion provided by this
clause (viii) shall not apply in the case of a succession, transfer or
disposition (A) that occurs after the Lease has been declared in default
or if such transfer or disposition is pursuant to the exercise of remedies
under Article 17 of the Lease, (B) which is an actual or deemed transfer
pursuant to Section 7.11 hereof or as a consequence of a Refinancing under
Section 15.01 hereof, or any actual or deemed transfer of an Original Loan
Certificate that as part of a Refinancing under Section 15.01 hereof is not
retired, but only to the extent the Taxes attributable to such transfer
exceed the amount of Taxes that would have been imposed on such transferor
if the debt had instead been retired, (C) to the extent necessary to make
payments with respect to such Taxes on an After-Tax Basis, (D) to the
extent such Taxes are directly attributable to the failure of the Lessee to
take administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost or
expense to the Lessee or (E) in the case of the Owner Participant or the
Lessor, to any Tax other than an Income Tax;
(ix) [Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price and
which have been paid to the applicable taxing authorities;
(xi) Any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien;
(xii) Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited Transaction");
provided, however, that in the event any prohibited transaction arises
which is not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually or
collectively, a "PTE") then the indemnity provided for herein shall extend
to any Taxes incurred by the Owner Participant (or any Affiliate thereof)
as the result of any Prohibited Transaction arising out of the purchase or
holding of any Loan Certificates by an employee benefit plan subject to
Title I of ERISA or by a plan subject to Section 4975 of the Code
(individually or collectively, an "ERISA Plan") with respect to which the
Owner Participant is a party in interest, within the meaning of Section
3(14) of ERISA, or a disqualified person,within the meaning of Section 4975
of the Code, except, however, that such Indemnity shall not extend to any
Taxes incurred by the Owner Participant (or any Affiliate thereof) as the
result of any Prohibited Transaction occurring with respect to the purchase
or holding of any Loan Certificates (A) over which purchase or holding the
Owner Participant (or an Affiliate thereof) has discretion or control
(other than in the capacity of a custodian, directed trustee or other
similar nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall
be required to pay with respect to any Tax indemnified against under
Section 8.01 shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had
such Tax not been incurred, provided that the calculation of any additional
amounts owing to any Indemnitee as a result of the Lessee's obligation to
indemnify on an After-Tax Basis shall be made without regard to the
exclusions set forth in Section 8.01(b). If any Indemnitee actually
realizes a tax benefit by reason of the payment of any Tax paid or
indemnified against by the Lessee, such Indemnitee shall promptly pay to
the Lessee, to the extent such tax benefit was not previously taken into
account in computing such payment, but not before the Lessee shall have
made all payments then due to such Indemnitee under this Agreement, the Tax
Indemnity Agreement and any other Operative Agreement, an amount equal to
the lesser of (x) the sum of such tax benefit plus any other tax benefit
actually realized by such Indemnitee that would not have been realized but
for any payment made by such Indemnitee pursuant to this sentence and not
already paid to the Lessee, and (y) the amount of the payment made under
Section 8.01 hereof and this Section 8.02 by the Lessee to such Indemnitee
plus the amount of any other payments by the Lessee to such Indemnitee
theretofore required to be made under this Section 8.02 and Sections 8.01
and 8.05 hereof (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment
to the Lessee pursuant to this sentence as long as an Event of Default
shall have occurred and be continuing under the Lease. The Lessee shall
reimburse on an After-Tax Basis such Indemnitee (and without regard to
Section 8.01(b) hereof, except for clause (v) thereof) for any payment of a
tax benefit pursuant to the preceding sentence (or a tax benefit otherwise
taken into account in calculating the Lessee's indemnity obligation
hereunder) to the extent that such tax benefit is subsequently disallowed
or reduced (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any
Indemnitee to contest or continue to contest, or permit Lessee to contest,
a claim which such Indemnitee would otherwise be required to contest
pursuant to this Section 8.04, if such Indemnitee shall waive payment by
Lessee of any amount that might otherwise be payable by Lessee under this
Article 8 in connection with such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by Lessee with respect to such Taxes.
Section 8.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 8 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements and the Original Agreements except as otherwise
provided in Section 10.01(d)(i) or Article 15 hereof) of every kind and
nature, including without limitation Make-Whole Premium (unless excluded
pursuant to Section 3.03 of the Lease) (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Pass Through Agreement, AVSA's FAA Bill
of Sale, AVSA's Warranty Bill of Sale or any other Operative Agreement or
any other document entered into in connection herewith or any sublease or
transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi) the offer, issuance, sale or delivery of any Certificate or
any Pass Through Certificate or any Original Loan Certificate, or any
refunding or refinancing thereof, or interest in the Lessor's Estate or
the Trust Agreement or the Original Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
or the Original Trust Agreement and the Lessor's Estate, the Indenture
or the Original Indenture or the Trust Indenture Estate (including,
without limitation, any claim arising out of the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, or any
other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the
Owner Trustee or Indenture Trustee as trustees, in the manner
contemplated by this Agreement, the Original Participation Agreement,
the Indenture, the Original Indenture, the Indenture and Security
Agreement Supplement, the Trust Agreement or the Original Trust
Agreement and in the case of the Owner Participant, its obligations
arising under Section 6.01 of the Trust Agreement or the Original Trust
Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or, if the Aircraft remains a part of the Lessor's Estate, after the
expiration of the Term (unless the Aircraft is being returned at such time,
in which case after return of physical possession; provided that if the
Lessor has terminated the Lease pursuant to Article 17 thereof, the
indemnity provided in Section 9.01(a) hereof shall survive for so long as
Lessor shall be exercising remedies under such Article 17), or to acts or
events which occur after return of possession of the Aircraft by the Lessee
in accordance with the provisions of the Lease (subject to the foregoing
proviso if the Lessor has terminated the Lease pursuant to Article 17 of
the Lease) but in any such case only to the extent not fairly attributable
to acts or omissions of the Lessee prior to expiration of the Term,
including without limitation the Lessee's failure to fully discharge all of
its obligations under the Lease, the other Operative Agreements or the
Original Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee)
pursuant to this Agreement or any other Operative Agreement and for
which the Lessee is not otherwise obligated to reimburse the Owner
Participant, directly or indirectly pursuant to the terms of this
Agreement or such other Operative Agreement;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default by the Lessee of any of its obligations under the
Operative Agreements or by another Indemnitee of any of the foregoing;
(vi) is a payment required to be made by the Owner Participant
pursuant to Section 2.03 hereof, but nothing contained in this Section
9.01(b)(vi) shall be deemed or construed to limit the obligations of the
Lessee to the Indenture Trustee and Holders of the Certificates pursuant to
Section 3.05 of the Lease;
(vii) is, in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; in
the case of FSBU, Lessor's Liens to the extent attributable to FSBU; and in
the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) is, in the case of the Owner Participant or the Owner Trustee,
attributable to the offer or sale by such Indemnitee after the Delivery
Date of any interest in the Aircraft, the Lessor's Estate or the Trust
Agreement or any similar interest (including an offer or sale resulting
from bankruptcy or other proceedings for the relief of debtors in which
such Indemnitee is the debtor), unless in each case such offer or sale
shall occur (x) in connection with a Refinancing, (y) as a result of the
occurrence of an Event of Default provided that either the Lease has been
declared in default or the transfer is pursuant to the exercise of remedies
under Article 17 of the Lease or (z) in connection with the Lessee's
exercise of its early termination option under Article 10 of the Lease or
its purchase options under Article 4 of the Lease or in connection with
Article 11 of the Lease;
(ix) is an Expense arising under or in connection with any
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code ("Prohibited Transaction"); provided,
however, that in the event any prohibited transaction arises which is
not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually
or collectively, a "PTE") then the indemnity provided for herein shall
extend to any Expenses incurred by the Owner Participant (or any
Affiliate thereof) as the result of any Prohibited Transaction arising
out of the purchase or holding of any Certificates by an employee
benefit plan subject to Title I of ERISA or by a plan subject to Section
4975 of the Code (individually or collectively, an "ERISA Plan") with
respect to which the Owner Participant is a party in interest, within
the meaning of Section 3(14) of ERISA, or a disqualified person,within
the meaning of Section 4975 of the Code, except, however, that such
Indemnity shall not extend to any Expenses incurred by the Owner
Participant (or any Affiliate thereof) as the result of any Prohibited
Transaction occurring with respect to the purchase or holding of any
Certificates (A) over which purchase or holding the Owner Participant
(or an Affiliate thereof) has discretion or control (other than in the
capacity of a custodian, directed trustee or other similar
nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan
sponsor" within the meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as an Event of Default shall have occurred and be
continuing. Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of such Tax benefit referred to in the next
preceding sentence in a taxable year subsequent to the year of allowance and
utilization by such Indemnitee (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired) shall be indemnifiable pursuant to the provisions of Section 8.01
hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the
Lessee shall be subrogated to any right of the Indemnitee, other than with
respect to any of such Indemnitee's insurance policies or in connection
with any indemnity claim the Person indemnified may have against any other
Indemnitee in respect of the matter against which such indemnity has been
made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has received notice for which the Lessee is, or may be, liable
under this Article 9; provided, however, that failure to give such notice
shall not terminate any of the rights of the Indemnitees under this Article 9,
except (with respect to such Indemnitee) to the extent that the Lessee has
been materially prejudiced by the failure to provide such notice. Unless
otherwise provided in the Operative Agreements, any amount payable to an
Indemnitee pursuant to this Article 9 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery
of all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee
under this Article 9, and provided there shall not have occurred a Payment
Default or an Event of Default (in which case payment shall not be made to
the Lessee until such Payment Default or Event of Default shall have been
cured) such Indemnitee shall pay to the Lessee the amount of any such
recovery, including interest received with respect to the recovery, net of
any Taxes paid or payable as a result of the receipt of the recovery and
interest, plus any net additional permanent income tax benefits actually
realized by Indemnitee as the result of any payment made pursuant to this
sentence less any reasonable costs and expense of any Indemnitee not
reimbursed by the Lessee; provided, however, that such amount shall not be
payable (a) before such time as the Lessee shall have made all payments or
indemnities then due and payable to such Indemnitee under this Article 9 or
(b) to the extent that the amount of such payment would exceed the amount
of all prior payments by the Lessee to such Indemnitee pursuant to this
Article 9, less the amount of all prior payments by such Indemnitee to the
Lessee pursuant to this Article 9. Any subsequent loss of such recovery or
tax benefit shall be subject to indemnification under Article 8 or this
Article 9, as the case may be, but without regard to Section 8.01(b)
hereof, other than Section 8.01(b)(v) hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers
shall have the right (in each such case at the Lessee's sole expense) to
investigate or, provided that (i) the Lessee or its insurers shall not
reserve the right to dispute liability with respect to any insurance
policies pursuant to which coverage is sought, (ii) in the case of the
Lessee, no Payment Default or Event of Default shall have occurred and be
continuing or shall arise at any time during the claim and (iii) the Lessee
shall have first acknowledged in writing to such Indemnitee the Lessee's
obligation to indemnify such Indemnitee hereunder in respect of such claim,
defend any such claim covered by insurance for which indemnification is
sought pursuant to this Article 9 and each Indemnitee shall cooperate with
the Lessee or its insurers with respect thereto, and provided, further, the
Lessee shall not be entitled to assume and control the defense of any such
claim if and to the extent (A) such Indemnitee reasonably objects to such
control on the ground that an actual or potential material conflict of
interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or on the grounds that such proceeding involves the
potential imposition of criminal liability on such Indemnitee or (B) such
proceeding will involve any material danger of the sale, forfeiture or loss
of, or the creation of any Lien on the Aircraft or the Trust Estate (unless
the Lessee posts a bond or other security reasonably acceptable in form and
substance to such Indemnitee) or involve any material risk of civil
liability to such Indemnitee for which it is not indemnified hereunder.
Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal
fees or expenses of such Indemnitee in connection with the defense of such
claim shall be indemnified hereunder unless the fees or expenses were
incurred at the written request of the Lessee or such insurers. Subject to
the requirement of any policy of insurance applicable to a claim, an
Indemnitee may participate at its own expense at any judicial proceeding
controlled by the Lessee or its insurers pursuant to the preceding
provisions, to the extent that such party's participation does not, in the
opinion of the independent counsel appointed by the Lessee or its insurers
to conduct such proceedings, interfere with such control; and such
participation shall not constitute a waiver of the indemnification provided
in this Section 9.06. No Indemnitee shall enter into any settlement or
other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its
right to be indemnified under this Article 9 with respect to such claim.
The Lessee shall not enter into any settlement or compromise which the
Lessee has not agreed to discharge or with respect to which the Lessee has
not agreed to indemnify such Indemnitee to such Indemnitee's satisfaction
or which admits any criminal violation, gross negligence or willful
misconduct on the part of any Indemnitee without the prior written consent
of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities after the expiration or other
termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing (or fairly attributable
to the Lessee's acts or omissions) prior to such termination or expiration or
incurred in the process of (i) the return or disposition of the Aircraft under
Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or
the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
Section 9.10. Obligations of Lessee Unsecured. The obligations of
the Lessee to the Original Loan Participants under this Article 9 shall
constitute unsecured obligations of the Lessee to such Original Loan
Participants and are not secured by the Lien of the Indenture or the Original
Indenture.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement all fees and
expenses of the following persons relating to the public offering of the Pass
Through Certificates contemplated by the Underwriting Agreement and related to
the transactions contemplated hereby: (i) the fees and expenses of counsel for
the Owner Participant; (ii) the fees and expenses of the transaction
documentation counsel and counsel for the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Original Loan Participants and the
Underwriters (other than those fees, expenses and disbursements payable by the
Underwriters pursuant to the Underwriting Agreement); (iii) the fees and
expenses of Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses
of the Pass Through Trustee and the fees and expenses of the Owner Trustee and
the Indenture Trustee; (v) any compensation, commissions and discounts payable
to the Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if
any, incurred in printing the Pass Through Certificates; (vii) the fees and
expenses incurred in connection with printing any amendment to the
Registration Statement on Form S-3 bearing Registration No. 33-56569, printing
any Preliminary Prospectus or Prospectus (as such terms are defined in the
Underwriting Agreement) for the offering of the Pass Through Certificates;
(viii) the fees and expenses of Arthur Andersen, LLP; (ix) the fees and
expenses of Moody's and S&P; (x) the fees and expenses of First Chicago
Leasing Corporation; (xi) the reasonable out-of-pocket expenses of the Owner
Participant; and (xii) reimbursement to the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee for any and all
fees, expenses and disbursements incurred in connection with the negotiation,
preparation, execution and delivery, filing and recording of the Operative
Agreements and the documents contemplated thereby, including, without
limitation, travel expenses and disbursements which shall have been paid by
such party. The fees and expenses described in clauses (ii) through (xii) of
this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant or the refunding of the Original Loan Certificates, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant or the refunding of the Original Loan
Certificates, in the proportion that the principal amount of the Certificates
bears to the total amount of the Pass Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.65% of the Purchase
Price (the "Estimated Expense Amount").
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of
the foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom, or (b) the
enforcement of the obligations of the Lessee hereunder or under the other
Operative Agreements, including, without limitation, the entering into or
giving or withholding of any amendments or supplements or waivers or
consents (whether or not consummated), including without limitation, any
amendment, supplement, waiver or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under the Original Agreements, this Agreement, the Lease,
the Indenture, the Certificates, the Tax Indemnity Agreement, the Purchase
Agreement Assignment or any other Operative Agreement or document or
instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement
(including any adjustment pursuant to Section 3.04 of the Lease) or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Section 7.03(d) hereof or otherwise) by the
Owner Participant after the Refunding Date of any interest in the Aircraft,
the Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the Owner Participant shall be responsible for all
such fees and expenses), unless such offer, sale or transfer shall occur
(A) after the Lease has been declared in default or if the transfer is
pursuant to the exercise of remedies under Article 17 of the Lease or (B)
in connection with the termination of the Lease or action or direction of
the Lessee pursuant to Section 4.02, Article 10 or Article 11 of the Lease;
and
(ii) to pay the fees, costs and expenses of all appraisers
involved in an independent appraisal of the Aircraft to the extent
required under Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement
or agreements, in form and substance reasonably satisfactory to the
Lessee, the Owner Participant, the Pass Through Trustee and the
Indenture Trustee whereby such successor Owner Trustee confirms that it
shall be deemed a party to this Agreement, the Trust Agreement, the
Lease, the Lease Supplement, the Purchase Agreement Assignment, the
Engine Warranty Assignment, the Indenture, the Indenture Supplement and
any other Operative Agreement to which the Owner Trustee is a party and
agrees to be bound by all the terms of such documents applicable to the
Owner Trustee and makes the representations and warranties contained in
Section 7.04 hereof (except that it may be duly incorporated, validly
existing and in good standing under the laws of the United States of
America or any State thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except
those obligations or duties expressly set forth in this Agreement, the
Indenture, the Trust Agreement, the Tax Indemnity Agreement, AVSA's FAA
Bill of Sale, AVSA's Warranty Bill of Sale, the Lease or any other
Operative Agreement to which the Owner Participant is a party and the Owner
Participant shall not be liable for the performance by any party hereto of
such other party's obligations or duties hereunder. Under no circumstances
shall the Owner Participant as such be liable to the Lessee, nor shall the
Owner Participant be liable to any Holder, for any action or inaction on
the part of the Owner Trustee or the Indenture Trustee in connection with
this Agreement, the Indenture, the Lease, the Trust Agreement, the Purchase
Agreement Assignment, the Engine Warranty Assignment, any other Operative
Agreement, any Original Agreement, the ownership of the Aircraft, the
administration of the Lessor's Estate or the Trust Indenture Estate or
otherwise, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that no section of the Indenture or the
Trust Agreement shall be amended or modified in any manner which materially
adversely affects the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to
the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the
Indenture, the Owner Trustee may not enter into any amendment, modification
or supplement of, or give any waiver or consent with respect to, or approve
any matter or document as being satisfactory under the Lease without the
prior consent of the Indenture Trustee and the Owner Participant and that,
except as otherwise provided in the Indenture, upon an Indenture Event of
Default, the Indenture Trustee may act as the Lessor under the Lease to the
exclusion of the Owner Trustee. The Lessee further agrees to deliver to
the Indenture Trustee and the Owner Participant a copy of each notice,
statement, request, report or other communication given or required to be
given to the Owner Trustee under the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
Section 13.04. Pass Through Trustee's Acknowledgment. The Pass
Through Trustee hereby acknowledges and agrees to be bound by all of the terms
and conditions of the Indenture, including without limitation, Section 8.01
thereof regarding the rights of the Owner Participant to purchase the
Certificates under circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and
shall be deemed received (a) if given by telecopier, when transmitted and
the appropriate telephonic confirmation received if transmitted on a
Business Day and during normal business hours of the recipient, and
otherwise on the next Business Day following transmission, (b) if given by
certified mail, return receipt requested, postage prepaid five Business
Days after being deposited in the United States mail and (c) if given by
FedEx service (or, if a Default or Event of Default shall have occurred and
be continuing, by other comparable courier service), when received or
personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5826, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 800 Westchester
Avenue, Rye Brook, New York 10573-1301, Attention: Vice President Leasing
with a copy to Director, Portfolio Administration, telephone (914)
335-5000, facsimile (914) 335-1287, or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee; and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date) in whole but not in
part, of the Certificates prior to the end of the Basic Term (a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as the Owner Participant is satisfied there is
no foreign currency risk to it), and shall be on terms that do not materially
adversely affect the Owner Participant. The Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with the Lessee as
to the terms of any such Refinancing transaction (including the terms of any
debt to be issued in connection with such refinancing and the documentation to
be executed in connection therewith). Without the prior written consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant in a manner satisfactory to it for any liabilities under federal,
state or foreign securities laws resulting from such offering. The aggregate
principal amount of the new Certificates issued in connection with each
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice (three (3) Business Days
with respect to the refinancing contemplated by this Agreement on the
Refunding Date) of the scheduled closing date of such Refinancing and the
Owner Participant shall have been provided such longer period as it shall have
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant,
nor shall its rights against all other parties taken as a whole be adversely
affected compared to such rights in effect under the Operative Agreements
prior to such proposed Refinancing.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant,
which consent may be withheld in its sole discretion, no such refinancing
shall (1) cause the aggregate principal amount of the indebtedness to be
substituted for the Loan Certificates to exceed the aggregate principal
amount of the then outstanding Loan Certificates, (2) cause the weighted
average life of such indebtedness to be different by more than 6 months
than the remaining weighted average life of the then outstanding Loan
Certificates, or (3) cause the date of maturity of such indebtedness to be
later than the date of maturity of the Loan Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium
and Breakage Costs, if any, and all other sums due and owing on the
Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing or would occur immediately after
giving effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase
of the Refinancing loan certificates by, or with the assets of, an
employee benefit plan, as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA or a plan or individual retirement account,
which is subject to Section 4975(c) of the Code, (individually or
collectively, an "ERISA Plan"), the Lessee will permit the placement of
the Refinancing loan certificates with an ERISA Plan only if either (A)
if such placement is in the form of pass through certificates, the sole
underwriter or the manager or co-manager of the underwriting syndicate
or the selling or placement agent of the Refinancing loan certificates
represents to the Lessee that it has a prohibited transaction exemption
from the U.S. Department of Labor with respect to pass through
certificates (such as Prohibited Transaction Exemption 89-88 or any
other comparable exemption) or (B) purchasers of the Refinancing loan
certificates provide a representation (which may be in the form of a
deemed representation) regarding their source of funds used in acquiring
the Refinancing loan certificates and, if such purchasers represent that
they are using funds of an ERISA Plan in acquiring the Refinancing loan
certificates, such purchasers further represent that (1) either they are
relying on a prohibited transaction exemption from the U.S. Department
of Labor with respect to their purchase and holding of the Refinancing
loan certificates and they provide representations regarding the
satisfaction of the relevant conditions of such an exemption or (2)
their purchase and holding of the Refinancing loan certificates will not
constitute a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code. The reliance on any such exemption
will not be conditional on the Owner Participant's representation
concerning its party in interest or other status with respect to ERISA
Plans. If neither exemption referred to in clause (A) or (B) of this
paragraph (viii) is valid or applicable in any respect to the purchase
and holding of the Refinancing loan certificates, or if the
representation in clause (B) of this paragraph (viii) that such purchase
and holding will not constitute a non-exempt prohibited transaction is
not correct, whichever is applicable, then the Lessee shall indemnify
the Owner Participant pursuant to, and to the extent provided for, under
Sections 8 and 9 hereof for Taxes and Expenses resulting from any
"prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code, occurring with respect to the placement
of the Refinancing loan certificates with, or the holding of the
Refinancing loan certificates by, any ERISA Plan with respect to which
the Owner Participant is a party in interest, within the meaning of
Section 3(14) of ERISA, or a disqualified person, within the meaning of
Section 4975 of the Code, provided, however, that if the Lessee shall
fail to obtain either of the representations set forth in clause (A) or
(B) of this paragraph (viii), such indemnity shall not be subject to the
exceptions set forth under Sections 8.01(b)(xii)(A) and (B) and
9.01(b)(ix)(A) and (B) hereof; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that it is the intent of the parties for
Federal, state, local and foreign income tax purposes that the Owner
Participant will be treated as the owner of the Aircraft and the Lessee will
be treated as the lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture and the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee
and the Pass Through Trustee. Each of FSBU and SSB is entering into this
Agreement solely in their respective capacities (except to the extent
otherwise expressly indicated), in the case of FSBU, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, in the case
of SSB, not in its individual capacity but solely as Indenture Trustee
under the Indenture and as Pass Through Trustee under the Pass Through
Agreement, and except as otherwise expressly provided in this Agreement or
in the Lease, the Indenture, the Pass Through Agreement or the Trust
Agreement, neither FSBU, nor SSB, shall be personally liable for or on
account of its statements, representations, warranties, covenants or
obligations under this Agreement; provided, however, that each of FSBU and
SSB accepts the benefits running to it under this Agreement, and each
agrees that (except as otherwise expressly provided in this Agreement or
any other Operative Agreement to which it is a party) it shall be liable in
its individual capacity for (a) its own gross negligence or willful
misconduct (whether in its capacity as trustee or in its individual
capacity), (b) any breach of representations and warranties or any breach
of covenants made in its individual capacity pursuant to or in connection
with this Agreement or the other Operative Agreements to which it is a
party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to
use ordinary care in receiving, handling and disbursing funds, (e) in the
case of the Owner Trustee, Lessor's Liens attributable to it in its
individual capacity, (f) in the case of the Indenture Trustee, Indenture
Trustee's Liens and (g) taxes, fees or other charges on, or based on, or
measured by, any fees, commissions or compensation received by it in
connection with the transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or
indirectly on account of any amount payable as Make-Whole Premium,
principal or interest on the Certificates, or any other amount payable on any
Certificate that is provided in the Operative Agreements to be nonrecourse to
the Owner Participant and (iii) the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Participant such Recourse Amount. For purposes of this
Section 17.10, "Recourse Amount" means the amount by which the portion of such
payment by the Owner Participant on account of clause (ii) above received by
the Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Lessee and the other parties hereto agree that the transactions contemplated
by the Operative Agreements are expressly intended to be, shall be and should
be construed so as to be entitled to the benefits and protection of Section
1110 of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 5th day of June, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
PMCC LEASING CORPORATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as an Original Loan Participant
By:__________________________________________
Name:
Title:
BANK OF AMERICA NT & SA
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:__________________________________________
Name:
Title:
COMMERZBANK AG, ATLANTA AGENCY
By:__________________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-A1
Federal Express Corporation Trust No. N668FE
Interest Rate: 7.85%
Maturity: January 30, 2015
Principal Amount: $50,511,000.00
2. Federal Express Corporation Pass Through Trust, 1996-A2
Federal Express Corporation Trust No. N668FE
Interest Rate: 8.17%
Maturity: January 30, 2018
Principal Amount: $12,142,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires and except in the case of
the Original Agreements, (i) references to agreements shall be deemed to
mean and include such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to
include the successors and permitted assigns of such parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having the
United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement.
Amendment No. 1 to the Original Tax Indemnity Agreement (Federal Express
Corporation Trust No. N668FE), dated as of June 1, 1996.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N668FE), dated the Delivery Date, as amended and
restated as of the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N668FE), dated the Refunding Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France, and its successors and
assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 15, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on August 24, 2019, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained
by the Pass Through Trustee for the payment of the Pass Through
Certificates, and after the Lien of the Indenture is discharged, Salt
Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N668FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Commencement Date. July 30, 1996.
Consent and Agreement. The Consent and Agreement dated as of May
15, 1996 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 24, 1996.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by manufacturer's serial numbers in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or
12.02 of the Lease, together with all Parts related thereto. Except as
otherwise provided, at such time as a Replacement Engine shall be so
substituted and the Engine for which the substitution is made shall be
released from the Lien of the Indenture, such replaced Engine shall cease to
be an "Engine" under the Lease. The term "Engines" means, as of any date of
determination, both Engines then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 15, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N668FE), dated as of May 15, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 7.06 of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSBU. First Security Bank of Utah, National Association, a
national banking association.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease (when it shall be determined based upon the actual
condition and location of the Aircraft), it shall be assumed that the Aircraft
is in the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
May 15, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither
the Certificate Holder nor any holder of a Pass Through Certificate shall be
deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N668FE), dated as of May 15, 1996, as amended
and restated as of June 1, 1996, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, and as
said Indenture may from time to time be further supplemented or amended,
including any amendment or supplement thereto entered into from time to time
pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N668FE) dated May 24, 1996, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the
Lessee has not indemnified (and is not obligated to indemnify) the Indenture
Trustee in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of
the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N668FE) dated as of May 15, 1996, as amended and restated as of June 1, 1996,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N668FE) dated May 24, 1996, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, or the Owner Participant, in each
case not related to the transactions contemplated by the Operative Agreements,
(ii) acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of the
Lease and other than a transfer pursuant to the exercise of the remedies set
forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the
Indenture, a certificate signed by a Responsible Officer of the Lessee or
the Owner Trustee, as the case may be, and delivered to the Indenture
Trustee. Each such certificate shall include the statements provided for
in Section 15.07 of the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I
(Federal Express Corporation Trust No. N668FE), among the Lessee, the
Owner Participant, the Indenture Trustee and the Owner Trustee as it was
originally executed on the Delivery Date.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N668FE), dated as of May 15,
1996, between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N668FE), dated May 24, 1996 attached thereto was
recorded as one instrument by the FAA on May 28, 1996 and assigned Conveyance
Number VV009331.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N668FE), dated as of May 15, 1996, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N668FE), dated May 24, 1996 attached thereto was
recorded as one instrument by the FAA on May 28, 1996 and assigned Conveyance
Number VV009332.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to
the Original Participation Agreement and their successors and assigns (other
than any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N668FE), among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of May 1, 1996.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N668FE) between the Lessee and the
Owner Participant as it was originally executed as of May 15, 1996.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N668FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of May 1, 1996 and filed with the FAA
on May 24, 1996.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture
Trustee in trust for the Holders of such Certificates pursuant
to Section 14.01 of the Indenture; provided, that if such
Certificates are to be prepaid, notice of such prepayment has
been duly given pursuant to the Indenture or provision therefor
satisfactory to the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N668FE), dated as of May 1, 1996, as amended and
restated as of June 1, 1996, among the Lessee, the Original Loan Participants,
the Owner Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as owner trustee, the Owner Participant, the
Indenture Trustee not in its individual capacity except as otherwise expressly
provided therein, but solely as indenture trustee and the Pass Through Trustee
not in its individual capacity except as otherwise expressly provided therein,
but solely as pass through trustee, as amended, modified or supplemented, or
the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or title to which remains vested in the Lessor pursuant to Article 8 of the
Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of February 1, 1993, as amended and restated as of October 1, 1995 between the
Lessee and the Pass Through Trustee, as such Pass Through Agreement may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series A1 or 1996 Pass Through Certificates, Series A2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-A1 or Federal Express Pass Through Trust, 1996-A2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. August 24, 2019 and each January 30 and July 30
commencing on July 30, 1996.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates
having a Maturity in 2015, June 11, 2008 and with respect to the
Certificates having a Maturity in 2018, November 24, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
Proposed Termination Date. The proposed date of termination of
the Lease as specified by the Lessee in its notice given pursuant to
Section 10.01 thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N668FE), dated as of May 15, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. The amount specified as such in Ancillary
Agreement I.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of
any determination date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining mandatory sinking fund redemption payment of principal, including
the payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. August 24, 2019 and each January 30 and
July 30 commencing on July 30, 1996.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of
Responsible Officer set forth in Section 3.10 of the Trust Agreement is
applicable) or the Indenture Trustee, any officer in its Corporate Trust
Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, and with respect to any other
party, any corporate officer or (except in the case of the Owner
Participant) other employee of a party who, in the normal performance of
his or her operational responsibilities, with respect to the subject matter
of any covenant, agreement or obligation of such party pursuant to any
Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-A1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-A2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Stipulated Loss Value is to be calculated with reference to any such
date; provided that if amounts in respect of Stipulated Loss Value are payable
under the Operative Agreements after the Stipulated Loss Determination Date in
respect of which such Stipulated Loss Value was determined, the Lessor shall
be compensated during the period from the Stipulated Loss Determination Date
to such payment date in accordance with the provisions of the Operative
Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term
that is on or after December 31, 2003 in the case of Article 10 of the
Lease, and in the case of (i) Section 4.02(a)(A) of the Lease, the Rent
Payment Date falling on July 30, 2017, (ii) Section 4.02(a)(D) or (E) of
the Lease, a Rent Payment Date that is on or after the seventh anniversary
of the Commencement Date and (iii) Section 4.02(a)(F) of the Lease, the
last day of the Basic Term.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent through such date and, accordingly, no further accrual or credit shall be
required through such date whenever Termination Value is to be calculated with
reference to any such date; provided that if amounts in respect of Termination
Value are payable under the Operative Agreements after the Termination Date in
respect of which such Termination Value was determined, the Lessor shall be
compensated during the period from the Termination Date to such payment date
in accordance with the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N668FE), dated as of May 1, 1996, as amended and restated as of June
1, 1996, between the Owner Participant and the Owner Trustee in its individual
capacity, as from time to time modified, amended or supplemented pursuant to
its applicable provisions and in accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.
and Morgan Stanley & Co. Incorporated.
Underwriting Agreement. The Underwriting Agreement dated June 5,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Netherlands
Austria New Zealand
Belgium Norway
Canada Philippines
Denmark Portugal
Finland Republic of China
(Taiwan)
France
Singapore
Germany
Sweden
Greece
Switzerland
Iceland
Thailand
Ireland
United Kingdom
Japan
Luxembourg
EXHIBIT A
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N668FE), dated as of May 1, 1996, as amended and restated as of June 1,
1996 (the "Participation Agreement"), among Federal, as Lessee, PMCC Leasing
Corporation, as Owner Participant, Morgan Guaranty Trust Company of New York,
Bank of America NT & SA, The Chase Manhattan Bank (National Association),
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as Original Loan
Participants, First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity, except as otherwise
stated, but solely as Owner Trustee under the Trust Agreement, State Street
Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture and State Street Bank and Trust Company, as Pass Through
Trustee, relating to the Aircraft. This opinion is being delivered pursuant
to Section 4.01(l)(i) of the Participation Agreement. Capitalized terms not
otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the refinancing in full of the Original Loan Certificates evidencing the
Original Loan Participants' participation in the payment of the Purchase Price
of one Airbus A300F4-605R aircraft (the "Aircraft"), using the proceeds from
the public offering of the Pass Through Certificates. Two Series of Pass
Through Certificates will be issued by two Pass Through Trusts formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N668FE) dated as of May 15, 1996, as amended and restated as of June 1, 1996,
as supplemented by the related Indenture and Security Agreement Supplement
("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined
or caused to be examined by attorneys under my supervision, executed
counterparts of the Operative Agreements, the Pass Through Agreement and each
Series Supplement (the "Transaction Agreements"). We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of
the parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a
party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms.
4. Neither the execution and delivery by Federal of the
Transaction Agreements to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Transaction Agreements to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a) require
the consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which are
required to be performed on or prior to the Refunding Date and which shall have
been accomplished on or prior to the Refunding Date) the registration with, or
the taking of any other action in respect of, the Aeronautics Authority, the
Securities and Exchange Commission or any other authority or agency of the
federal government or of the State of Tennessee other than (i) the
registration of the issuance and sale of the Pass Through Certificates under
the Securities Act, (ii) compliance with the securities laws of each
applicable state, and (iii) the filing of the Indenture, the Lease and the
Trust Agreement with the FAA, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action
or proceeding before any court or administrative agency which individually (or
in the aggregate in the case of any group of related lawsuits) (i) is expected
to have a material adverse effect on (A) except for the matters described (a)
under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in Federal's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 29, 1996) and (b) in the Lessee's Current Report on
Form 8-K dated April 30, 1996, as to which I can express no opinion at this
time concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and
valid title to the Aircraft free and clear of all Liens on file with the FAA,
except for Liens permitted under Section 6.01(a) of the Lease. Pursuant to
the Original Participation Agreement the Aircraft was duly delivered to the
Owner Trustee. Federal, as Lessee, duly accepted the Aircraft under the
Original Lease and the Lease Supplement and the Term commenced on the Delivery
Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Transaction Agreements to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Transaction Agreements, the governing law with respect to each
of the Transaction Agreements is identical in all relevant respects to the law
of the State of Tennessee. Insofar as the foregoing opinion relates to the
enforceability of any instrument, such enforceability is subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally (whether such enforceability is considered in a
proceeding in equity or at law). The enforceability of the remedies provided
under the Lease may also be limited by applicable laws which may affect the
remedies provided therein but which do not in my opinion affect the
validity of the Lease or make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have
relied on the opinion of Daugherty, Fowler & Peregrin of even date
herewith, to the extent such matters are addressed in such counsel's
opinion and subject to the assumptions and qualifications expressed
therein.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my
prior written consent.
I rendered an opinion dated May 24, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. I hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N668FE), dated as of May 1, 1996, as amended and
restated as of June 1, 1996 (the "Participation Agreement"), among Federal
Express, as Lessee, PMCC Leasing Corporation, as Owner Participant, Morgan
Guaranty Trust Company of New York, Bank of America NT & SA, The Chase
Manhattan Bank (National Association), Commerzbank AG, Atlanta Agency and
NationsBank, N.A. (South), as the Original Loan Participants, First Security
Bank of Utah, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement, State Street Bank and Trust
Company, not in its individual capacity, except as otherwise stated, but
solely as Indenture Trustee under the Indenture, and State Street Bank and
Trust Company, as Pass Through Trustee, relating to the Aircraft. This
opinion is being delivered pursuant to Section 4.01(l)(viii) of the
Participation Agreement. Capitalized terms not otherwise defined herein have
the meanings assigned thereto in the Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one Airbus A300F4-605R Aircraft which was purchased by
the Owner Trustee pursuant to AVSA's FAA Bill of Sale and AVSA's Warranty Bill
of Sale, subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides, among
other things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of the Pass Through Certificates. Two Series
of Pass Through Certificates will be issued by separate Pass Through Trusts,
each formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture.
In connection with the opinions expressed below, we have
examined executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action was
or is necessary in order to establish the Owner Trustee's title thereto and
interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery
of the Transaction Agreements by each of the parties to each such document
(other than Federal Express), (ii) each such party has full power and legal
right to enter into and perform its respective obligations under the
Transaction Agreements, (iii) that the execution, delivery and performance by
each of the Transaction Agreements by each of the parties thereto will not
violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificates are delivered by the Original Loan Participants
to the Indenture Trustee for cancellation and are cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express
of each of the Transaction Agreements to which Federal Express is a party do
not, or did not on the date of execution thereof, violate, and fully comply,
or did fully comply on the date of execution thereof, with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 4(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the
Participation Agreement, the Trust Agreement, the Indenture and the Lease by
the Owner Trustee in its individual or trust capacity, as the case may be, and
the issuance, execution, delivery and performance of the Certificates by the
Owner Trustee in its trust capacity do not violate, and fully comply with, any
laws and governmental rules and regulations of the State of New York that may
be applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank of Utah, National Association in its individual or trust
capacity in the State of New York not related to the transactions contemplated
by the Transaction Agreements. We have assumed that First Security Bank of
Utah, National Association has made the filings necessary to comply with
Section 131.3 of the Banking Law of the State of New York, however we express
no opinion as to whether First Security Bank of Utah, National Association is
required to comply with said Section 131.3.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates
duly issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in
paragraph 2 above, neither the execution and delivery by Federal Express of the
Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in respect of,
the Department of Transportation, the FAA, the Securities and Exchange
Commission or any other Federal or New York State governmental authority.
10. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as
lessor under and by reason of the Lease. The Lease, including the rights under
Section 1110 of the United States Bankruptcy Code, has been assigned to the
Indenture Trustee pursuant to the Indenture as part of the collateral for the
Certificates and, as assignee, the Indenture Trustee has the benefit of Section
1110.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty,
Fowler & Peregrin and George W. Hearn, Vice President - Law of
Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware. We express no opinion as to any matters
involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
(e) We rendered an opinion dated May 24, 1996 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection with
the financing and acquisition of the Aircraft on such date. We hereby
consent and agree that the addressees hereto who were not addressees
to the Delivery Date Opinion may rely on the Delivery Date Opinion as
fully and with the same force and effect as if such addressees were
originally named therein on the date of the Delivery Date Opinion.
Very truly yours,
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(2)(a)
[Letterhead of Simpson Thacher & Bartlett]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
We have acted as special New York counsel for PMCC Leasing
Corporation ("PMCC") in connection with the transactions contemplated by the
Participation Agreement (Federal Express Corporation Trust No. N668FE), dated
as of May 1, 1996, as amended and restated as of June 1, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as lessee, First
Security Bank of Utah, National Association, not in its individual capacity,
but solely as owner trustee, PMCC, as owner participant, State Street Bank and
Trust Company, not in its individual capacity but solely as indenture trustee,
State Street Bank and Trust Company, not in its individual capacity but solely
as pass through trustee, and Morgan Guaranty Trust Company of New York, Bank
of America NT & SA, The Chase Manhattan Bank (National Association),
Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as original loan
participants. This opinion is being furnished to you pursuant to Section
4.01(l)(ii) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined herein shall have the meaning ascribed to them in the
Participation Agreement.
We have examined executed counterparts of the Participation
Agreement, the Trust Agreement, the Tax Indemnity Agreement, the Ancillary
Agreement I and the Ancillary Agreement II (collectively, the "Owner
Participant Documents") and we have made such other and further investigations
as we have deemed necessary or appropriate for purposes of this opinion. In
our examination we have assumed, with your permission, and without independent
investigation or inquiry, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
With your permission, we have further assumed that (i) the Owner
Participant Documents have been duly authorized, executed and delivered by
each of the parties thereto, (ii) the respective parties thereto have the power
and authority to execute, deliver and perform the Owner Participant Documents,
(iii) the execution, delivery and performance of the Owner Participant
Documents by the parties thereto do not and will not violate the certificate of
incorporation, by-laws or other organizations documents of any such party or
any bond, debenture, note, mortgage, indenture, lease or other agreement or
instrument to which any such party is a party or by which any such party is
bound and does and will fully comply with all laws an regulations applicable to
each such party and (iv) the Owner Participant Documents constitute valid,
legal and binding obligations of the parties thereto (other than PMCC),
enforceable against such parties (other than PMCC) in accordance with their
respective terms.
Based upon the foregoing, we are of the opinion that:
1. The Participation Agreement and the Tax Indemnity Agreement
constitute valid and legally binding obligations of PMCC enforceable against
PMCC in accordance with their respective terms.
2. The execution and delivery by the Owner Participant of the Owner
Participant Documents will not result in any violation of any Federal or New
York statute or any order, rule or regulation issued pursuant to any New York
or Federal statute by any New York or Federal Court or governmental agency or
body having jurisdiction over the Owner Participant.
3. No consent, approval, authorization, order, registration or
qualification under any Federal or New York statute is required to be obtained
by the Owner Participant for the execution and delivery by the Owner
Participant of the Owner Participant Documents.
Our opinion in paragraph 1 is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York and express
no opinion herein concerning any law other than the laws of the State of New
York.
This opinion is rendered to you in connection with the
above-described transaction. This opinion may not be relied by you for any
other purpose, or relied upon by or furnished to any other person, firm or
corporation without our prior written consent, except that the Owner
Participant may furnish a copy of this opinion to a potential transferee or
participant of the interest of such entity or otherwise as required by a
governmental authority.
We rendered an opinion dated May 24, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Simpson Thacher & Bartlett
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(2)(b)
[Letterhead of PMCC]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
In my capacity as General Counsel and Secretary of Philip Morris
Capital Corporation, a Delaware corporation, I have supervised corporate
proceedings of PMCC Leasing Corporation, a Delaware corporation (the "Owner
Participant"), in connection with the Owner Participant's participation in the
transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N668FE), dated as of May 1, 1996, as amended and
restated as of June 1, 1996 (the "Participation Agreement"), among the Owner
Participant, Federal Express Corporation as Lessee; Morgan Guaranty Trust
Company of New York, Bank of America NT & SA, The Chase Manhattan Bank
(National Association), Commerzbank AG, Atlanta Agency and NationsBank, N.A.
(South), as original loan participants; First Security Bank of Utah, National
Association, not in its individual capacity but solely as owner trustee; State
Street Bank and Trust Company, not in its individual capacity, except as
otherwise stated, but solely as indenture trustee; and State Street Bank and
Trust Company, as pass through trustee. This opinion is delivered pursuant to
Section 4.01(l)(ii) of the Participation Agreement. Capitalized terms used
herein but not otherwise defined herein, shall have the respective meanings
set forth in Schedule II to the Participation Agreement.
In connection with this opinion, I have examined originals, or
copies certified or otherwise identified to my satisfaction of the
Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement, the
Ancillary Agreement I and the Ancillary Agreement II (each such document to be
hereafter referred to individually as an "Operative Document" and collectively
as the "Operative Documents"). I have also examined such corporate documents,
records and instruments of the Owner Participant as in my judgement are
necessary or appropriate to enable me to render the opinions expressed below.
In rendering such opinions, I have relied upon the representations and
warranties contained in or made pursuant to the Operative Documents and have
assumed the due authorization, execution and delivery of all documents and
instruments by all parties thereto other than the Owner Participant.
Based on the foregoing and subject to the qualifications and
matters of reliance set forth herein, I am of the opinion that:
1. The Owner Participant is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full corporate power, authority and legal right to
carry on its business as now conducted, and is duly authorized and
empowered to execute and deliver the Operative Documents and to
fulfill and comply with the terms, conditions and other provisions
thereof.
2. The Operative Documents have been duly authorized by all
necessary corporate action on the part of the Owner Participant, and
have been duly executed and delivered by the Owner Participant.
3. No filing with, notice to, or authorization or approval
from any governmental or public body or authority is required under
the laws of the State of New York, the laws of the United States of
American, or the General Corporation Law of the State of Delaware in
connection with the execution, delivery and performance by the Owner
Participant of the Operative Documents.
4. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Owner Participant) pending or, to my
knowledge, threatened against or affecting the Owner Participant or
any property rights of the Owner Participant at law or in equity or
before any commission or other administrative agency which, either
individually or in the aggregate, could materially and adversely
affect the condition, financial or otherwise, of the Owner
Participant or its ability to perform its obligations under the
Operative Documents or which would affect the legality, validity or
enforceability of such Operative Documents.
5. Neither the execution and delivery of the Operative
Documents, the consummation of the transactions therein contemplated
nor the fulfillment of or compliance with the terms, conditions and
other provisions thereof will conflict with, or result in any breach
of, any of the terms, conditions or provisions of (i) any law or
regulation binding upon the Owner Participant, (ii) any order,
injunction or decree of any court or governmental instrumentality
binding upon the Owner Participant, (iii) the Certificate of
Incorporation or Bylaws of the Owner Participant, or (iv) any bond,
debenture, note, mortgage indenture or other agreement or instrument
to which the Owner Participant is now a party or by which the
property of the Owner Participant may be bound.
I am a member of the bar of the State of New York, and I do not
purport to be conversant with, or to express any opinion herein concerning, the
laws of any jurisdiction other than those of the State of New York and the
United States of America and the General Corporation Law of the State of
Delaware. In addition, I express no opinion concerning the laws of the State
of New York, the United States of America or any other jurisdiction applicable
to the offering or sale of securities. Further, I have made no investigation
and express no opinion, as to any aviation law or other laws, statutes, rules
or regulations applicable due to the particular nature of the equipment
subject to the Lease.
This opinion is solely for the benefit of the addresses hereof
and their respective successors and assigns for use in connection with the
transactions contemplated by the Operative Documents and may not be relied
upon by any other person or for any other purpose without my express written
consent. This opinion may be relied upon by Messrs. Simpson, Thacher &
Bartlett in rendering their opinion of even date herewith.
I rendered an opinion dated May 24, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
John S. Savage
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N668FE), dated as
of May 15, 1996, as amended and restated as of June 1, 1996 (the "Indenture")
between First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee") and the
Indenture Trustee, in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No.
N668FE), dated as of May 1, 1996, as amended and restated as of June 1, 1996
(the "Participation Agreement"), among Federal Express Corporation, as Lessee
(the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the "Owner
Participant"); Morgan Guaranty Trust Company of New York, Bank of America NT &
SA, The Chase Manhattan Bank (National Association), Commerzbank AG, Atlanta
Agency and NationsBank, N.A. (South), as Loan Participants (the "Loan
Participants"); the Owner Trustee; and the Indenture Trustee. This opinion is
being delivered pursuant to Section 4.01(l)(iii) of the Participation
Agreement. Except as otherwise defined herein, all capitalized terms used
herein shall have the respective meanings set forth in Schedule II to the
Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Indenture Trustee, as the case may be, is a party (collectively, the
"Indenture Trustee Documents"), the Certificate of the Massachusetts
Commissioner of Banks relating to State Street and originals, or copies
certified or otherwise identified to our satisfaction, of such other
documents, corporate records, certificates, or other instruments as we have
deemed necessary or advisable for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Indenture Trustee), the conformity to
the originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts, is
a "citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Refunding Date and to perform its other
obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee
Documents by State Street, in its individual capacity or as Indenture Trustee,
as the case may be, and compliance by State Street or the Indenture Trustee, as
the case may be, individually or as Indenture Trustee, with all of the
provisions thereof do not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the
Indenture Trustee, or any order or judgment known to us, of any Massachusetts
or Federal court or governmental authority applicable to or binding on State
Street, individually or as Indenture Trustee, or contravene the provisions of,
or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Indenture Trustee under, its charter documents
or By-Laws or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, in each case known
to us, or any other agreement or instrument, in each case known to us, to
which State Street, individually or as Indenture Trustee, is a party or by
which it or any of its property may be bound or affected, other than the Lien
of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document constitutes
a legal, valid and binding obligation of State Street, in its individual
capacity or as Indenture Trustee, as the case may be, enforceable against
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, in accordance with its terms.
5. The Certificates issued and dated the Refunding Date have
been duly authenticated and delivered by the Indenture Trustee pursuant to the
terms of the Indenture.
6. There are no fees, taxes or other governmental charges
payable by the Owner Trustee, the Indenture Trustee (except taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders to the Commonwealth of Massachusetts or any political
subdivision thereof in connection with the execution, delivery or performance
of any of the Operative Agreements or in connection with the issuance and
acquisition of the Certificates by the Certificate Holders or the beneficial
interests of the Certificate Holders in the Trust Indenture Estate solely
because the Indenture Trustee in its individual capacity (a) is incorporated
under the laws of the Commonwealth of Massachusetts, (b) has its principal
place of business in the Commonwealth of Massachusetts, (c) performs (in its
individual capacity or as Indenture Trustee) any or all of its duties under
the Indenture Trustee Documents in the Commonwealth of Massachusetts, and (d)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee Documents in the Commonwealth of Massachusetts. Neither the
Indenture Trustee nor the trust created under the Indenture will be subject to
any fee, tax or other governmental charge (except for taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof in
existence on the date hereof, on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Indenture
Estate solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
There is no fee, tax or other governmental charge (except for taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) under the
laws of the Commonwealth of Massachusetts or any political subdivision thereof
in existence on the date hereof, on, based on or measured by any payments under
the Certificates by reason of the creation of the trust under the Indenture
solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts. We
express no opinion as to whether or not any fees, taxes or other charges are
now or hereafter may be payable by the Original Loan Participant or the Owner
Participant to the Commonwealth of Massachusetts or any political subdivision
thereof in connection with (a) the execution, delivery or performance by any of
the Indenture, the Participation Agreement or any of the other Operative
Agreements and (b) the making by the Owner Participant of its investment in
the Aircraft.
7. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State Street,
individually or as Indenture Trustee, to perform its obligations under the
Indenture Trustee Documents.
We rendered an opinion dated May 24, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
4.01(l)(iv) of the Participation Agreement (Federal Express Corporation Trust
No. N668FE), dated as of May 1, 1996, as amended and restated as of June 1,
1996 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"), PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"), Morgan Guaranty Trust Company of New York, Bank of
America NT & SA, The Chase Manhattan Bank (National Association), Commerzbank
AG, Atlanta Agency and NationsBank, N.A. (South), as the Original Loan
Participants (the "Original Loan Participants"), First Security Bank of Utah,
National Association, not in its individual capacity but solely as Owner
Trustee (the "Owner Trustee"), State Street Bank and Trust Company, as
Indenture Trustee (the "Indenture Trustee") and State Street Bank and Trust
Company, as Pass Through Trustee, with respect to that portion of Subtitle VII
of Title 49 of the United States Code relative to the recordation of
instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal
Aviation Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N668FE) dated as of May 1, 1996, as amended and restated
as of June 1, 1996 (the "Trust Agreement") between the
Owner Participant and the Owner Trustee, which Trust
Agreement amends and restates the Original Trust
Agreement, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N668FE) dated as of May 15, 1996,
as amended and restated as of June 1, 1996 and executed
on June __, 1996 (the "Trust Indenture") between the
Owner Trustee and the Indenture Trustee, which Trust
Indenture amends and restates the Original Indenture,
which Trust Indenture was filed at ____ _.m., C._.T.;
and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N668FE) dated as of May 15, 1996, as amended and restated
as of June 1, 1996 (the "Lease") between the Owner
Trustee, as lessor, and the Lessee, as lessee, which
Lease amends and restates the Original Lease, with the
Trust Indenture attached thereto, which Lease with the
Trust Indenture attached thereto was filed at ____ _.m.,
C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture, as containing
confidential financial information.
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated May 24, 1996 (the
"FAA Bill of Sale") from AVSA S.A.R.L., as seller, conveying
title to the Airframe to the Owner Trustee has been duly
recorded by the FAA on May 24, 1996 and assigned Conveyance No.
[______];
2. the Trust Indenture and the Lease with the Trust Indenture
attached are in due form for recordation by and have been duly
filed for recordation with the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on May
24, 1996 pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded
by the FAA pursuant to and in accordance with the provisions of
49 U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Trust Indenture and Security Agreement
Supplement attached was duly filed with and duly recorded by the
FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the
security interest created by the Original Indenture, as amended
and restated by the Trust Indenture, as supplemented by the
Indenture and Security Agreement Supplement, and (ii) the
rights of the parties under the Original Lease, as amended and
restated by the Lease, as supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Trust
Indenture, as supplemented by the Indenture and Security
Agreement Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly perfected
first assignment of all the right, title and interest of the
Owner Trustee in, to and under the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which have
been duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the Owner
Trustee's title to the Airframe or (B) such security interest
and assignment (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), it being understood that no
opinion is herein expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and performance
of the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture,
as amended and restated by the Trust Indenture, as supplemented
by the Indenture and Security Agreement Supplement, or the
Original Trust Agreement, as amended and restated by the Trust
Agreement, except for such filings as are referred to in our
opinion dated May 24, 1996 (which have been duly effected) and
the filings referred to in clauses (a), (b) and (c) above; and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto
of the Original Trust Agreement, the Trust Agreement, the
Original Indenture, the Trust Indenture, the Indenture and
Security Agreement Supplement, the Original Participation
Agreement, the Participation Agreement, the FAA Bill of Sale,
the Original Lease, the Lease and the Lease Supplement or the
performance by the parties thereto of: (i) the Original Trust
Agreement, as amended and restated by the Trust Agreement; (ii)
the Original Indenture, as amended and restated by the Trust
Indenture, as supplemented by the Indenture and Security
Agreement Supplement; (iii) the Original Participation
Agreement, as amended and restated by the Participation
Agreement; and (iv) the Original Lease, as amended and restated
by the Lease, as supplemented by the Lease Supplement, in
accordance with the provisions thereof, nor the consummation by
the parties thereto of any of the transactions contemplated
thereby, requires the consent or approval of, or the giving of
notice to, or the registration with, or the taking of any other
action in respect of, the FAA except for the filings, the
recordations and the filings for recordation specified
elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of
the United States. In rendering this opinion, we were subject to the accuracy
of the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties had actual notice.
In rendering this opinion we are assuming that there are no documents with
respect to the Aircraft which have been filed for recording under the
recording system of the FAA but have not yet been listed in the available
records of such system as having been so filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated May ___, 1996 and have
continued to rely upon the opinion of the Assistant Chief Counsel of the
Aeronautical Center dated __________, 1996, copies of which are attached
hereto.
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 772 and U.S. Registration No. N668FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-239 and 705-240 (the "Engines") (the
Airframe and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N668FE)
dated as of May 1, 1996 between the Owner Participant and the Owner Trustee,
which was filed with the FAA on May 24, 1996.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N668FE) dated as of May 15, 1996 between the
Owner Trustee and the Indenture Trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on ______, 1996 and assigned
Conveyance No. ______.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N668FE) dated May 24, 1996 between the Owner
Trustee and the Indenture Trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N668FE)
dated as of May 15, 1996 between the Owner Trustee, as lessor, and the Lessee,
which together with the Lease Supplement (as hereinafter defined), the
Original Indenture and the Indenture and Security Agreement Supplement
attached thereto was recorded as one instrument by the FAA on ______, 1996
and assigned Conveyance No. ______.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N668FE) dated May 24, 1996 between the Owner Trustee, as lessor, and the
Lessee, with respect to the Aircraft, which was attached to and recorded by the
FAA as one instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) the Owner Participant
Amount and Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule
III), (iii) the Termination Values (Schedule IV), (iv) the Purchase Option
Schedule (Schedule V) omitted from the FAA filing counterpart thereof as
containing confidential financial information; and (v) the purchase price
under Section 4.02(a)(F) of the Lease set forth in Ancillary Agreement I,
which was not attached to the FAA filing counterpart of the Lease or otherwise
filed with the FAA for recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of Utah,
National Association, a national banking association ("First Security"), in
connection with the Trust Agreement (Federal Express Corporation Trust No.
N668FE), dated as of May 1, 1996, as amended and restated as of June 1, 1996
(the "Trust Agreement"), between First Security and PMCC Leasing Corporation,
a Delaware corporation (the "Owner Participant"). Pursuant to the
Participation Agreement (Federal Express Corporation Trust No. N668FE), dated
as of May 1, 1996, as amended and restated as of June 1, 1996 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee, the
Owner Participant, Morgan Guaranty Trust Company of New York, Bank of America
NT & SA, The Chase Manhattan Bank (National Association), Commerzbank AG,
Atlanta Agency and NationsBank, N.A. (South), as Original Loan Participants,
First Security, not in its individual capacity except as otherwise expressly
set forth therein but solely as Owner Trustee (the "Owner Trustee") under the
Trust Agreement, State Street Bank and Trust Company, as Indenture Trustee and
State Street Bank and Trust Company, as Pass Through Trustee, one Airbus
A300F4-605R aircraft bearing U.S. Registration No. N668FE (the "Aircraft") is
being refinanced. This opinion is furnished pursuant to Section 4.01(l)(vii)
of the Participation Agreement. Capitalized terms used herein and not
otherwise defined are used as defined in the Participation Agreement, except
that references herein to any instrument shall mean such instrument as in
effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1
dated May 24, 1996;
(e) The Lease;
(f) The Ancillary Agreement I;
(g) The Ancillary Agreement II:
(h) The Lease Supplement dated May 24, 1996 (each of the
documents identified in paragraphs (a) through (g) above
being collectively referred to as the "Owner Trustee
Documents"); and
(h) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national
banking association, with banking and trust powers, is a Citizen of
the United States within the meaning of Section 40102(a)(15) of the
Transportation Code, and each of First Security and the Owner
Trustee, as the case may be, has or had, on the date of execution
thereof, full corporate power, authority and legal right to execute,
deliver and perform each of the Owner Trustee Documents to which it
is or is to be a party and to issue, execute, deliver and perform the
Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner Trustee
Document to which it is a party; each such document constitutes a
legal, valid and binding obligation of the Owner Trustee (and, to the
extent set forth in the respective Owner Trustee Document, of First
Security) enforceable against the Owner Trustee (and, to the extent
set forth in the respective Owner Trustee Document, against First
Security) in accordance with its terms; and assuming the Trust
Agreement was properly authorized, executed and delivered by the
Owner Participant and that the terms of the Trust Agreement are not
in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement
constitutes, under the laws of the State of Utah, a legal, valid and
binding obligation of the Owner Participant enforceable against the
Owner Participant in accordance with its terms. The Certificates
have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and
constitute the legal, valid and binding obligations of the Owner
Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture; and the Certificates are
entitled to the benefits and security afforded by the Indenture in
accordance with their terms and the terms of the Indenture.
3. On the Delivery Date, the Owner Trustee received from AVSA
such title to the Aircraft as AVSA conveyed to the Owner Trustee,
subject to the rights of the Owner Trustee and the Lessee under the
Original Lease and the security interest created pursuant to the
Original Indenture and the Indenture Supplement; and to our
knowledge, there exist no Liens affecting the title of the Owner
Trustee to the Lessor's Estate resulting from claims against First
Security not related to the ownership of the Lessor's Estate or the
administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust
Indenture Estate.
4. Under the laws of the State of Utah, all of the properties
which are part of the Trust Indenture Estate have been pledged and
mortgaged with the Indenture Trustee as part of the Trust Indenture
Estate and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent
provided in the Indenture, to the Lien of the Indenture in favor of
the holders of the Certificates issued and to be issued under the
Indenture.
5. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture Trustee's
taking possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including
the filing or recording of any document, is necessary (i) to create
under the UCC the security interest in the Trust Indenture Estate
(including the grant and assignment unto the Indenture Trustee of the
security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation
Agreement) which the Indenture by its terms purports to create in
favor of the Indenture Trustee, and (ii) to perfect in the State of
Utah such security interest, except for the filing of a UCC financing
statement complying with the formal requisites of Section 9-402 of
the UCC in the office of the Division of Corporations and Commercial
Code of the State of Utah with respect to the security interest,
which filing has been duly effected, and the filing of continuation
statements with respect thereto required to be filed at periodic
intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust
under Utah law, the trust created by the Trust Agreement has been duly
created and exists for the benefit of the Owner Participant, and the
Trust Agreement create for the benefit of the Owner Participant the
interest in the properties referred to in Section 1.02 of the Trust
Agreement which the Trust Agreement by its terms purports to create,
which interest is subject and subordinate to the security interests
created by the Indenture to the extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any court or administrative or governmental authority or
agency of the State of Utah or the United States of America governing
the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement.
9. The execution, delivery and performance by the Owner Trustee
or First Security, as the case may be, of each of the Owner Trustee
Documents and the issuance, execution, delivery and performance of the
Certificates by the Owner Trustee are not or were not, on the date of
execution thereof, in violation of the charter or by-laws of First
Security or of any law, governmental rule, or regulation of the State
of Utah or the United States of America governing the banking or
trust powers of First Security or, to our knowledge, of any
indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument
to which it is a party or by which it is bound or, to our knowledge,
of any judgment or order of the State of Utah or the United States of
America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the
laws of the State of Utah or any political subdivision thereof in
existence on the date hereof on, based on or measured by any payments
under the Certificates or the beneficial interests in the Lessor's
Estate, by reason of the creation of the trust under the Trust
Agreement, pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement, within
the State of Utah, which would not have been imposed if First
Security did not have its principal place of business and did not
perform its obligations under the Owner Trustee Documents in the
State of Utah.
11. Neither a Utah court nor a federal court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms or
with the consent of the Indenture Trustee, as long as the Lien of the
Indenture on the Trust Indenture Estate has not been released or
payment of the principal of, and premium, if any, and interest on,
the Certificates have not been made in full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner
Participant, holders of a lien against the assets of any such person
that is an Owner Participant, holders of a lien against the assets of
any such person, such as trustees, receivers or liquidators (whether
or not any insolvency proceeding has been commenced) (collectively,
the "Creditors") may acquire valid claims and liens, as to the Trust
Estate, only against the rights of such Owner Participant under the
Trust Agreement or in the Trust Estate, and do not have, and may not
through the enforcement of such Creditor's rights acquire, any
greater rights than such Owner Participant with respect to the Trust
Agreement or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its
properties in any court or before any administrative agency or
arbitrator, which, if adversely determined, would materially
adversely affect the ability of First Security or the Owner Trustee,
as the case may be, to perform its obligations under any of the Owner
Trustee Documents, and there are no pending or, to our knowledge,
threatened actions or proceedings before any court, administrative
agency or tribunal involving First Security or the Owner Trustee, as
the case may be, in connection with the transactions contemplated by
any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah, the federal laws of the United States of America governing the banking
and trust powers of First Security and Title II of the United States Code
entitled "Bankruptcy". However, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended (except
with respect to the opinion set forth in paragraph 1 above concerning the
citizenship of First Security) and (iii) state securities or blue sky laws.
Insofar as the foregoing opinions relate to the validity and enforceability in
the State of Utah of the Certificates and the other Owner Trustee Documents
expressed to be governed by the laws of the State of New York, we have assumed
that the laws of New York are identical to the laws of Utah in all material
respects, and that the Certificates and such Owner Trustee Documents
constitute legal, valid, binding and enforceable documents or instruments
under such laws (as to which we express no opinion). No opinion is expressed
as to the priority of any security interest or as to title to any part of the
Trust Estate.
B. The foregoing opinions regarding enforceability of any
document or instrument, except for the opinions set forth in paragraphs 11 and
12 above, are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of the
Owner Trustee or First Security) on documents and instruments examined by us
are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated May 24, 1996 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the financing
and acquisition of the Aircraft on such date. We hereby consent and agree that
the addressees hereto who were not addressees to the Delivery Date Opinion may
rely on the Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of the
Delivery Date Opinion.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT A(6)
[Letterhead of Bingham, Dana & Gould]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N668FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of February 1, 1993, as amended and restated
as of October 1, 1995 (the "Pass Through Trust Agreement"), as supplemented by
the Series Supplements dated the date hereof between Federal Express
Corporation and the Pass Through Trustee, designated as Series Supplement
1996-A1 and 1996-A2, respectively (the "Series Supplements") and the
Participation Agreement (Federal Express Corporation Trust No. N668FE) dated
as of May 1, 1996, as amended and restated as of June 1, 1996 (as amended and
restated, the "Participation Agreement") among Federal Express, as Lessee,
PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company
of New York, Bank of America NT & SA, The Chase Manhattan Bank (National
Association), Commerzbank AG, Atlanta Agency and NationsBank, N.A. (South), as
Original Loan Participants, First Security Bank of Utah, National Association,
a national banking association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee under the Trust Agreement, State
Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture and State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity, except as
otherwise stated, but solely the Pass Through Trustee. This opinion is being
delivered pursuant to Section 4.01(l)(ix) of the Participation Agreement.
Except as otherwise defined herein, all capitalized terms used herein shall
have the respective meanings set forth in Schedule II to the Participation
Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Pass Through Trustee, as the case may be, is a party, the Pass Through
Trust Agreement and the Series Supplements (collectively, the "Pass Through
Trustee Documents"), the Certificate of the Massachusetts Commissioner of
Banks relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Pass Through Trustee), the conformity
to the originals of all documents reviewed by us as copies, the authenticity
and completeness of all original documents reviewed by us in original or copy
form and the legal competence of each individual executing any document (other
than on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Pass Through Trustee,
as applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Pass Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts with
full corporate power and authority to execute, deliver and carry out,
individually or as Pass Through Trustee, as the case may be, the terms of the
Pass Through Trustee Documents and, in its capacity as Pass Through Trustee,
to authenticate the Pass Through Certificates delivered on the Refunding Date.
Upon execution of the Series Supplements, the Pass Through Trustee will be
deemed to have duly executed the Pass Through Trust Agreement and thereupon
become the Pass Through Trustee under the Pass Through Trust Agreement and the
Series Supplements for all purposes thereof.
2. The execution and delivery of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) by State Street, in
its individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not contravene any Massachusetts or Federal law, rule or regulation governing
the banking or trust powers of State Street or the Pass Through Trustee, or any
order or judgment known to us, of any Massachusetts or Federal court or
governmental authority applicable to or binding on State Street, individually
or as Pass Through Trustee, or contravene the provisions of, or constitute a
default under, or result in the creation of a Lien on any property of State
Street or the Pass Through Trustee under, its charter documents or By-Laws or
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, in each case known to us, or any other
agreement or instrument, in each case known to us, to which State Street,
individually or as Pass Through Trustee, is a party or by which it or any of
its property may be bound or affected, or any Massachusetts or Federal law,
rule or regulation governing the Pass Through Trustee's banking or trust
powers, or any judgement, order or decree known to us as to be applicable to
the Pass Through Trustee, in its individual or trust capacity, of any court,
regulatory body, administrative agency, government or governmental body having
jurisdiction over the Pass Through Trustee, in its individual or trust
capacity, other than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than
the Pass Through Trust Agreement) has been duly authorized, executed and
delivered by State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, and each Pass Through Trust Document constitutes
a legal, valid and binding obligation of State Street, in its individual
capacity or as Pass Through Trustee, as the case may be, enforceable against
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, in accordance with its terms.
5. The Pass Through Certificates have been duly authorized
and validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates acquired by the Underwriters
under the Underwriting Agreement are enforceable against the Pass Through
Trustee and are entitled to the benefits of the related Pass Through Trust
Agreement and the related Series Supplements, except as the enforceability
thereof may be limited by (a) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), (b) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
6. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State Street,
individually or as Pass Through Trustee, to perform its obligations under the
Pass Through Trustee Documents.
7. There are no taxes, fees or other governmental charges
payable under the laws of the State of New York or any political subdivision
thereof in connection with the execution, delivery and performance by the Pass
Through Trustee, in its individual or trust capacity, as the case may be, of
the Pass Through Trustee Documents to which it is a party or in connection with
the execution, issuance and delivery of the Pass Through Certificates by the
Pass Through Trustee, pursuant to the Series Supplements.
8. Neither the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee, in its
individual or trust capacity, as the case may be, nor their respective
Affiliates, successors or assigns, will be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of New York or any political subdivision
thereof (other than taxes imposed on the fees received by State Street Bank
and Trust Company for acting as Pass Through Trustee under the Series
Supplements). Certificate holders who are not residents of or otherwise
subject to tax in New York will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net worth,
capital, franchise or doing business tax), fee or other governmental charge
under the laws of the State of New York or any political subdivision thereof
as a result of purchasing, owning (including receiving payments with respect
to) or selling a Pass Through Certificate. There are no applicable taxes
under the laws of the State of New York or any political subdivision thereof
upon or with respect to (a) the construction, mortgaging, financing,
refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, location, ownership, insurance, control, assembly,
possession, repossession, operation, use, condition, maintenance, repair, sale,
return, abandonment, replacement, preparation, installation, storage,
redelivery, manufacture, leasing, subleasing, modification, rebuilding,
importation, transfer of title, transfer of registration, exportation or other
application or disposition of the Aircraft or any interest in any thereof, (b)
payments of Rent or other receipts, income or earnings arising therefrom or
received with respect to the Aircraft or any interest in any thereof or
payable pursuant to the Lease, (c) any amount paid or payable pursuant to any
Operative Agreements, (d) the Aircraft or any interest therein or the
applicability of the Lease to the Aircraft or any interest in any thereof, (e)
any or all of the Operative Agreements, any or all of the Pass Through
Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification, assumption,
reissuance, refinancing or refunding of any or all thereof, and any other
documents contemplated thereby and amendments or supplements hereto and
thereto, (f) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to, any or all of the Pass Through
Certificates, whether as originally issued or pursuant to any refinancing,
refunding, assumption, modification or reissuance, or any other obligation
evidencing any loan in replacement of the loan evidenced by any or all of the
Pass Through Certificates, or (g) otherwise with respect to or in connection
with the transactions contemplated by the Pass Through Trust Agreement, the
Series Supplements, the Pass Through Certificates and the Operative Agreements,
which would not have been imposed if the Pass Through Trustee had not had its
principal place of business in, had not performed (either in its individual
capacity or as Pass Through Trustee) any or all of its administrative duties
under the Pass Through Trust Agreement, the Series Supplements, the Pass
Through Certificates and the Operative Agreements in, and had not engaged in
any activities unrelated to the transactions contemplated by the Pass Through
Trust Agreement, the Series Supplements, the Pass Through Certificates and the
Operative Agreements in, the State of New York.
With respect to the opinions set forth in paragraphs 7 and 8
above, with your permission we have relied upon, and this opinion is limited
by, the assumptions set forth in the discussion entitled "Certain Massachusetts
Taxes" in the Prospectus Supplement to the Prospectus forming part of
Registration Number No. 33-56569 (the "Registration Statement") for the
registration of the Pass Through Certificates with the Securities and Exchange
Commission. In addition, we have assumed that each Pass Through Trust (as
defined in the Registration Statement) will constitute a grantor trust under
Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended (the "Code"), and will not be classified as a corporation or as a
Partnership (as defined in Section 7701 of the Code), and each Pass Through
Trust does not otherwise engage in business in New York. We express no
opinion as to the correctness of the foregoing assumptions and we have
conducted no independent investigation in this regard.
Very truly yours,
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Agent
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Original Loan Participants
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
NationsBank, N.A. (South)
One NationsBank Plaza
5th Floor
Nashville, TN 37239-1697
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.g]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.c.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.f]
EXHIBIT E-1
[FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT]
BENEFICIAL INTEREST TRANSFER AGREEMENT (this "Document"), dated
as of _______ __, ____, between ______________, a ______________
corporation ("Transferor") and ______________, a ______________ corporation
("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer
by Transferor to Transferee of all of the rights, title and interest of
Transferor in and to its interest (the "Beneficial Interest") under the
Trust Agreement, dated as of _______________, 1996 (as heretofore amended,
the "Trust Agreement"), between Transferor and First Security Bank of Utah,
National Association, and the Lessor's Estate created thereunder, and all
of Transferor's rights and obligations under the Participation Agreement,
dated as of ____________, 1996 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee, First Security Bank of Utah,
National Association, as Owner Trustee, PMCC Leasing Corporation, as Owner
Participant, State Street Bank and Trust Company, as Indenture Trustee,
State Street Bank and Trust Company, as Pass Through Trusteea and the
Original Loan Participants parties thereto, and under the other Operative
Agreements and (b) the acceptance by Transferee of such transfer and the
assumption by Transferee of such obligations of Transferor thereunder; and
WHEREAS, Section 7.03(d) of the Participation Agreement permits
such transfer and assumption upon satisfaction of certain conditions
heretofore or concurrently herewith being observed;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto agree
as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Participation Agreement.
2. Transfer. Transferor does hereby sell, convey, assign,
transfer and set over, unto Transferee, as of the Effective Time (as
defined below), all of Transferor's present and future right, title and
interest in and to (a) all of the Beneficial Interest and (b) all of the
Owner Participant's rights and obligations under the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements and any proceeds therefrom, together with all other
documents and instruments evidencing any of such right, title and interest,
except such rights of Transferor as have arisen or accrued to Transferor
prior to the Effective Time (including without limitation, the right to
receive any amounts due or accrued to Transferor under the Operative
Agreements as of a time prior to the Effective Time and the right to
receive any indemnity payment pursuant to the Participation Agreement or
the Tax Indemnity Agreement, with respect to events occurring prior to such
time); all of the foregoing that is being transferred under this paragraph
2, the "Transferred Interest".
3. Assumption. Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of Transferor and the other
parties to the Participation Agreement, assumes and undertakes and agrees
to perform and discharge all of the duties and obligations of Transferor
with respect to the Transferred Interest whenever and wherever accrued
(other than duties and obligations of Transferor required to be performed
by it on or prior to the Effective Time). Transferee hereby confirms that,
from and after the Effective Time, Transferee (a) shall be deemed, to the
extent set forth in Section 2 hereof, the "Owner Participant" party to the
Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement
and the other Operative Agreements and (b) shall be bound by all of the
terms of the Operative Agreements to the extent the same relate to the
Transferred Interest.
4. Release of Transferor. At the Effective Time, Transferor
shall be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
Transferor shall in no event be released from any such duty or obligations
arising or relating to any event occurring prior to the Effective Time, or on
account of any breach by Transferor of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements, or for any
fraudulent or willful misconduct engaged in by it prior to the Effective Time,
or from any obligation that relates to any indemnity claimed by Transferor or
any Lessor's Lien attributable to Transferor.
5. Fees and Expenses. The fees, expenses and charges of the
parties to the Participation Agreement incurred in connection with the
transfer effected hereby shall be for the account of [specify
Transferor/Transferee].
6. Payments. Transferor hereby covenants and agrees to pay
over to Transferee, if and when received following the Effective Time, any
amounts (including any sums payable as interest in respect thereof) paid on
account of the Transferred Interest to or for the benefit of Transferor, and
Transferee hereby covenants and agrees to pay over to Transferor, if and when
received following the Effective Time, any amounts (including any sums payable
as interest in respect thereof) paid to or for the benefit of Transferee that
are not attributable to the Transferred Interest and to which Transferor is
otherwise entitled.
7. Investment Purpose. Transferee hereby represents and
warrants that, as of the date hereof, it is acquiring the Transferred Interest
for its account with no present intention of distributing such Transferred
Interest or any part thereof in any manner which would violate the Securities
Act of 1933, as amended, but without prejudice, however, to the right of
Transferee at all times to sell or otherwise dispose of all or any part of
such Transferred Interest in compliance with Section 7.03(d) of the
Participation Agreement.
8. Representations and Warranties of Transferor. Transferor
represents and warrants to Transferee that as of the Effective Time:
(a) Organization and Power. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal
right to execute, deliver and perform this Agreement and to enter into
and carry out the transactions contemplated hereby and in the other
Operative Agreements (the "Transactions").
(b) Authorization, Execution and Validity. This Agreement has
been duly authorized, executed and delivered by Transferor and
constitutes the legal, valid and binding obligation of Transferor,
enforceable against it in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity.
(c) Conflict. The execution, delivery and performance by
Transferor of this Agreement and compliance by Transferor with all of
the provisions hereof do not contravene any regulation or any order of
any governmental authority applicable to or binding on Transferor, or
contravene the provisions, or constitute a default by Transferor under,
its certificate of incorporation or by-laws or any indenture, mortgage,
contract or other agreement or instrument to which Transferor is a party
or by which Transferor or any of its Properties is bound or affected.
(d) Consents. No consent, approval or authorization of, or
filing, registration or qualification with, or the giving of notice or
the taking of any other action with respect to, any governmental
authority on the part of Transferor is required in connection with the
execution, delivery and performance by Transferor of this Agreement.
(e) Litigation. There are no proceedings pending or, to the
knowledge of Transferor, threatened against Transferor before any
governmental authority that would materially and adversely affect the
ability of Transferor to consummate the Transactions.
(f) No Liens. The Trust Estate is free of Lessor's Liens
attributable to Transferor.
(g) Compliance with Operative Agreements. Transferor has fully
performed all of its obligations under the Participation Agreement and
under each other Operative Agreement which obligations by their terms
are required to be satisfied or performed prior to the Effective Time or
prior to the consummation of the Transactions.
(h) Default. As a result of the transfer effected hereby, no
Indenture Default attributable to the Owner Participant or the Owner
Trustee has occurred and is continuing.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the
nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship,
design, patent or trademark infringement, operation, merchantability or
fitness for use of the Aircraft.
9. Representations and Warranties of Transferee.
Transferee represents and warrants to Transferor and to the other parties to
the Participation Agreement that as of the Effective Time:
(a) Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of [ ], has
the full corporate power, authority and legal right to carry on its
business as now conducted, and has full corporate power, authority and
legal right to execute, deliver and perform this Agreement and to enter
into and carry out the transactions contemplated hereby and in the other
Operative Agreements (the "Transactions");
(b) Transferee has full corporate power, authority and legal
right to execute, deliver and enter into this Agreement and the other
Operative Agreements and full corporate power and authority to perform
its obligations thereunder, and such execution, delivery and performance
do not and will not contravene any applicable law or any order of any
governmental authority applicable to or binding on the Transferee, or
contravene the provisions of, or constitute a default under, or result
in the creation of any Lien upon the property of the Transferee under,
its articles of incorporation or by-laws or any material indenture,
mortgage, contract or other agreement or instrument to which the
Transferee is a party or by which it or any of its property may be bound
or affected;
(c) the execution, delivery and performance of this Agreement by
the Transferee (i) has been duly authorized by all necessary corporate
action and (ii) does not require any approval of the shareholders of the
Transferee or any approval or consent of, or notice to, any trustee or
holders of any indebtedness or obligation of the Transferee, except for
such approvals and consents as have already been obtained;
(d) this Agreement has been duly executed and delivered by the
Transferee, and constitutes the legal, valid and binding obligation of
the Transferee, enforceable against the Transferee in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(e) there are no proceedings or actions pending or, to the
knowledge of the Transferee, threatened against the Transferee before
any governmental authority in which there is a reasonable probability of
an adverse determination that individually or in the aggregate would
materially and adversely impair the ability of the Transferee to perform
its obligations under this Agreement or the Operative Agreements, or
which involve the Transactions or question the validity of any Operative
Agreement to which the Owner Participant is a party or any action taken
or to be taken pursuant thereto; and the Transferee is not in default
with respect to any order of any governmental authority which involves
the Transactions or the default under which would materially and
adversely affect the ability of the Transferee to perform its
obligations under this Agreement or any of the Operative Agreements;
(f) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any governmental authority is required under any law for the
execution and delivery by the Transferee of this Agreement, or the
carrying out by the Transferee of any of the Transactions, other than
any such consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken;
(g) the Lessor's Estate is free of any Lessor's Liens
attributable to the Transferee;
(h) the Transferee, upon execution of this Agreement, will not
be in default under any of the Operative Agreements;
(i) no part of the funds to be used by it to acquire the
interests acquired by the Owner Participant under the Participation
Agreement constitutes assets (within the meaning of ERISA and any
applicable rules and regulations) of any employee benefit plan subject
to Title I of ERISA or of any plan or individual retirement account
subject to Section 4975 of the Code;
(j) Transferee is a "U.S. Person" as defined in Section
7701(a)(30) of the Code and is not a tax resident of another country and
if it shall at any time cease to be such a "U.S. Person" or shall become
a tax resident of another country, it shall furnish to the Agent and
each Loan Certificate Holder an indemnity, in form and substance
reasonably satisfactory to such Loan Certificate Holder, for any Taxes
that may be imposed on such Holder as a result of its failure to be such
a "U.S. Person" or as a result of its being a tax resident of another
country, and it shall be personally liable for any debt service to the
extent that the receipt of rentals is reduced by reason of any
withholding Taxes that result from such failure to be such a "U.S.
Person" or from being a tax resident of another country;
(k) [After giving effect to a voting trust or similar
agreement(1), Transferee is a Citizen of the United States] [applicable
if Aircraft is registered in the United States or is proposed to be so
registered]
- ----------------
(1) Such voting trust or similar agreement must be reasonably satisfactory to
the Lessor and the Indenture Trustee.
(l) On and as of the Effective Date, the representations and
warranties of the Owner Participant in Article 7 of the Participation
Agreement are true and correct as to the Transferee; and
(m) Transferee satisfies the conditions applicable to a
transferee of the Beneficial Interest set forth in Section 7.03(d) of
the Participation Agreement, including without limitation, the condition
set forth in the last sentence thereof [and to the extent the same has
been requested by the Lessee or the Indenture Trustee, Transferee has
heretofore provided to the Lessee and the Indenture Trustee its most
recent audited financial statements, which show a consolidated tangible
net worth or combined capital and surplus of at least $75,000,000]
[remove bracketed language if an Owner Participant Guaranty is
provided].
(n) the Transferee has, independently and without reliance upon
any other party (including without limitation the Transferor) and based
on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement, and the
Transferee has established adequate means of obtaining from Lessee on a
continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the financial
condition, operations, properties and prospects of Lessee.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the nature or
use of the equipment owned by the Owner Trustee, including, without
limitation, the airworthiness, value, condition, workmanship, design, patent
or trademark infringement, operation, merchantability or fitness for use of
the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of it under applicable aviation law.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
11. Effectiveness. This Agreement shall be effective upon the
mutual execution and delivery of this Agreement (the "Effective Time").
12. Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute a single instrument.
It shall not be necessary that any counterpart be signed by both parties so
long as each party shall sign at least one counterpart.
13. Beneficiaries. Each of the Owner Trustee, the Indenture
Trustee, the Loan Participants and the Lessee, together with their respective
successors and permitted assigns, is and shall be deemed a third party
beneficiary of this Agreement entitled to enforce this Agreement directly and
in its own name and enforce any rights or claims of the parties hereto.
14. Further Assurances. Each party agrees that from time to
time after the Effective Time, it shall execute and deliver or cause to be
executed and delivered such instruments, documents and papers, and take all
such further action as may be reasonably required in order to consummate fully
the purposes of this Agreement and to implement the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
[TRANSFEROR]
By:____________________________
Name:
Title:
[TRANSFEREE]
By:____________________________
Name:
Title:
EXHIBIT E-2
[FORM OF OWNER PARTICIPANT GUARANTY]
TRANSFEREE'S PARENT GUARANTY, dated as of ___________ __, ____,
(this "Guaranty") by ____________________, a ___________ corporation (the
"Guarantor"), to First Security Bank of Utah, National Association, in its
individual capacity and as Owner Trustee, State Street Bank and Trust Company,
as Indenture Trustee, State Street Bank and Trust Company, as Pass Through
Trustee, the Original Loan Participants and the Lessee referred to in the
Participation Agreement described below (collectively, together with their
successors and assigns and the holders from time to time of the Loan
Certificates, the "Beneficiaries").
W I T N E S S E T H :
WHEREAS, ___________, a ____________ corporation (the
"Transferor"), is party to the Participation Agreement, dated as of
____________, 1996 (as amended, modified or supplemented from time to time,
the "Participation Agreement"), among Federal Express Corporation, as Lessee,
PMCC Leasing Corporation, as Owner Participant, First Security Bank of Utah,
National Association, as Owner Trustee, State Street Bank and Trust Company,
as Indenture Trustee, State Street Bank and Trust Company, as Pass Through
Trustee, and the Original Loan Participants parties thereto; and
WHEREAS, the Transferor wishes to transfer, among other things,
all of the rights, title and interest of the Transferor in and to the
Beneficial Interest under the Trust Agreement and the Lessor's Estate
created thereunder, and all of the Transferor's rights and obligations
under the Participation Agreement, the Trust Agreement and the other
Operative Agreements to __________________, a _______________ [corporation]
(together with its successors and assigns, the "Transferee"), a subsidiary
of the Guarantor, pursuant to the Beneficial Interest Transfer Agreement,
dated as of the date hereof (the "Transfer Agreement"), between the
Transferor and the Transferee; and
WHEREAS, the terms of the Participation Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guaranty by the Guarantor;
NOW, THEREFORE, in order that the Transferor may make the
aforementioned transfer to the Transferee, the Guarantor hereby agrees with
and for the benefit of the Beneficiaries as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the
Participation Agreement or the Transfer Agreement.
2.Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely surety, to the
Beneficiaries the prompt and complete payment by the Transferee when due of
all payment obligations of the Transferee under the Operative Agreements
without offset or deduction and the timely performance of all other
obligations of the Transferee thereunder (such payment and other
obligations, the "Obligations"), and the Guarantor further agrees to pay
any and all expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be paid or incurred by the Beneficiaries in
enforcing any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantor under this Guaranty.
The Guarantor will not exercise any rights that it may now or
hereafter acquire against Transferee that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty,
the Transferred Interest or the Operative Agreements, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against Transferee or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from Transferee,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations have been performed in full and all
other amounts payable under this Guaranty shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the final payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of any Beneficiary and shall forthwith
be paid to such Beneficiary to be credited and applied to the Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured,
in accordance with the terms of the Operative Agreements, or to be held as
collateral for any Obligations or other amounts payable under this Guaranty
thereafter arising.
3. No Subrogation. Notwithstanding anything to the contrary in
this Guaranty, the Guarantor hereby agrees not to assert any rights which may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the Bankruptcy Code, under common law or
otherwise) of any Beneficiary against the Transferee for the payment of the
Obligations until all of the Obligations shall have been satisfied by payment
and performance in full.
4. Amendments with Respect to the Obligations; Waiver of
Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment or
performance of any of the Obligations made by any Beneficiary may be rescinded
by such party and any of the obligations continued, and the Obligations, may,
from time to time, in whole or part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Beneficiary
and any Operative Agreement may be amended, modified, supplemented or
terminated, in whole or in part, in accordance with the provisions thereof
from time to time. When making any demand hereunder against the Guarantor, a
Beneficiary may, but shall be under no obligation to, make a similar demand on
the Transferee, and any failure by a Beneficiary to make any such demand or to
collect any payments from the Transferee or any release of the Transferee
shall not relieve the Guarantor of its obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied,
or as a matter of law, of any Beneficiary against the Guarantor. For the
purposes hereof, "demand" shall include the commencement and continuance of
any legal proceedings. The Guarantor represents and warrants that it is
the parent of the Transferee, and agrees that its obligations hereunder
shall continue unimpaired, even if the Guarantor is no longer an Affiliate
of the Transferee.
5. Guaranty Absolute and Unconditional. The Guarantor
guarantees that the Obligations will be paid and performed strictly in
accordance with the terms of the Transfer Agreement and the Operative
Agreements, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any such terms or the rights of any
Beneficiary with respect thereto. The obligations of the Guarantor under this
Guaranty are independent of the Obligations or any other obligations of any
other party, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether the
Transferee or any other party is joined in any such action or actions. The
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guaranty; and all dealings between the Transferee or the
Guarantor and any Beneficiary shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Guaranty. The Guarantor waives,
to the fullest extent permitted by applicable law, diligence, presentment,
promptness, protest, mitigation of damages by the Beneficiaries demand for
payment and notice of default or nonpayment to or upon the Transferee or the
Guarantor with respect to the Obligations. The Guarantor further waives any
right to revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Obligations, whether existing now or
in the future. The Guarantor understands and agrees that, to the fullest
extent permitted by applicable law, this Guaranty shall be construed as a
continuing, absolute and unconditional guaranty of payment and performance
(and not merely of collectibility) without regard to:
(a) the validity, regularity or enforceability of the Transfer
Agreement, any Operative Agreement, or any of the Obligations at any
time or from time to time held by any Beneficiary;
(b) any defense, set-off, rebate, adjustment, withholding,
deduction or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by the
Transferee against any Beneficiary or any agreement or instrument
relating thereto or;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations or any other
obligations of any other party under the Transfer Agreement, the
Operative Agreements, or any other amendment or waiver of or any consent
to departure from the Transfer Agreement or other Operative Agreements;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(e) any change, restructuring or termination of the corporate
structure or existence of the Guarantor or the Transferee or any of the
Affiliates of either;
(f) any defect in the title, condition, design, operation or
fitness of, or any interference with the operation, use or possession
of, the Aircraft;
(g) any failure to establish, perfect or preserve title to or
any security interest in or to the Aircraft or any other collateral
security for the Obligations; or
(h) any other circumstance whatsoever or any existence of or
reliance on any representation by any Beneficiary that might otherwise
constitute a defense available to, or a discharge of, the Guarantor or
any other guarantor or surety.
When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue
such rights and remedies as it may have against the Transferee for the
Obligations, and any failure by any Beneficiary to pursue such other rights or
remedies or to collect any payments from the Transferee, or any release of the
Transferee, shall not, to the fullest extent permitted by applicable law,
relieve the Guarantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Beneficiary against the Guarantor. This Guaranty is a
continuing guaranty and shall remain in full force and effect until the
earlier of (x) the date that all of the Obligations are satisfied by payment
and performance in full and (y) the date that all right, title and interest of
the Transferee shall have been transferred to a Person meeting the
requirements of Section 7.03(d) of the Participation Agreement in accordance
with said section; provided that this Guaranty shall remain in full force and
effect with respect to obligations relating to the period prior to such
transfer.
6. Reinstatement. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Beneficiary upon the insolvency, bankruptcy
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made and the Guarantor agrees that it will
indemnify any such Beneficiary on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) by
such Beneficiary in connection with such rescission or restoration.
7. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction, rebate,
adjustment or withholding, and shall be made in U.S. Dollars in immediately
available funds.
8. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and the Transferee is currently a subsidiary of the
Guarantor;
(b) the Guarantor has the power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guaranty
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor or any of its constitutive documents;
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or governmental authority and no
consent of any other person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty;
(f) the Guarantor is a [a bank, savings institution, finance
company, leasing company or trust company, national banking association
acting for its own account or in a fiduciary capacity as trustee or
agent under any pension, retirement, profit sharing or similar trust or
fund, insurance company, fraternal benefit society or corporation acting
for its own account having a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent)] of not
less than $75,000,000 [and has, if the same have been requested by the
Lessee or the Indenture Trustee, heretofore furnished to the Lessee and
the Indenture Trustee copies of its most recent audited financial
statements];
(g) there are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived; and
(h) the Guarantor has, independently and without reliance upon
any Beneficiary and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter
into this Guaranty, and the Guarantor has established adequate means of
obtaining from Transferee on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar
with, the financial condition, operations, properties and prospects of
Transferee.
9. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. Jurisdiction; Waiver of Jury Trial, Etc.
(a) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting
in New York, New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Guaranty, the Transfer
Agreement or any Operative Agreement to which it is or is to be a party, or
for recognition or enforcement of any judgment, and the Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The
Guarantor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty
shall affect any right that any party may otherwise have to bring any action
or proceeding relating to this Guaranty, the Transfer Agreement or any
Operative Agreement to which it is or is to be a party in the courts of any
jurisdiction.
(b) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty, the Transfer Agreement or any
Operative Agreement to which it is or is to be a party in any New York State
or federal court. The Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
11. Section Headings. The Section headings used in this
Guaranty are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
12. No Waiver; Cumulative Remedies. No Beneficiary shall by any
act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any Beneficiary, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right power or privilege. A waiver by a
Beneficiary of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that such Beneficiary would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. Amendments and Waivers. None of the terms or provisions of
this Guaranty may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by the Guarantor and each Beneficiary.
14. Successors and Assigns. This Guaranty shall be binding upon
the successors and assigns of the Guarantor and shall inure to the benefit of
the Beneficiaries and their respective successors and permitted assigns but
Guarantor may not assign this Guaranty without prior written consent of the
Beneficiaries except to an assignee making, as of the date of such assignment,
(i) representations and warranties substantially similar to those contained in
Section 8 hereof and (ii) a representation that it is a U.S. citizen, unless,
in the case of the preceding clause (ii) any of (a) the aircraft is not then
registered in the United States nor contemplated to be so registered or (b) a
voting trust or similar arrangement reasonably satisfactory to the
Beneficiaries is in place with respect to such registration or (c) it is not
necessary for the Guarantor to be a U.S. citizen in order for the aircraft to
remain registered in the United States.
15. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given
or made, when delivered by hand or by mail, upon receipt, or, when delivered
by facsimile transmission, upon being sent and confirmed, addressed (a) in the
case of the Guarantor, to the Guarantor at the address set forth under its
signature below, and (b) in the case of any Beneficiary, to such Beneficiary
at the address provided for such Beneficiary in or pursuant to the
Participation Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
[NAME OF GUARANTOR]
_________________________________
Name:
Title:
__________________________________
__________________________________
__________________________________
Address for Notices:
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N669FE)
Dated as of June 1, 1996
among
FEDERAL EXPRESS CORPORATION,
Lessee
PMCC LEASING CORPORATION,
Owner Participant
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 774, REGISTRATION NO. N669FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 4
Section 2.03. Owner Participant's Instructions to Owner Trustee........ 5
Section 2.04. Pre-Delivery Date Adjustments to Basic Rent, Stipulated
Loss Values and Termination Values....................... 5
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date......................... 5
Section 3.02. Commitments to Participate in Purchase Price............. 6
Section 3.03. Owner Participant's Instructions to Owner Trustee........ 8
Section 3.04. Transaction Costs........................................ 8
Section 3.05. Postponement of Delivery Date............................ 9
Section 3.06. Closing.................................................. 10
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date).......... 10
Section 4.02. Conditions Precedent (Delivery Date)..................... 18
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.... 25
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 26
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 26
Section 6.02. Offering by Lessee....................................... 32
Section 6.03. Certain Covenants of Lessee.............................. 33
Section 6.04. Survival of Representations and Warranties............... 40
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 41
Section 7.02. Citizenship.............................................. 41
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 43
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee........................................ 47
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 50
Section 7.06. Indenture Trustee's Notice of Default.................... 51
Section 7.07. Releases from Indenture.................................. 51
Section 7.08. Covenant of Quiet Enjoyment.............................. 51
Section 7.09. Pass Through Trustee's Representations and Warranties.... 52
Section 7.10. Survival of Representations, Warranties and Covenants.... 53
Section 7.11. Lessee's Assumption of the Certificates.................. 53
Section 7.12. Indebtedness of Owner Trustee............................ 55
Section 7.13. Compliance with Trust Agreement, Etc..................... 55
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 56
Section 8.02. After-Tax Basis.......................................... 61
Section 8.03. Time of Payment.......................................... 62
Section 8.04. Contests................................................. 62
Section 8.05. Refunds.................................................. 64
Section 8.06. Lessee's Reports......................................... 65
Section 8.07. Survival of Obligations.................................. 66
Section 8.08. Payment of Taxes......................................... 66
Section 8.09. Reimbursements by Indemnitees Generally.................. 66
Section 8.10. Obligations of Lessee Unsecured.......................... 66
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 66
Section 9.02. After-Tax Basis.......................................... 70
Section 9.03. Subrogation.............................................. 71
Section 9.04. Notice and Payment....................................... 71
Section 9.05. Refunds.................................................. 71
Section 9.06. Defense of Claims........................................ 72
Section 9.07. Survival of Obligations.................................. 72
Section 9.08. Effect of Other Indemnities.............................. 73
Section 9.09. Interest................................................. 73
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 73
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 76
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 77
Section 12.02. Interest of Holders of Certificates..................... 77
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 78
Section 13.02. Further Assurances...................................... 78
Section 13.03. Pass Through Trustee's Acknowledgement.................. 78
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 78
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 79
Section 15.02. Reoptimization.......................................... 83
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 84
Section 17.02. Collateral Account...................................... 85
Section 17.03. Counterparts............................................ 85
Section 17.04. No Oral Modifications................................... 85
Section 17.05. Captions................................................ 86
Section 17.06. Successors and Assigns.................................. 86
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and the
Pass Through Trustee.................................... 86
Section 17.08. Severability............................................ 87
Section 17.09. Public Release of Information........................... 87
Section 17.10. Certain Limitations on Reorganization................... 87
Section 17.11. GOVERNING LAW........................................... 88
Section 17.12. Section 1110 Compliance................................. 88
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 88
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
SCHEDULE IV Debt Portion
EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel
(Certificate Closing Date)
EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel
(Delivery Date)
EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel
(Delivery Date)
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4)(a) Opinion of Owner Trustee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(4)(b) Opinion of Owner Trustee's Special Counsel
(Delivery Date)
EXHIBIT A(5) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(7) Opinion of Manufacturer's and AVSA's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement, AVSA Consent and Agreement
EXHIBIT F Form of Engine Warranty Assignment and Engine Consent
EXHIBIT G-1 Form of Assignment and Assumption Agreement
EXHIBIT G-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N669FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N669FE) dated as of June 1, 1996 (this "Agreement") among FEDERAL EXPRESS
CORPORATION, a Delaware corporation (herein, together with its successors and
permitted assigns, the "Lessee"), PMCC LEASING CORPORATION, a Delaware
corporation (herein, together with its successors and permitted assigns, the
"Owner Participant"), FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity as trustee, together with its
successors and permitted assigns, the "Owner Trustee"), STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, not in its individual capacity,
except as otherwise expressly stated herein, but solely as indenture trustee
under the Indenture referred to below (in such capacity as trustee, together
with its successors and permitted assigns, the "Indenture Trustee") and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as pass through trustee (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Owner Participant has entered into the Trust Agreement
with the Owner Trustee in its individual capacity, substantially in the form
of Exhibit D hereto, pursuant to which Trust Agreement the Owner Trustee
agrees, among other things, to hold the Lessor's Estate for the benefit of the
Owner Participant on the terms specified in the Trust Agreement, subject to
the Lien of the Indenture.
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering will be
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the interest rate and Maturity applicable thereto.
WHEREAS, concurrently with the execution and delivery hereof, the
Owner Trustee and the Indenture Trustee are entering into the Indenture for
the benefit of the Pass Through Trustee, pursuant to which the Owner Trustee
is issuing the Certificates to the Pass Through Trustee as evidence of the
loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of
which loans will be deposited by the Owner Trustee in the Collateral Account.
WHEREAS, prior to the Delivery Date, the Certificates will be secured
by the Liquid Collateral.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from AVSA;
(b) on the Certificate Closing Date, to execute and deliver the
Lease substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in said Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from
the Owner Trustee, the Aircraft on the Delivery Date, such lease to be
effected by the execution and delivery of a Lease Supplement, in the form
of Exhibit A to the Lease, covering the Aircraft and incorporating by
reference all of the terms of the Lease;
(c) on the Certificate Closing Date, to execute and deliver the
Indenture, substantially in the form of Exhibit C hereto, for the benefit
of the Holders from time to time of the Certificates, pursuant to which the
Owner Trustee agrees, among other things, (A) to deposit, mortgage and
pledge with the Indenture Trustee, as part of the Trust Indenture Estate,
all of the Lessor's Estate but not Excepted Payments, (B) on the
Certificate Closing Date, to issue Certificates substantially in the form
set forth in Exhibit B to the Indenture, the proceeds of the sale of which
will be held by the Owner Trustee in the Collateral Account until released
on the Delivery Date for use by the Owner Trustee (or, in certain
circumstances, the Lessee) towards payment of the Purchase Price for the
Aircraft, and (C) on the Delivery Date, to execute and deliver the
Indenture and Security Agreement Supplement, substantially in the form of
Exhibit A to the Indenture, covering the Aircraft and supplementing the
Indenture;
(d) on the Certificate Closing Date, to execute and deliver the
Purchase Agreement Assignment, whereby the Lessee assigns to the Owner
Trustee the right to purchase the Aircraft from AVSA and certain of the
Lessee's rights and interests under the Purchase Agreement and the Consent
and Guaranty to the extent that the same relate to the Aircraft (except to
the extent reserved in said Purchase Agreement Assignment), which Purchase
Agreement Assignment is to include as an annex a Consent and Agreement
executed by the Manufacturer and the AVSA Consent and Agreement executed by
AVSA, said Purchase Agreement Assignment, Consent and Agreement and AVSA
Consent and Agreement to be substantially in the form of Exhibit E hereto;
and
(e) on the Certificate Closing Date, to execute and deliver the
Engine Warranty Assignment, whereby the Lessee assigns to the Owner Trustee
certain of the Lessee's rights and interests under the GTA to the extent
that the same relate to the Engines (except to the extent reserved in the
Engine Warranty Assignment), which Engine Warranty Assignment is to include
as an annex an Engine Consent executed by the Engine Manufacturer, said
Engine Warranty Assignment and Engine Consent to be substantially in the
form of Exhibit F hereto.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment, the Engine
Warranty Assignment, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale and
the Airbus Guaranty, the Owner Trustee will purchase, and receive title to,
the Aircraft from AVSA and lease the Aircraft to the Lessee pursuant to the
Lease (or, in certain, circumstances, the Lessee will purchase the Aircraft).
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Certificate Closing Date, on behalf of each Pass Through
Trust, from an allocable amount of the proceeds of the sale of the related
Pass Through Certificates, the Pass Through Trustee shall purchase the
Certificates specified for such Pass Through Trust on Schedule I hereto. For
each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to
the principal amount of Certificates of the Maturity and having the interest
rate that relates to such Pass Through Trust, which amounts in the aggregate
shall equal the aggregate principal amount of the Certificates as specified in
Section 2.04 of the Indenture. The aggregate amount payable by the Pass
Through Trustee pursuant to this Section 2.01(b) shall be payable by wire
transfer or intra-bank transfer to the Indenture Trustee on behalf of the
Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall,
on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank
transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the
Collateral Account pursuant to the Indenture.
(d) On the Certificate Closing Date concurrently with the events
specified in Section 2.01(b) hereof, the parties hereto shall execute and
deliver, to the extent they are parties thereto, and consent to the execution
and delivery of (if they are not parties thereto), the Lease, the Indenture
and the Trust Agreement, and the other documents listed in Section 4.01(d)
hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the applicable Pass Through Trustee, upon the request of the Owner
Trustee, the Certificates as provided in Section 2.02 hereof.
(e) The Closings shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Certificate Closing Date, the Owner
Participant will instruct the Owner Trustee to execute and deliver to the
Indenture Trustee, and the Indenture Trustee shall authenticate and deliver,
upon the request of the Owner Trustee, to the Pass Through Trustee for each
Pass Through Trust, the Certificates specified for such Pass Through Trust on
Schedule I attached hereto, which (i) shall be issued in the principal amount
and in the Maturity set forth for such Certificate in Schedule I hereto, (ii)
shall bear interest at the interest rate set forth for such Certificate in
Schedule I hereto, (iii) shall be issued in such form and on such terms as are
specified in the Indenture, (iv) shall be dated and authenticated on the
Certificate Closing Date and shall bear interest from the Certificate Closing
Date and (v) shall be registered in the name of the Pass Through Trustee on
behalf of such Pass Through Trust.
Section 2.03. Owner Participant's Instructions to Owner Trustee. The
Owner Participant agrees that the issuance of Certificates in accordance with
the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the action
specified in Section 1.01 (other than clauses (a) and (c)) of the Trust
Agreement and confirmation that all conditions to closing in respect of the
Certificate Closing Date set forth in Section 4.01 (but not Section 4.02)
hereof were either met to the satisfaction of the Owner Participant or, if not
so met, were in any event waived by it.
Section 2.04. Pre-Delivery Date Adjustments to Basic Rent,
Stipulated Loss Values and Termination Values. On or prior to the Delivery
Date, the percentages for Owner Participant Amount and Basic Rent referred to
in Schedule II of the Lease and the percentages for Stipulated Loss Value and
Termination Value in Schedule III and Schedule IV, respectively, of the Lease
shall be adjusted (upward or downward), subject to the procedures set forth in
Section 3.04 of the Lease and the minimum values established by Section 3.05
of the Lease and the definitions of Stipulated Loss Value and Termination
Value, to reflect changes in the pricing assumptions with respect to (i) the
Delivery Date being other than June 25, 1996, (ii) a different rate of
interest or amortization schedule assumed by the Owner Participant in
calculating such percentages from that assumed by the Owner Participant in
originally calculating such percentages, (iii) Transaction Costs being other
than as assumed in Section 10.01 hereof, (iv) any change in the length of the
Interim Term or the Basic Term (but in no event shall the Term exceed 23.25
years) and (v) a Change in Tax Law which occurs after the date of the
execution of this Agreement but on or prior to the Delivery Date.
Notwithstanding anything herein to the contrary, the Lessee shall have no
obligation to enter into the transaction contemplated by this Agreement other
than with respect to Transaction Costs as described in Section 2.03 below and
its obligation to purchase the Aircraft as provided in Section 3.05(a) hereof
if, as a result of a Change in Tax Law after the date of execution of this
Agreement but on or prior to the Delivery Date, the Net Present Value of Rents
is increased by 150 basis points or more.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for
the Aircraft, the serial number of the Airframe and each Engine, and the
Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) the Indenture Trustee agrees to release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account together with the Lessee Shortfall (as defined in clause (iii) below),
if any, to the Owner Trustee for application to the Purchase Price as provided
below, (ii) the Owner Participant agrees to participate in the Lessor's
payment of the Purchase Price by making an investment in the beneficial
ownership of the Lessor's Estate in an amount equal to the amount set forth
in Ancillary Agreement II, (iii) the Lessee agrees to pay to the
Indenture Trustee excess, if any, of (I) the Debt Portion over (II) the
amount as may then be held in the Collateral Account (the "Lessee Shortfall")
as provided in Section 17.02(a) hereof, and (iv) pursuant to the Purchase
Agreement as assigned pursuant to the Purchase Agreement Assignment,
AVSA shall sell the Aircraft to the Owner Trustee and the Owner Trustee shall
immediately thereafter lease the Aircraft to the Lessee pursuant to the Lease.
In consideration for the assignment to the Owner Trustee by the Lessee under
the Purchase Agreement Assignment of the Lessee's right to purchase the
Aircraft for the remaining balance due under the Purchase Agreement and for
the transfer of title to the the Aircraft from AVSA to the Owner Trustee, the
following cash payments will be made by wire transfer of immediately available
funds on the Delivery Date: (A) by the Owner Trustee to AVSA, an amount equal
to the remaining balance due to AVSA under the Purchase Agreement for the
Aircraft, as evidenced by the Invoice, (B) by the Owner Trustee to the Lessee,
an amount equal to the Purchase Price minus the cash payment to AVSA pursuant
to clause (A) above and (C) by the Indenture Trustee, on behalf of the Owner
Trustee, to the Lessee the excess of any amounts as may then be held in the
Collateral Account over the Debt Portion.
(b) Payment of Commitment. The Owner Participant agrees with the
Lessee and only with the Lessee on behalf of the Owner Trustee, subject to the
terms and conditions of this Agreement, to make the amount of its Commitment
available for and on account of the Owner Trustee on the Delivery Date
specified in the Delivery Notice pursuant to Section 3.03 hereof by wire
transfer, initiated by 10:00 a.m. (New York City time on such day) of such
amount in immediately available funds, to the Owner Trustee for deposit in its
account at The First National Bank of Chicago, ABA No. 071000013, Account
Number 10-47272, Attention: Margaret Kennelly, Reference Federal Express.
The amount of the Owner Participant's Commitment shall be held for the account
of the Owner Participant by the Owner Trustee until released by the Owner
Participant or its special counsel at closing or until returned to the Owner
Participant in accordance with Section 3.02(c) hereof.
(c) No Obligation to Increase Commitments; Delayed Delivery. (i) If
the Indenture Trustee shall default in its obligation to make the amount of
its Debt Portion available pursuant hereto, the Owner Participant shall have
no obligation to make any portion of such Debt Portion available or to
increase the amount of its respective Commitment, and the obligations of the
Owner Participant shall remain subject to the terms and conditions of this
Agreement.
(ii) Subject to the provisions of Section 3.05 hereof, if the closing
of the transactions contemplated by the Operative Agreements shall not have
been consummated by 2:00 p.m. (New York City time), or such earlier time as
directed by the Lessee, on the Scheduled Delivery Date, the Owner Trustee
shall, if instructed in writing by the Lessee, at the risk and expense of the
Lessee, use its reasonable best efforts to cause the Owner Participant's
Commitment to be invested and reinvested to the extent practicable at the
direction received by it from the Lessee (with a copy to the Owner
Participant), at the risk of the Lessee, in Permitted Investments consisting
of either commercial paper or time deposits; provided, however, that in the
absence of instructions by 2:00 p.m. (New York City time) the Owner Trustee
shall use its reasonable best efforts to cause such amount or the proceeds
thereof to be invested and reinvested to the extent practicable in overnight
Eurodollar time deposits. Earnings on any such investments shall be applied
to the Lessee's payment obligations, if any, to such Owner Participant
pursuant to the next succeeding paragraph, and the balance, if any, of such
earnings remaining after such application shall be paid in accordance with the
Lessee's written instructions.
If for any reason (i) the Operative Agreements shall not be executed
and delivered by the respective parties thereto and/or the Delayed Delivery
Date shall not occur (whether by reason of a failure to meet a condition
precedent thereto set forth in Article 4 hereof or otherwise) on or before the
third Business Day after the Scheduled Delivery Date (or earlier if requested
by the Owner Participant) or, if earlier, the Cut-Off Date, or (ii) the Lessee
has notified the Owner Trustee (with a copy to the Owner Participant) prior to
2:00 p.m. (New York City time) on any date after the Scheduled Delivery Date
that it does not intend to go forward to close the transactions contemplated
hereby for such Delivery Date, the Owner Participant may cancel any funding
arrangements made to fund its Commitment on the Scheduled Delivery Date but
the Owner Participant's Commitment hereunder with respect to the Aircraft shall
not be terminated thereby until the Cut-Off Date, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or the Cut-Off Date, as the case may be, or the
earliest practicable Business Day thereafter, the Owner Trustee shall return
the amounts held by it hereunder to the Owner Participant, provided that the
Owner Trustee shall have had a reasonable time to liquidate any Permitted
Investments it has been authorized to invest in pursuant to the preceding
paragraph and to obtain the proceeds therefrom in funds of the type originally
received, and the Lessee shall pay interest on such funds to the Owner
Participant at the Debt Rate, such interest to be payable for the period from
and including such Scheduled Delivery Date to but excluding the date such
funds are returned to the Owner Participant in accordance with the terms
hereof; provided that if any such funds are returned to the Owner Participant
after 2:00 p.m. (New York City time) on any such date, such funds shall be
deemed for purposes of this paragraph to have been returned on the next
succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(c). Further,
the Lessee shall indemnify the Owner Trustee and hold it harmless from and
against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Owner Participant's Instructions to Owner Trustee. The
Owner Participant agrees that the release of its Commitment in accordance with
the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the actions
specified in Sections 1.01(a) and (c) of the Trust Agreement and confirmation
that all conditions to closing set forth in Section 4.02 hereof were either
met to the satisfaction of the Owner Participant or, if not so met, were in
any event waived by it.
Section 3.04. Transaction Costs. If the transactions contemplated
by this Article 3 are consummated, as and when any portion of Transaction
Costs becomes due and payable, the Owner Participant shall, as soon as
practicable upon receipt of bills or invoices for the amounts payable make
such payments or, if the Lessee shall have already made such payment, shall
reimburse the Lessee therefor or shall, as soon as practicable, furnish the
Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as
practicable, make payment of such portion to the Person or Persons entitled to
payment upon presentation to the Owner Trustee of bills or invoices for the
amount of such payment. If such transactions are not consummated, the Lessee
shall pay or cause to be paid all the Transaction Costs; provided, however
that if the failure of such transactions to be consummated is due to (i) a
failure of the Owner Participant to obtain investment approval to proceed with
the transaction contemplated hereby, (ii) a failure to negotiate the Operative
Agreements in good faith by the Owner Participant or (iii) a wrongful act by
the Owner Participant, the Lessee shall have no obligation to pay those costs
and expenses incurred directly by the Owner Participant in connection with the
transactions contemplated by this Agreement described in Sections 10.01(a)(i)
and (xi) hereof, but the Lessee shall be obligated to pay all other
Transaction Costs.
Section 3.05. Postponement of Delivery Date. (a) If the Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available on the Delivery Date in accordance with the terms of
Section 3.02 hereof, the Owner Trustee will promptly give each party confirmed
facsimile notice thereof and the Lessee shall postpone the Delivery Date for a
period of not more than five (5) Business Days, but in no event later than the
Cut-Off Date. If the Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, (i) if the Owner
Participant fails to make available its Commitment in breach of its
obligations under this Agreement, the Lessee shall cause the Owner Participant
to assign to another equity investor identified by the Lessee its interest in
the Lessor's Estate pursuant to Section 7.03(d) hereof and (ii) if no such
equity investor is identified, or if such equity investor fails to close such
transactions, or if the Owner Participant fails to make available its
Commitment for any other reason than as specified in clause (i) above, the
Owner Participant's interest in the Lessor's Estate shall be automatically
conveyed to the Lessee without any further action, and the parties hereto
shall take such actions as may be advisable or necessary to give effect to
such conveyance. From and after any such conveyance, the Owner Participant's
obligations hereunder and under the other Operative Agreements shall cease.
The exception to the Lessee's indemnity set forth in clause (viii) of Section
9.01(b) hereof shall not be applicable to any such conveyance other than a
conveyance pursuant to clause (i) above. For the avoidance of doubt, it is
understood and agreed that if for any reason other than the failure of the
Manufacturer or AVSA to deliver the Aircraft, the Lessee does not enter into
the Lease Supplement with the Owner Trustee on or prior to the Cut-Off Date,
the Indenture Trustee and the Pass Through Trustee agree that the Lessee shall
purchase the Aircraft and assume all of the obligations of the Owner Trustee
under the Certificates upon satisfaction of the requirements set forth in
Section 4.02 hereof, as the same may be modified by the provisions of Section
7.11 hereof and as otherwise necessary to reflect a full recourse secured
aircraft financing of the Lessee. If the Lessee has identified an equity
investor under the circumstances set forth in clause (i) above, the Owner
Participant agrees to assign its interest in the Lessor's Estate as provided
in said clause (i). In case of any such conveyance pursuant to said clause
(i) (but subject to the satisfaction of the conditions precedent specified
herein), the Indenture Trustee shall release the Debt Portion or such lesser
amount as may then be held in the Collateral Account for application to the
payments contemplated in the last sentence of Section 3.02(a) hereof.
(b) Release of Obligations. If the Delivery Date has not occurred
on or prior to the Cut-Off Date (i) in the case of the Indenture Trustee and
the Pass Through Trustee, as a result of a failure of the Manufacturer or AVSA
to deliver the Aircraft, or (ii) in the case of the Owner Participant, for any
reason, then, in such event, the Owner Trustee shall not purchase the Aircraft
from AVSA, and the parties to the Operative Agreements shall have no further
obligations or liabilities under any of said Operative Agreements with respect
to the Aircraft, including the obligation of the Owner Participant to
participate in the payment of the Purchase Price, and such documents shall
terminate and have no further force or effect with respect to the Aircraft;
provided, however, that the Lessee shall provide, no later than the Cut-Off
Date, notice of prepayment to the Indenture Trustee and the Certificates shall
be prepaid on the 15th day following the Cut-Off Date as provided in Section
6.02(a)(vi) of the Indenture and Section 17.02(c) hereof and provided further,
that (i) the Lessee's obligation to pay any Transaction Costs as provided in
Section 3.04 hereof (to the extent such section is applicable) and to
indemnify such parties to the extent provided in such documents, shall not be
diminished or modified in any respect and (ii) the obligations of the Owner
Trustee, the Indenture Trustee and the Lessee to return funds and pay
interest, costs, expenses and other amounts thereon or in respect thereof as
provided in Section 3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(c) hereof, the Scheduled Delivery Date may be postponed from time
to time (but in no event shall the Delivery Date be later than the Cut-Off
Date) for any reason, other than pursuant to Section 3.05(a) hereof, if the
Lessee gives the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee confirmed facsimile notice (or telephone notice
followed by written confirmation) of such postponement and notice of the date
to which the Delivery Date has been postponed, such notice of postponement to
be received by each party no later than 11:00 a.m. (New York City time) on the
Business Day preceding the Scheduled Delivery Date.
Section 3.06. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the Owner Participant, the Indenture Trustee
and the Pass Through Trustee on behalf of each Pass Through Trust to
participate in the transactions contemplated hereby on the Certificate Closing
Date are subject to the fulfillment to the satisfaction of such party (or
waiver by such party), prior to or on the Certificate Closing Date, of the
following conditions precedent (it being understood that receipt by the Lessee
of any of the following documents shall not be a condition precedent to the
obligations of any party):
(a) Certificates. On the Certificate Closing Date, there shall have
been duly issued and delivered by the Owner Trustee to the Pass Through
Trustee for each Pass Through Trust, against payment therefor, a
Certificate, substantially in the form set forth in Exhibit B to the
Indenture, duly authenticated, dated the Certificate Closing Date and
registered in the name of the Pass Through Trustee on behalf of such Pass
Through Trust, in the principal amounts, Maturity, bearing the interest
rate and the other economic terms specified in the Series Supplements and
otherwise as provided in Section 2.04 of the Indenture. The Pass Through
Certificates shall be registered under the Securities Act, any applicable
state securities laws shall have been complied with, and the Pass Through
Agreement shall have been qualified under the Trust Indenture Act.
(b) Legal Investment. On the Certificate Closing Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Owner Participant or its special
counsel, the Pass Through Trustee or the Indenture Trustee or their special
counsel, would make it illegal for the Owner Participant, the Lessee, the
Owner Trustee, the Pass Through Trustee or the Indenture Trustee, and no
change in circumstances shall have occurred which would otherwise make it
illegal or otherwise in contravention of guidance issued by regulatory
authorities for the Owner Participant, the Lessee, the Owner Trustee, the
Pass Through Trustee or the Indenture Trustee, to participate in the
transaction to be consummated on the Certificate Closing Date; and no
action or proceeding shall have been instituted nor shall governmental
action before any court, governmental authority or agency be threatened
which in the opinion of counsel for the Owner Participant, the Indenture
Trustee or the Pass Through Trustee is not frivolous, nor shall any order
have been issued or proposed to be issued by any court, or governmental
authority or agency, as of the Certificate Closing Date, to set aside,
restrain, enjoin or prevent the consummation of any of the transactions
contemplated by this Agreement or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Documents. This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties thereto, shall each be satisfactory in form and substance to the
Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee
and the Owner Participant (each acting directly or by authorization to its
special counsel) and shall each be in full force and effect; there shall
not have occurred any default thereunder, or any event which with the lapse
of time or the giving of notice or both would be a default thereunder, and
copies executed or certified as requested by the Lessee, the Owner Trustee,
the Indenture Trustee, the Pass Through Trustee or the Owner Participant,
as the case may be, of such documents shall have been delivered to the
Owner Participant, the Lessee, the Indenture Trustee, the Pass Through
Trustee and the Owner Trustee (provided that the sole chattel-paper
original of each of the Lease and each Ancillary Agreement amendatory of the
Lease, shall be delivered to the Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, the Tax Indemnity
Agreement;
(iv) the Purchase Agreement and the Consent and Guaranty;
(v) the Purchase Agreement Assignment and the French Pledge
Agreement with respect thereto;
(vi) the Consent and Agreement and the AVSA Consent and Agreement;
(vii) the GTA;
(viii) the Engine Warranty Assignment;
(ix) the Engine Consent;
(x) the Trust Agreement;
(xi) the Ancillary Agreement I; and
(xii) the Ancillary Agreement II.
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, which in the
opinion of the Owner Participant, the Pass Through Trustee or the Indenture
Trustee are required in connection with any transaction contemplated by
this Agreement, shall have been duly obtained.
(f) Financing Statements. Uniform Commercial Code ("UCC") financing
statements covering all the security interests (and other interests)
intended to be created by or pursuant to the Granting Clause of the
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Holders, and such financing statements shall have been duly filed or
duly submitted for filing in the State of Utah, and all other action shall
have been taken which, in the opinion of the Owner Participant, the Pass
Through Trustee and the Underwriters, is necessary to perfect and protect
such security interests and other interests.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Pass Through Trustee,
the Lessee and the Indenture Trustee (acting directly or by authorization
to its counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Certificate Closing Date, and a copy of the minutes
of the regular meeting of the board of directors of the Lessee,
certified as such as of the Certificate Closing Date by such
Secretary or Assistant Secretary, duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of this Agreement, the Lease, the Tax
Indemnity Agreement, the Pass Through Agreement, the Series
Supplements, the other Operative Agreements to which the Lessee is or
is to be a party and each other document to be executed and delivered
by the Lessee in connection with the transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the Owner
Participant, certified by the Secretary or an Assistant Secretary of
the Owner Participant as of the Certificate Closing Date, and a copy
of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Certificate Closing Date by
such Secretary or an Assistant Secretary, authorizing the execution
and delivery by the Owner Participant of this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party and
each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Certificate
Closing Date (or other like instruments satisfactory to the Lessee
and the Owner Participant) and evidence authorizing the execution,
delivery and performance by the Owner Trustee in its individual
capacity or as Owner Trustee, as the case may be, of this Agreement,
the Trust Agreement and each of the other Operative Agreements to
which it is or is to be a party, whether in its individual capacity
or as Owner Trustee, and each other document to be executed and
delivered by the Owner Trustee in connection with the transactions
contemplated hereby;
(iv) a copy of the certificate of incorporation and by-laws and
other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as of
the Certificate Closing Date (or other like instruments satisfactory
to the Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of each
of this Agreement, the Indenture and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Indenture Trustee in
connection with the transactions contemplated hereby;
(v) a copy of the certificate of incorporation and by-laws and other
instruments of the Pass Through Trustee, certified by the Secretary
or an Assistant Secretary of the Pass Through Trustee as of the
Certificate Closing Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to be
a party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant as the Indenture
Trustee, the Pass Through Trustee or the Owner Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement.
(h) Officer's Certificate of Lessee. On the Certificate Closing
Date, the following statements shall be true, and the Owner Participant,
the Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received a certificate signed by the Vice President and Treasurer or
any other duly authorized officer of the Lessee, dated the Certificate
Closing Date, stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto are true and correct on and as of the Certificate Closing
Date as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date,
in which case such certificate shall state that such representations
and warranties were true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the
financial statements included in the Lessee's Quarterly Reports on
Form 10-Q for the fiscal quarters ended August 31, 1995, November
30, 1995 and February 29, 1996) and (ii) in the Lessee's Current
Report on Form 8-K dated April 30, 1996, as to which such officer
will make no certification concerning the liability of the
Lessee (if any), or the effect of any adverse determination
upon the consolidated financial condition, business or operations
of the Lessee, no material adverse change has occurred in the
financial condition, business or operations of the Lessee from
that shown in the audited financial statements of the Lessee as of
May 31, 1995 or the unaudited consolidated financial statements of
the Lessee as of February 29, 1996 and nothing has occurred which
will, in the judgment of such officer, materially adversely affect
the ability of the Lessee to carry on its business or to perform
its obligations under this Agreement and each other Operative
Agreement to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(i) Officer's Certificate of Owner Participant. On the Certificate
Closing Date, the following statements shall be true, and the Lessee, the
Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Certificate Closing
Date, stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto, are true and correct on and as of the Certificate Closing
Date as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date,
in which case such certificate shall state that such representations
and warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant exist;
and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(j) Other Officer's Certificates. On the Certificate Closing Date,
the following statements shall be true, and the Owner Participant, the
Lessee, the Pass Through Trustee, the Owner Trustee and the Indenture
Trustee shall have received a certificate from each of FSBU and the Owner
Trustee (in the case of the Lessee, the Pass Through Trustee, the Owner
Participant and the Indenture Trustee), SSB and the Indenture Trustee (in
the case of the Lessee, the Pass Through Trustee, the Owner Participant and
the Owner Trustee) and SSB and the Pass Through Trustee (in the case of the
Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee)
signed by a duly authorized officer of FSBU and SSB, respectively, dated
the Certificate Closing Date, stating with respect to FSBU and the Owner
Trustee, with respect to SSB and the Indenture Trustee, or with respect to
SSB and the Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSBU in its individual
capacity and as Owner Trustee, of SSB in its individual capacity and
as Indenture Trustee and of SSB in its individual capacity and as
Pass Through Trustee contained in this Agreement, the Lease, the
Trust Agreement and the Indenture and in any certificate delivered
pursuant hereto or thereto are true and correct on and as of the
Certificate Closing Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state
that such representations and warranties were true and correct on and
as of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSBU in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSBU and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(k) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Certificate Closing Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate and
Business Transactions of the Lessee, in the form of Exhibit
A(1)(a)(i) hereto and addressed to the Underwriters, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the
Indenture Trustee;
(ii) Simpson Thacher & Bartlett, special counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and the General
Counsel's Office of the Owner Participant, in the form of Exhibit
A(2)(b) hereto, each addressed to the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Lessee;
(iii) Bingham, Dana & Gould LLP, special counsel for the Indenture
Trustee, in the form of Exhibit A(3) hereto and addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Lessee;
(iv) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(4)(a)(i) hereto and addressed to
the Underwriters, the Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Lessee;
(v) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(i) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee and the Lessee; and
(vi) Bingham, Dana & Gould LLP, special counsel for the Pass
Through Trustee, in the form of Exhibit A(5)(a) hereto and addressed
to the Underwriters, the Owner Participant, the Indenture Trustee,
the Owner Trustee, the Pass Through Trustee and the Lessee.
(l) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(m) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(n) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement.
(o) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements
referred to in subparagraph (f) of this Section 4.01, or in connection with
the issuance of the Certificates shall have been duly paid or caused to be
paid in full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Certificate Closing Date which are then due and payable shall have
been duly paid in full.
(p) Governmental Compliance. All appropriate action required to
have been taken by the FAA, or any governmental or political agency,
subdivision or instrumentality of the United States, prior to the Delivery
Date in connection with the transactions contemplated by this Agreement
shall have been taken, and all orders, permits, waivers, authorizations,
exemptions and approvals (collectively "permits") of such entities required
to be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such permits
shall be in full force and effect on the Delivery Date.
Section 4.02. Conditions Precedent (Delivery Date). The obligations
of the Owner Trustee, the Owner Participant, the Indenture Trustee and the
Pass Through Trustee on behalf of each Pass Through Trust to participate in
the transactions contemplated hereby on the Delivery Date are subject to the
fulfillment to the satisfaction of each party (or waiver by such party), prior
to or on the Delivery Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligation of any party):
(a) Notice, Etc. Each party hereto shall have received a Delivery
Notice pursuant to Section 3.01 hereof at least three (3) Business Days
prior to the Delivery Date.
(b) Legal Investment. No change shall have occurred after the date
which is two days prior to the Delivery Date in applicable laws or
regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee or the
Indenture Trustee or their special counsel, would make it illegal for the
Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, and no change in circumstances shall have
occurred which would otherwise make it illegal or otherwise in
contravention of guidance issued by regulatory authorities for the Owner
Participant, the Lessee, the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, to participate in the transaction to be consummated on
the Delivery Date; and no action or proceeding shall have been instituted
nor shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee or the Pass Through Trustee is not
frivolous, nor shall any order have been issued or proposed to be issued by
any court, or governmental authority or agency, as of the Delivery Date,
to set aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other Operative
Agreements.
(c) Documents. The documents referred to in Section 4.01(d) hereof
shall each be in full force and effect and the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto, shall each be satisfactory in form and substance to the
Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee
and the Owner Participant (each acting directly or by authorization to its
special counsel) and shall each be in full force and effect; there shall
not have occurred any default thereunder, or any event which with the lapse
of time or the giving of notice or both would be a default thereunder, and
copies executed or certified as requested by the Lessee, the Owner Trustee,
the Indenture Trustee, the Pass Through Trustee or the Owner Participant,
as the case may be, of such documents shall have been delivered to the Owner
Participant, the Lessee, the Indenture Trustee, the Pass Through Trustee
and the Owner Trustee (provided that the sole chattel-paper original of the
Lease Supplement shall be delivered to the Indenture Trustee):
(i) the Lease Supplement covering the Aircraft, dated the Delivery
Date;
(ii) an Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(iii) the Invoice; and
(iv) AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale and the
Airbus Guaranty.
(d) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Delivery Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate and
Business Transactions of the Lessee, in the form of Exhibit
A(1)(a)(ii) hereto and addressed to the Underwriters, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the
Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(ii) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee and the Lessee;
(iii) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(4)(b)(ii) hereto and addressed to
the Underwriters, the Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Lessee;
(iv) counsel for the Engine Manufacturer, in the form of Exhibit
A(6) hereto and addressed to the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee
and the Lessee;
(v) Clifford Chance, special counsel for AVSA and the Manufacturer,
in the form of Exhibit A(7) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee and the Lessee;
(vi) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(8) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee and the Lessee; and
(vii) in the case of the Owner Participant only, Simpson Thacher &
Bartlett, tax counsel to the Owner Participant, addressed to the Owner
Participant, with respect to certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to
the effect that:
(i) the Owner Trustee has good and marketable title (subject to
filing and recording of AVSA's FAA Bill of Sale with the Aeronautics
Authority) to the Aircraft, free and clear of Liens, except the
rights of the Owner Trustee and the Lessee under the Lease and the
Lease Supplement covering the Aircraft, the rights of the Indenture
Trustee under the Indenture and the beneficial interest of the Owner
Participant created by the Trust Agreement and the interest of the
Certificate Holders created by the Indenture and the Indenture and
Security Agreement Supplement covering the Aircraft, which evidence
shall include AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale
and the Airbus Guaranty;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) AVSA's FAA Bill of Sale, the Lease and Lease Supplement
covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft and the Trust Agreement
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Aeronautics
Authority pursuant to the Transportation Code; and
(iv) application to the Aeronautics Authority for registration of
the Aircraft in the name of the Owner Trustee shall have been duly
made and the Lessee shall have temporary or permanent authority to
operate the Aircraft.
(f) Financing Statements. A UCC notice filing describing the Lease
as a lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee) and shall have been duly filed in
the State of Tennessee.
(g) Payments. The Owner Participant shall have made available its
Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant to the
effect, among other things, that on the Delivery Date:
(i)(A) the estimated fair market value of the Aircraft net of any
cost to the Owner Participant or the Owner Trustee of return at the
end of the Basic Term and any Fixed Renewal Term (determined without
including in such value any increase or decrease for inflation or
deflation during the Term) is equal to or greater than 20% of the
Purchase Price for the Aircraft and (B) at least 20% of the useful
economic life of the Aircraft will be remaining at the end of the
Basic Term and any Fixed Renewal Term;
(ii) the estimated useful life of the Aircraft is at least 133% of
the Interim Term and the Basic Term and any Fixed Renewal Term;
(iii) the Purchase Price of the Aircraft is no greater than the
fair market value of the Aircraft on the Delivery Date;
(iv) on the Delivery Date, the Aircraft will not require any
modifications, improvements or additions in order to be rendered
complete for its intended purpose by the Lessee;
(v) the amount payable by the Lessee upon the exercise of its
purchase option pursuant to Section 4.02(a)(F) of the Lease equals or
exceeds the currently estimated Fair Market Value of the Aircraft on
such date (taking into account inflation or deflation to such date);
and
(vi) the Aircraft is not limited use property.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (e) and (f) of
this Section 4.02, or in connection with the purchase of the Aircraft by
the Owner Trustee and the making by the Owner Participant of its equity
investment shall have been duly paid or caused to be paid in full; and (B)
all sales or use taxes and duties related to the consummation of the
transactions contemplated by the Operative Agreements on the Delivery Date
which are then due and payable shall have been duly paid in full.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, or any governmental or political agency,
subdivision or instrumentality of the United States, prior to the Delivery
Date in connection with the transactions contemplated by this Agreement
shall have been taken, and all orders, permits, waivers, authorizations,
exemptions and approvals (collectively "permits") of such entities required
to be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such permits
shall be in full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Delivery Date,
stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1995, November 30, 1995 and
February 29, 1996) and (ii) in the Lessee's Current Report on Form
8-K dated April 30, 1996, as to which such officer will make no
certification concerning the liability of the Lessee (if any), or the
effect of any adverse determination upon the consolidated financial
condition, business or operations of the Lessee, no material adverse
change has occurred in the financial condition, business or
operations of the Lessee from that shown in the audited financial
statements of the Lessee as of May 31, 1995 or the unaudited
consolidated financial statements of the Lessee as of February 29,
1996 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(o) Officer's Certificate of Owner Participant. On the Delivery
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Delivery Date,
stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement (excluding the Tax Indemnity Agreement) to which
it is a party and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant exist;
and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of FSBU and the Owner Trustee (in the
case of the Lessee, the Pass Through Trustee, the Owner Participant and the
Indenture Trustee), SSB and the Indenture Trustee (in the case of the
Lessee, the Pass Through Trustee, the Owner Participant and the Owner
Trustee) and SSB and the Pass Through Trustee (in the case of the Lessee,
the Indenture Trustee, the Owner Participant and the Owner Trustee) signed
by a duly authorized officer of FSBU and SSB, respectively, dated the
Delivery Date, stating with respect to FSBU and the Owner Trustee, with
respect to SSB and the Indenture Trustee, or with respect to SSB and the
Pass Through Trustee, as the case may be, that:
(i) the representations and warranties of FSBU in its individual
capacity and as Owner Trustee, of SSB in its individual capacity and
as Indenture Trustee and of SSB in its individual capacity and as
Pass Through Trustee contained in this Agreement, the Lease, the
Trust Agreement and the Indenture and in any certificate delivered
pursuant hereto or thereto are true and correct on and as of the
Delivery Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of FSBU in its individual capacity or as Owner
Trustee, of SSB in its individual capacity or as Indenture Trustee
and of SSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or FSBU and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(q) Release of Debt Portion. The Indenture Trustee shall have
released the Debt Portion from (or such lesser amount as may then be held in)
the Collateral Account.
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of AVSA's FAA
Bill of Sale, the Trust Agreement, the Lease (with the Lease Supplement
covering the Aircraft, the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft attached as exhibits) and the Indenture (with
the Indenture and Security Agreement Supplement covering the Aircraft attached
as an exhibit), the Lessee shall cause Special Aviation Counsel to deliver to
the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee
and the Indenture Trustee an opinion as to (i) the due registration of the
Aircraft in the name of the Owner Trustee, (ii) the due recording pursuant to
the Transportation Code of AVSA's FAA Bill of Sale, the Trust Agreement, the
Lease (with such Lease Supplement, the Indenture and such Indenture and
Security Agreement Supplement attached as exhibits), and the Indenture (with
such Indenture and Security Agreement Supplement attached as an exhibit), and
(iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed
to it under, as the case may be, paragraphs (d), (g)(ii)-(v), (i), (j),
(k)(ii)-(vi) of Section 4.01 hereof and the Underwriters shall have made
available the amounts required to be paid by them pursuant to Section 2.01
hereof, and the Lessee's obligation to participate in the transactions
contemplated hereby on the Delivery Date, is subject to the conditions that,
on or prior to the Delivery Date, the Lessee shall have received the documents
which are referred to in, or the opinions to be addressed to it under, as the
case may be, paragraphs (c) and (d)(ii)-(v) of Section 4.02 hereof and the
Indenture Trustee shall have released the Debt Portion from (or such lesser
amount as may then be held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Certificate Closing Date and the Delivery Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the other Operative Agreements to which it is a party, the
Pass Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered or, in the case of the Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and delivered
by the Lessee and constitutes (or will constitute, as the case may be) the
legal, valid and binding obligations of the Lessee enforceable against it
in accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.02(d)(iii) and
4.03 hereof and except for the filings referred to in Sections 4.01(f) and
4.02(f) hereof, all of which shall have been duly obtained or made and
shall be in full force and effect on and as of the Certificate Closing Date
or the Delivery Date, or as contemplated by said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent (other than the Consent and Agreement, the AVSA
Consent and Agreement, the Engine Consent and the Consent and Guaranty) or
approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Lessee or any order,
writ, injunction or decree of any court or governmental authority against
the Lessee or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Lessee is a party or by which it or any of its Properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any Lien upon any of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1995, November 30, 1995 and February 29, 1996)
and (ii) in the Lessee's Current Report on Form 8-K dated April 30, 1996, as
to which no representation is made concerning the Lessee's liability (if
any) or the effect of any adverse determination upon the consolidated
financial condition, business or operations of the Lessee, if adversely
determined, would materially and adversely affect the consolidated
financial condition, business or operations of the Lessee, or (C) if
adversely determined would adversely affect the ability of the Lessee to
perform its obligations under the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of AVSA's FAA Bill of Sale, the Trust Agreement, the
Affidavits and the Application, (B) the filing with and, where appropriate,
recordation by the FAA pursuant to the Transportation Code of the
Indenture, the Indenture and Security Agreement Supplement covering the
Aircraft, the Lease and the Lease Supplement covering the Aircraft, (C) the
filing of the financing statements referred to in Sections 4.01(f) and
4.02(f) hereof and (D)(x) on the Certificate Closing Date, the taking of
possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated in
Section 2.14(a) of the Indenture and (y) on the Delivery Date, the taking
of possession by the Indenture Trustee of the original counterpart of the
Lease and the Lease Supplement covering the Aircraft, no further action,
including any filing or recording of any document, is necessary or
advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee;
(k) on the Delivery Date, the Owner Trustee will receive good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement, the rights
of the Indenture Trustee under the Indenture and the beneficial interest of
the Owner Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1995, November 30, 1995 and February
29, 1996, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1995 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1995, November 30, 1995 and February
29, 1996, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur
Andersen, LLP, independent public accountants; said financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied and present fairly the financial position
of the Lessee as of such dates and the results of its operations and
cash flows for such periods and such Annual Report, Quarterly Reports and
financial statements did not, as of their respective dates of filing with
the SEC, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this Section
6.01(m)) nor their related trusts have been terminated in a distress
termination pursuant to Section 4041(c) of ERISA or by the Pension
Benefit Guaranty Corporation (together with any successor agency or
instrumentality thereto, the "PBGC") pursuant to Section 4042 of
ERISA, nor have any actions been taken to so terminate any Pension
Plan or related trust and neither the Lessee nor any ERISA Affiliate
(as defined at the end of this Section 6.01(m)) has incurred or could
reasonably be expected to incur any material liability with respect
to a Pension Plan under Section 4062, 4063, 4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f), 4.02(e)
and 4.02(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition so as
to enable the airworthiness certificate of such Aircraft to be in good
standing under the Transportation Code; the Aircraft will have been duly
certificated by the FAA as to type and airworthiness; there will be in
effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects the
value, utility or condition of the Aircraft;
(u) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or condition
of the Purchase Agreement, the Purchase Agreement Assignment, the Engine
Warranty Assignment and the GTA and the aggregate amount of loans shall not
exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft will be fully equipped to operate in commercial
service upon delivery on the Delivery Date and will comply with all
governmental requirements governing such service; and
(x) there are no broker's or underwriter's or management fees
payable on behalf of the Lessee in connection with the transactions
contemplated in the Operative Agreements other than those of the
Underwriters and First Chicago Leasing Corporation referred to in Article
10 hereof.
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Purchase Agreement, the Purchase Agreement Assignment, the GTA, the Engine
Warranty Assignment, the Indenture, the Indenture and Security Agreement
Supplement, the Tax Indemnity Agreement, the Lease and the Lease Supplement
and the other Operative Agreements to which it is a party. Without
limiting the generality of this Section 6.03(a), the Lessee will promptly
take, or cause to be taken, at the Lessee's cost and expense, such action
with respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) From and after the Delivery Date, the Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code, and shall
furnish to the Owner Trustee such information as may be required to enable
the Owner Trustee to make application for such registration; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that if at any time after December 31, 2003, so long as no
Event of Default shall have occurred and be continuing, the Lessee has
requested their consent to the registration of the Aircraft in the name of
the Owner Trustee (or, if appropriate under the laws of such jurisdiction of
reregistration, in the name of the Lessee or a sublessee as a "lessee" or a
"sublessee"), at the Lessee's expense, in a country listed in Schedule III
hereto with which the United States then maintains normal diplomatic
relations (and which is not then experiencing war or substantial civil
unrest), the Owner Participant, upon receipt by the Owner Participant, the
Owner Trustee and the Indenture Trustee of the assurances and opinion
described below, shall not unreasonably withhold their consent to such
change in registration (it being agreed, without limitation, that the
inability of the Lessee to deliver such assurances or such opinion shall
constitute reasonable grounds to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease have
been and will be complied with and are and shall be in full force and
effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required) and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any additional
indemnities for which the Lessee is then willing to enter into a
binding agreement to indemnify) in favor of the Owner Participant,
the Owner Trustee (in its individual capacity and as trustee under
the Trust Agreement), the Indenture Trustee (in its individual
capacity, and as trustee under the Indenture), the Pass Through
Trustee (in its individual capacity, and as trustee under the Pass
Through Agreement) and the other Indemnitees under this Agreement,
the Indenture, the Pass Through Agreement and (in the case of the
Owner Participant only) the Tax Indemnity Agreement, afford each such
party substantially the same protection as provided prior to such
change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Tax Indemnity Agreement) for which the Lessee has not agreed to
indemnify the Owner Participant to its reasonable satisfaction, the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee (or
any successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(L) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(M) that appropriate deregistration powers of attorney in favor of
the Owner Trustee and the Indenture Trustee have been executed and
delivered by the Lessee and any sublessee and, if necessary or
desirable for the effectiveness thereof, filed with the relevant
aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might reasonably have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any state
thereof (it being understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to cover
such risk and the Lessee undertakes to keep such insurance in full
force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft or under the Lease and (unless
the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft;
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request; and
(H) the Lien of the Indenture continues to constitute a first
priority, duly perfected Lien on the Aircraft.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Delivery Date, AVSA's FAA Bill of Sale,
the Lease, the Lease Supplement, the Trust Agreement, the Indenture and the
Indenture and Security Agreement Supplement. The following documents shall
be filed and, where appropriate, recorded on the Delivery Date with the
Aeronautics Authority in the following order of priority: first, AVSA's
FAA Bill of Sale, second, the Application, with the Trust Agreement and the
Affidavits, third, the Indenture with the Indenture and Security Agreement
Supplement attached thereto, and fourth, the Lease with the Lease
Supplement, the Indenture and the Indenture and Security Agreement
Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1997, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company (or Person which acquires
by conveyance, transfer or lease the assets of the Lessee) is in compliance
with all of the terms and conditions of this Agreement and the Lease and
each other Operative Agreement and each other document contemplated hereby
or thereby; provided that no such merger, consolidation or conveyance,
transfer or lease shall be permitted if the same gives rise to an Event of
Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become the Lessee
hereunder in the manner prescribed in this Section 6.03(g) from its
liability hereunder or under the other Operative Agreements. Nothing
contained herein shall permit any lease, sublease, or other arrangement for
the use, operation or possession of the Aircraft except in compliance with
the applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its
corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to its stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any officer of the Lessee obtaining knowledge of any condition
or event which constitutes a Default or an Event of Default, an
officer's certificate specifying the nature and period of existence
thereof and what action the Lessee has taken or is taking or proposes
to take with respect thereto;
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may
reasonably request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the delivery of the Aircraft and the expiration or other
termination of this Agreement and the other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement is
being acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Section 7.03(d) hereof (except
as provided in clause (ii) of Section 3.05(a) hereof), at all times be within
its control and the foregoing representation shall not limit the Owner
Participant's right to transfer or sell such interests pursuant to the terms
of this Agreement. Neither the Owner Participant nor anyone authorized to act
on its behalf has directly or indirectly offered any interest in the Lessor's
Estate or the Trust Agreement, or in any similar security, for sale to, or
solicited any offer to acquire any of the same from, anyone. The Owner
Participant further represents and warrants that neither it nor anyone
authorized to act on its behalf has made or will make any offer, solicitation
or sale of any interest in the Lessor's Estate or the Trust Agreement in
violation of the provisions of Section 5 of the Securities Act of 1933, as
amended. No representation in this Section 7.01(b) shall include any action
or inaction of the Lessee, First Chicago Leasing Corporation or the
Underwriters whether or not such action or inaction is purportedly on behalf
of the Owner Trustee, the Owner Participant or any of their Affiliates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is or will be a Citizen of the
United States on the Delivery Date. If the Owner Participant or the Owner
Trustee in its individual capacity does not comply with the requirements of
this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date it shall have
actual knowledge that it has ceased to be a Citizen of the United States, it
will resign immediately as the Owner Trustee if such citizenship is necessary
under the Transportation Code as in effect at such time or, if it is not
necessary under the Transportation Code as in effect at such time, if it is
informed in writing by the Lessee or the Owner Participant that such lack of
United States citizenship would have any adverse effect on the Lessee or the
Owner Participant. The Owner Trustee, in its individual capacity, further
covenants that if at any time it appears reasonably probable that it will
cease to be a Citizen of the United States based on information that is (i)
known to a Responsible Officer or (ii) generally known to the public, it will
promptly so notify, to the extent permitted by law, all parties to this
Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time on or after the Delivery Date when the
Aircraft is registered or the Lessee proposes to register the Aircraft in the
United States (i) either it shall cease to be, or an event which has been
publicly disclosed has occurred of which the Owner Participant has knowledge
and which will cause the Owner Participant to cease to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore become ineligible
for registration in the name of the Owner Trustee under the Transportation
Code and regulations then applicable thereunder, then the Owner Participant
shall give notice thereof to the Lessee, the Owner Trustee and the Indenture
Trustee and shall (at its own expense and without any reimbursement or
indemnification from the Lessee) immediately (and in any event within a period
of 20 days) (x) effect a voting trust or other similar arrangement, (y)
transfer in accordance with the terms of this Agreement and the Trust
Agreement all its rights, title and interest in and to such Trust Agreement,
the Lessor's Estate and this Agreement, or (z) take any other alternative
action that would prevent any deregistration, or maintain or permit the United
States registration, of the Aircraft. It is agreed that the Owner Participant
shall be liable to pay promptly on request (A) to each of the other parties
hereto any actual damages (but not consequential damages) suffered by any such
other party to the extent the same shall result from the representation and
warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee,
the Indenture Trustee or the Pass Through Trustee for any damages actually
(but not consequentially) incurred by the Lessee, the Indenture Trustee and
the Pass Through Trustee as a result of the Owner Participant's failure to
comply with its obligations pursuant to the first sentence of this Section
7.02(c); provided, that, the foregoing shall not restrict the Pass Through
Trustee or the Indenture Trustee from asserting against the Owner Participant
any damages actually incurred by the holders of any Pass Through Certificates.
Each party hereto agrees, upon the request and at the sole expense of the
Owner Participant, to cooperate with the Owner Participant in complying with
its obligations under the provisions of the first sentence of this Section
7.02(c), but without any obligation on the part of such other party to take
any action believed by it in good faith to be unreasonably burdensome to such
party or materially adverse to its business interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants on the date
hereof and as of the Certificate Closing Date and the Delivery Date that:
(i) it is a corporation duly incorporated and validly existing in good
standing under the laws of the State of Delaware and it has full corporate
power, authority and legal right to carry on its present business and
operations, to own or lease its Properties and to enter into and to carry
out the transactions contemplated by this Agreement, the Tax Indemnity
Agreement, the Trust Agreement and the Operative Documents to which it is
party;
(ii) the execution, delivery and performance by it of this Agreement,
the Tax Indemnity Agreement, and the Trust Agreement and the Operative
Documents to which it is party and the Owner Participant been duly
authorized by all necessary corporate action on its part and, assuming the
accuracy of the Lessee's representations in Section 6.01(o) hereof, do not
require any governmental approvals that would be required to be obtained by
the Owner Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii), 6.02 and 7.09 hereof and compliance
with Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement and the Operative Documents to which it
is party nor compliance with the terms and provisions hereof or thereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under any law, governmental rule or regulation
applicable to the Owner Participant or the charter documents, as amended,
or bylaws, as amended, of the Owner Participant or any order, writ,
injunction or decree of any court or governmental authority against the
Owner Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its Properties is
bound, or constitutes or will constitute a default thereunder or results or
will result in the imposition of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement and the Trust
Agreement and the Operative Documents to which it is party have been or on
the Certificate Closing Date will be duly executed and delivered by the
Owner Participant and constitute or on the Certificate Closing Date will
constitute the legal, valid and binding obligation of the Owner Participant
enforceable against it in accordance with their terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights (regardless
of whether enforceability is considered in a proceeding in equity or at
law);
(v) it is not in default under any mortgage, deed of trust, indenture,
lease or other instrument or agreement to which the Owner Participant is a
party or by which it or any of its Properties may be bound, or in violation
of any applicable law, which default or violation would have a material
adverse effect on the financial condition, business or operations of the
Owner Participant or an adverse effect on the ability of the Owner
Participant to perform its obligations under this Agreement and the other
Operative Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under this Agreement and
the other Operative Agreements to which it is or is to be a party and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of this Agreement or
the other Operative Agreements to which it is a party nor the performance
of its obligations hereunder or thereunder requires the consent or approval
of or the giving of notice to, the registration with, or the taking of any
other action in respect of, any governmental authority or agency that would
be required to be obtained or taken by the Owner Participant except for
filings contemplated by this Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by the Owner Participant under this Agreement constitutes
assets (within the meaning of ERISA and any applicable rules and
regulations) of any employee benefit plan subject to Title I of ERISA or of
any plan or individual retirement account subject to Section 4975 of the
Code;
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30) of the
Code and is not a tax resident of another country; and
(x) it has a consolidated tangible net worth of not less than
$75,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Certificate Closing Date.
The Owner Participant agrees with and for the benefit of the Lessee, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee that the Owner
Participant will, at its own cost and expense, take such action as may be
necessary (by bonding or otherwise, so long as neither the Lessee's operation
and use of the Aircraft nor the validity and priority of the Lien of the
Indenture is impaired) to duly discharge and satisfy in full, promptly after
the same first becomes known to the Owner Participant, any Lessor's Lien
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate attributable to the Owner Participant (or an Affiliate
thereof), provided, however, that the Owner Participant shall not be required
to discharge or satisfy such Lessor's Lien which is being contested by the
Owner Participant in good faith and by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Aircraft or the Lessor's Estate or the Trust Indenture Estate or any
interest in any thereof or otherwise materially adversely affect the validity
or priority of the Lien of the Indenture.
(c) Reimbursement. Without limiting any other rights the parties
hereto may have as a result of any breach by the Owner Participant of its
obligations in Section 7.03(b) hereof, the Owner Participant agrees to
reimburse each other party hereto for all reasonable legal fees and expenses
of counsel that may be incurred by any such party as a result of the failure
of the Owner Participant to discharge and satisfy any such Lessor's Lien in
accordance with the terms of Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after
all obligations of the Owner Participant under Section 3.07 hereof have been
satisfied in full (or upon the direction of the Lessee if Section 3.05(a)(i)
hereof shall be applicable), and subject to the conditions set forth in this
Section 7.03(d), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee and the Indenture Trustee at least 10
Business Days' notice of such assignment, conveyance or other transfer and
provided further that the Owner Participant and any Owner Participant
Guarantor shall remain liable for all obligations of the Owner Participant
under the Trust Agreement and the Operative Agreements to which the Owner
Participant is a party to the extent (but only to the extent) relating to the
period on or before the date of such transfer and provided that the transferee
agrees by a written instrument substantially in the form attached hereto as
Exhibit G-1 to assume primary liability for all obligations as an Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party relating to the period after the date
of transfer. Any such transferee shall (a) be (i) a bank, savings
institution, finance company, leasing company or trust company, national
banking association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or similar
trust or fund, insurance company, fraternal benefit society or corporation
acting for its own account having a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent) of not less
than $75,000,000, (ii) a subsidiary of any Person described in clause (i)
where such Person provides (A) support for the obligations assumed by such
transferee subsidiary reasonably satisfactory to the Lessee, the Owner Trustee
and the Indenture Trustee or (B) an unconditional guaranty substantially in
the form of Exhibit G-2 attached hereto of such transferee subsidiary's
obligations, or (iii) an Affiliate of the transferring Owner Participant, so
long as such Affiliate has a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (b) be legally capable of binding itself to the obligations of
the Owner Participant and shall expressly agree to assume all obligations of
the Owner Participant under the Trust Agreement and this Agreement and (c)
provide representations substantially similar to those contained in Sections
7.02(a) and 7.03(a) hereof. In the event of any such assignment, conveyance
or transfer, the transferee shall become a party to the Trust Agreement and
shall agree to be bound by all the terms of and will undertake all of the
obligations of the Owner Participant contained in the Trust Agreement and the
other Operative Agreements in the manner set forth in the form attached as
Exhibit G-1. A transferee hereunder shall be (i) a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (or any successor provision thereto) and
(B) such transferee shall be personally liable for any debt service to the
extent that its receipt of rentals is reduced by reason of any withholding
Taxes that result from such transferee's failure to be such a "U.S. Person"
and (ii) a Citizen of the United States or has established a voting trust,
voting powers or other arrangement reasonably satisfactory to the Indenture
Trustee and the Lessee to permit the Owner Trustee to be the registered owner
of the Aircraft under the Transportation Code. A transferee hereunder shall
not be, and in acquiring the Beneficial Interest shall not use the assets of,
an employee benefit plan subject to Title I of ERISA or an individual
retirement account or a plan subject to Section 4975 of the Code. Assuming
the truth of the representations made in Sections 6.01(m) and 7.06 hereof and
compliance with Section 10.06 of the Indenture, no such assignment, conveyance
or transfer shall violate any provision of law or regulation or create a
relationship which would be in violation thereof. The Owner Trustee shall not
be on notice of or otherwise bound by any such assignment, conveyance or
transfer unless and until it shall have received an executed counterpart of
the instrument of such assignment, conveyance or transfer. Upon any such
disposition by the Owner Participant to a transferee as above provided, the
transferee shall be deemed the "Owner Participant" or "Trustor" for all
purposes of the Operative Agreements, and shall be deemed to have made all the
payments previously made by its transferor and to have acquired the same
interest in the Lessor's Estate as theretofore held by its transferor; and
each reference therein to the "Owner Participant" or "Trustor" shall
thereafter be deemed a reference to such transferee. Notwithstanding anything
to the contrary contained in this Section 7.03(d), in no event shall the Owner
Participant transfer its interest in the Beneficial Interest to any entity
whose business is that of a nationwide or worldwide overnight or expedited
delivery small package air courier, cargo or freight deliverer or which
competes with the Lessee in such lines of business. The Lessee agrees that it
will reasonably cooperate with the Owner Participant in effecting an
assignment of the Owner Participant's interests including, without limitation,
providing letters to any successor Owner Participant permitting such successor
Owner Participant to rely on any opinions provided by the Lessee on the
Delivery Date.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSBU represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) on the date hereof and as of the
Certificate Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the Uniform Commercial Code) at 79 South
Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust
Department and has full corporate power and authority, in its individual
capacity or (assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant) as the Owner Trustee, as
the case may be, to carry on its business as now conducted, and to
execute, deliver and perform this Agreement and the Operative Agreements to
which it is or is to be a party;
(ii) the execution, delivery and performance by FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement and the Operative Agreements to which it is or is to be party
have been duly authorized by all necessary corporate action on its part,
and do not contravene its certificate of incorporation or by-laws; each of
this Agreement and the other Operative Agreements to which it is or is to
be a party has been duly authorized, and has been duly executed and
delivered or, in the case of the Operative Agreements identified in Section
4.02(c) hereof, will on the Delivery Date be duly executed and delivered by
FSBU, either in its individual capacity or as the Owner Trustee, as the
case may be, and neither the execution and delivery thereof nor FSBU's
performance of or compliance with any of the terms and provisions thereof
will violate any Federal or state or local law or regulation governing
FSBU's banking or trust powers;
(iii)(A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by FSBU in its individual capacity, constitute the
legal, valid and binding obligation of FSBU in its individual capacity
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSBU in its individual capacity
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on FSBU in its individual
capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against FSBU before any court or administrative agency which
would materially and adversely affect the ability of FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under the Operative Agreements to which it is or is to be
party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of FSBU in its individual capacity or any of its Affiliates the
consent or approval of or the giving of notice to, the registration with,
or the taking of any other action in respect of, any Federal or Utah
governmental authority or agency governing its banking or trust powers; and
(vii) on the Certificate Closing Date, the Owner Trustee shall own
good title to the proceeds arising from the issuance and sale of the
Certificates, which proceeds shall be free of Lessor's Liens attributable
to FSBU in its individual capacity and on the Delivery Date the Owner
Trustee shall be holding whatever title to the Aircraft as was conveyed to
it by AVSA, the Aircraft shall be free of Lessor's Liens attributable to
FSBU in its individual capacity and FSBU in its individual capacity is a
Citizen of the United States.
(b) Lessor's Liens. FSBU, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Lessor's Estate or the Trust Indenture Estate (and as at the Delivery
Date, the Aircraft), and that there will not be any such Lessor's Liens
against, on or with respect to the Lessor's Estate or the Trust Indenture
Estate on the Certificate Closing Date or the Delivery Date. The Owner
Trustee, in its trust capacity, and at the cost and expense of the Lessee,
covenants that it will in its trust capacity promptly, and in any event within
30 days after the same shall first become known to it, take such action as may
be necessary to discharge duly any Lessor's Liens attributable to it in its
trust capacity. FSBU, in its individual capacity, covenants and agrees that
it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days after
the same shall first become known to it, any Lessor's Liens against, on or
with respect to the Lessor's Estate or the Trust Indenture Estate or,
following the Delivery Date, the Aircraft, attributable to it in its
individual capacity or the consolidated group of taxpayers of which it (in
such capacity) is a part which may arise at any time after the date of this
Agreement.
(c) Indemnity for Lessor's Liens. FSBU, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant and the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSBU to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSBU, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents on the date hereof and as of the
Certificate Closing Date and the Delivery Date as follows:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the other Operative
Agreements to which it is a party and to authenticate the Certificates to
be delivered on the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates to be delivered on the Certificate Closing Date, have been
duly authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or Massachusetts law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under, its articles of
association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is or is to be a party, has been duly
executed and delivered or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be executed
and delivered by it and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is (or will be,
as the case may be), the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee holds the
Liquid Collateral on behalf of the Owner Trustee and on the Delivery Date,
the Indenture Trustee will hold the original counterparts of the Lease and
the Lease Supplement.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Lessor's Estate or the Trust Indenture
Estate or, as at and following the Delivery Date, the Aircraft, and that there
will not be any Indenture Trustee's Liens against, on or with respect to the
Lessor's Estate or the Trust Indenture Estate on the Certificate Closing Date
or, as at and following the Delivery Date, the Aircraft. The Indenture
Trustee, in its individual capacity, covenants and agrees that it will at its
own expense take such action as may be necessary to duly discharge and satisfy
in full, promptly, and in any event within 30 days, after the same shall first
become known to it, any Indenture Trustee's Liens against, on or with respect
to the Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither the Owner Participant
(or the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as
the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, as the case may be).
Section 7.09. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a Massachusetts trust company duly organized and validly
existing in good standing under the laws of the Commonwealth of
Massachusetts and has the power and authority to enter into and perform its
obligations under the Pass Through Agreement, the Series Supplements and
this Agreement and to execute and authenticate the Pass Through
Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or Massachusetts
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee provided for
in this Article 7, and their respective obligations under any and all of them,
shall survive the Closings, the delivery of the Aircraft and the expiration or
other termination of this Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Event of
Default shall have occurred and be continuing then, upon compliance with the
applicable provisions of said Section 4.02(a) of the Lease, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to
the Lien of the Indenture, all of the Owner Trustee's right, title and
interest in and to the Aircraft, and if the Lessee, in connection with such
purchase, elects pursuant to Section 4.02(a)(A), (D) or (E) of the Lease to
assume the obligations of the Owner Trustee to the Indenture Trustee and the
Holders under the Indenture, the Certificates and hereunder, then the Lessee
shall so notify the Indenture Trustee (such notice to be given at least 30 and
not more than 60 days prior to the effective date of such assumption), and
each of the parties shall execute and deliver appropriate documentation
permitting the Lessee to assume such obligations on the basis of full recourse
to the Lessee, maintaining for the benefit of the Holders the security
interest in the Aircraft created by the Indenture, and upon compliance with the
provisions of this Section 7.11 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Certificates, the Indenture,
this Agreement and the other Operative Agreements, except any obligations
relating to the period prior to such assumption and take all such other
actions, at the Lessee's expense, as are reasonably necessary to permit such
assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Holders and the Indenture Trustee, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Certificate Closing Date or the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in clause
(A) or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Owner Participant in connection with
such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSBU and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any other provision of the Trust Agreement in a manner that would materially
adversely affect any such party without the prior written consent of such
party. The Owner Trustee confirms for the benefit of the Lessee, the
Indenture Trustee and the Pass Through Trustee that it will comply with the
provisions of Article 2 of the Trust Agreement. Notwithstanding anything else
to the contrary in the Trust Agreement, so long as the Lease remains in
effect, the Owner Participant agrees not to terminate or revoke the trust
created by the Trust Agreement without the consent of the Lessee. If and so
long as the Indenture shall not have been discharged the consent of the
Indenture Trustee shall also be required prior to any termination or
revocation of such trust and in addition, the Owner Participant will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement, any payments thereunder or
otherwise in connection therewith), by any Federal, state or local government
or taxing authority in the United States, or by any government or taxing
authority of a foreign country or of any political subdivision or taxing
authority thereof or by a territory or possession of the United States or an
international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the Indenture
Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement, any interest
therein or by reason of the transactions described in or contemplated by the
Operative Agreements;
(v) the principal or interest or other amounts payable with respect
to the Certificates;
(vi) the Pass Through Certificates or the Certificates or the
issuance, sale, acquisition, reoptimization, or refinancing thereof or the
beneficial interests in the Trust Estate or the Trust Indenture Estate or
the creation thereof under the Trust Agreement or the Indenture, or the
security interest created or perfected thereby or by any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and
Supplemental Rent), receipts or earnings arising from the Operative
Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured by or
with respect to the net or gross income, items of tax preference or minimum
tax or excess profits, receipts, value-added taxes, capital, franchise, net
worth (whether denominated income, excise, capital stock, or doing
business taxes) or other similarly-based taxes (other than sales, use,
transfer, rental, ad valorem, stamp, property, or similar taxes) ("Income
Taxes"), provided, however, that this clause (i) shall not exclude from the
indemnity described in Section 8.01(a) above any such Income Taxes to the
extent such taxes are imposed by any jurisdiction in which the Indemnitee
would not be subject to such taxes but for, or would be subject to such
taxes solely as a result of, (x) the operation, registration, location,
presence, or use of the Aircraft, Airframe, any Engine or any Part thereof,
in such jurisdiction or (y) the place of incorporation or principal office
or the activities of the Lessee or any sublessee in such jurisdiction (it
being understood that (A) any such indemnity would be payable only to the
extent of the net harm incurred by the Indemnitee from such Income Taxes,
taking into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements were the Indemnitee's sole nexus to the jurisdiction);
provided, further, that the provisions of this paragraph (b)(i) relating to
Income Taxes shall not exclude from the indemnity described in Section
8.01(a) hereof any Income Taxes for which the Lessee would be required to
indemnify an Indemnitee (x) so that any payment under the Operative
Agreements, otherwise required to be made on an After-Tax Basis, is made on
an After-Tax Basis or (y) pursuant to the last sentence of Section 8.02,
8.05, 9.02 or 9.05 of this Agreement;
(ii) [Intentionally Left Blank];
(iii) Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods (or any combination of the
foregoing) which occur after the later of (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements, and (B) the earliest of (x) the expiration of the
Term of the Lease and return of the Aircraft in accordance with Article 12
of the Lease, (y) the termination of the Lease in accordance with the
applicable provisions of the Lease and return of the Aircraft in accordance
with the Lease, or (z) the termination of the Lease in accordance with the
applicable provisions of the Lease and the transfer of all right, title and
interest in the Aircraft to the Lessee pursuant to its exercise of any of
its purchase options set forth in Section 4.02(a) of the Lease, provided
that this exclusion (iii) shall not apply in respect of any payment made
after the dates set forth in clauses (A) and (B) above unless such payment
is made with respect to any event or circumstance occurring on, with or
prior to such return or transfer or period prior to such return or
transfer, or Taxes incurred in connection with the exercise of any remedies
pursuant to Article 17 of the Lease following the occurrence of an Event of
Default;
(iv) As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Trust Agreement or, as to the Indenture Trustee,
Taxes imposed against the Indenture Trustee upon or with respect to any
fees received by it for services rendered in its capacity as Indenture
Trustee under the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements)
or the breach by such Indemnitee of: (i) in the case of an Indemnitee other
than the Owner Participant, any representation, warranty or covenant
contained in the Operative Agreements or any document delivered in
connection therewith and (ii) in the case of the Owner Participant, the
representations or covenants in Sections 7.02(a), (c); 7.03(a)(i), (ii),
(iii), (iv), (vii), (ix); and 7.03(b), (c), (d), (e) of this Agreement (in
either case unless attributable to a breach of representation, warranty or
covenant of the Lessee);
(vi) Taxes imposed on, and not collected by withholding from
payments of Rent, the Owner Trustee or the Owner Participant or any
successor, assign or Affiliate thereof which became payable by reason of
any voluntary or involuntary transfer or disposition by such Indemnitee
subsequent to the Delivery Date, including revocation of the Trust, of any
interest in some or all of the Aircraft, Airframe, Engines or Parts thereof
or its interest in the Lessor's Estate (not including any transfers of any
Certificates pursuant to Section 15.01(a) hereof) or a disposition in
connection with a bankruptcy or similar proceedings involving either the
Lessor or the Owner Participant other than (A) transfers resulting from a
loss, substitution or modification of the Aircraft, Engines or any Part,
(B) any transfer of the Aircraft, Engines or any Part (in each case other
than at Fair Market Value) to the Lessee or other person in possession
thereof, (C) transfers attributable to an Event of Default or (D) a
transfer pursuant to the Lessee's exercise of its rights under Section
10.01 of the Lease; the parties agree to cooperate to minimize any such
Taxes covered by this provision;
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or an
Indemnitee as of the date hereof under the Operative Agreements (including,
without limitation, a transferee which is a new lending office of an
original Indemnitee) which on the Certificate Closing Date is an Indemnitee
(for purposes of this clause (viii), an "original Indemnitee") or such
original Indemnitee to the extent that such Taxes exceed the amount of
Taxes that would have been imposed and would have been indemnifiable
pursuant to Section 8.01(a) had there not been a succession, assignment or
other transfer by such original Indemnitee of any such interest of such
Indemnitee in the Aircraft or any Part, any interest in or under any
Operative Agreement, or any proceeds thereunder (it being understood that
for purposes of determining the amount of indemnification that would have
been due to such original Indemnitee with respect to a net income Tax, it
shall be assumed that such original Indemnitee would be subject to taxation
on its income at the highest marginal statutory rate applicable to it),
provided, however, that the exclusion provided by this clause (viii) shall
not apply in the case of a succession, transfer or disposition (A) that
occurs after the Lease has been declared in default or if such transfer or
disposition is pursuant to the exercise of remedies under Article 17
of the Lease, (B) which is an actual or deemed transfer pursuant to
Section 7.11 hereof or as a consequence of a Refinancing under Section
15.01 hereof, or any actual or deemed transfer of a Certificate
that as part of a Refinancing under Section 15.01 hereof is not
retired, but only to the extent the Taxes attributable to such transfer
exceed the amount of Taxes that would have been imposed on such transferor
if the debt had instead been retired, (C) to the extent necessary to make
payments with respect to such Taxes on an After-Tax Basis, (D) to the
extent such Taxes are directly attributable to the failure of the Lessee to
take administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost or
expense to the Lessee or (E) in the case of the Owner Participant or the
Lessor, to any Tax other than an Income Tax;
(ix) [Intentionally Left Blank];
(x) Any Taxes which have been included in the Purchase Price and
which have been paid to the applicable taxing authorities;
(xi) Any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien; and
(xii) Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited Transaction");
provided, however, that in the event any prohibited transaction arises
which is not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually or
collectively, a "PTE") then the indemnity provided for herein shall extend
to any Taxes incurred by the Owner Participant (or any Affiliate thereof)
as the result of any Prohibited Transaction arising out of the purchase or
holding of any Loan Certificates by an employee benefit plan subject to
Title I of ERISA or by a plan subject to Section 4975 of the Code
(individually or collectively, an "ERISA Plan") with respect to which the
Owner Participant is a party in interest, within the meaning of Section
3(14) of ERISA, or a disqualified person,within the meaning of Section 4975
of the Code, except, however, that such Indemnity shall not extend to any
Taxes incurred by the Owner Participant (or any Affiliate thereof) as the
result of any Prohibited Transaction occurring with respect to the purchase
or holding of any Loan Certificates (A) over which purchase or holding the
Owner Participant (or an Affiliate thereof) has discretion or control
(other than in the capacity of a custodian, directed trustee or other
similar nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a tax benefit by reason
of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized by such Indemnitee that would not have been
realized but for any payment made by such Indemnitee pursuant to this sentence
and not already paid to the Lessee, and (y) the amount of the payment made
under Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore required to be made under this Section 8.02 and
Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment to
the Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee (and without regard to Section 8.01(b) hereof,
except for clause (v) thereof) for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is subsequently disallowed or reduced (including the
expiration of any tax credit carryovers or carrybacks of such Indemnitee that
would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by Lessee with respect to such Taxes.
Section 8.10. Obligations of Lessee Unsecured. Notwithstanding
anything in this Article 8 to the contrary, the Lessee shall hold the Owner
Participant harmless on an After-Tax Basis from any Taxes or losses arising
from or in connection with the transactions contemplated by Section 17.02
hereof.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements except as otherwise provided in Section 10.01(d)(i)
or Article 15 hereof) of every kind and nature, including without limitation
Make-Whole Premium (unless excluded pursuant to Section 3.03 of the Lease)
(whether or not any of the transactions contemplated by this Agreement are
consummated) (individually, an "Expense," collectively, "Expenses"), which
may be imposed on, incurred or suffered by or asserted against any Indemnitee,
in any way relating to, based on or arising out of:
(i) this Agreement (including, without limitation, the execution,
delivery and performance hereof by the Owner Participant prior to the
delivery of the Aircraft), the Lease, the Indenture, the Trust Agreement,
the Pass Through Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill
of Sale or any other Operative Agreement or any other document entered into
in connection herewith or any sublease or transfer or any transactions
contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements,
or the falsity or inaccuracy of any representation or warranty of the
Lessee in any of the Operative Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements and the
administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
and the Lessor's Estate, the Indenture or the Trust Indenture Estate
(including, without limitation, any claim arising out of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or
any other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the Owner
Trustee or Indenture Trustee as trustees, in the manner contemplated by
this Agreement, the Indenture, the Indenture and Security Agreement
Supplement or the Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements), and such Expense does not fall within any of the
exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) after the Delivery Date, is in respect of the Aircraft, and is
attributable to acts or events which occur after the Aircraft is no longer
part of the Lessor's Estate or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (unless the Aircraft is
being returned at such time, in which case after return of physical
possession; provided that if the Lessor has terminated the Lease pursuant
to Article 17 thereof, the indemnity provided in Section 9.01(a) hereof
shall survive for so long as Lessor shall be exercising remedies under such
Article 17), or to acts or events which occur after return of possession of
the Aircraft by the Lessee in accordance with the provisions of the Lease
(subject to the foregoing proviso if the Lessor has terminated the Lease
pursuant to Article 17 of the Lease) but in any such case only to the
extent not fairly attributable to acts or omissions of the Lessee prior to
expiration of the Term, including without limitation the Lessee's failure
to fully discharge all of its obligations under the Lease or the other
Operative Agreements;
(iii) is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to
the Tax Indemnity Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement and for which the Lessee
is not otherwise obligated to reimburse the Owner Participant, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement or any other Operative Agreement to which it is a party unless
such breach or default shall be a result of the breach or default by the
Lessee of any of its obligations under the Operative Agreements or by
another Indemnitee of any of the foregoing;
(vi) is a payment required to be made by the Owner Participant
pursuant to Section 3.02(b) hereof, but nothing contained in this Section
9.01(b)(vi) shall be deemed or construed to limit the obligations of the
Lessee to the Indenture Trustee and Holders of the Certificates pursuant to
Section 3.05 of the Lease;
(vii) is, in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; in
the case of FSBU, Lessor's Liens to the extent attributable to FSBU; and in
the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) is, in the case of the Owner Participant or the Owner Trustee,
attributable to the offer or sale by such Indemnitee after the Certificate
Closing Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest (including an offer or sale
resulting from bankruptcy or other proceedings for the relief of debtors in
which such Indemnitee is the debtor), unless in each case such offer or
sale shall occur (x) in connection with a Refinancing, (y) as a result of
the occurrence of an Event of Default provided that either the Lease has
been declared in default or the transfer is pursuant to the exercise of
remedies under Article 17 of the Lease or (z) in connection with the
Lessee's exercise of its early termination option under Article 10 of the
Lease or its purchase options under Article 4 of the Lease or in connection
with Article 11 of the Lease;
(ix) is an Expense arising under or in connection with any prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code ("Prohibited Transaction"); provided, however, that
in the event any prohibited transaction arises which is not exempt under
any class prohibited transaction exemption or any individual or statutory
prohibited transaction exemption (individually or collectively, a "PTE")
then the indemnity provided for herein shall extend to any Expenses
incurred by the Owner Participant (or any Affiliate thereof) as the result
of any Prohibited Transaction arising out of the purchase or holding of any
Certificates by an employee benefit plan subject to Title I of ERISA or by
a plan subject to Section 4975 of the Code (individually or collectively,
an "ERISA Plan") with respect to which the Owner Participant is a party in
interest, within the meaning of Section 3(14) of ERISA, or a disqualified
person,within the meaning of Section 4975 of the Code, except, however, that
such Indemnity shall not extend to any Expenses incurred by the Owner
Participant (or any Affiliate thereof) as the result of any Prohibited
Transaction occurring with respect to the purchase or holding of any
Certificates (A) over which purchase or holding the Owner Participant (or
an Affiliate thereof) has discretion or control (other than in the capacity
of a custodian, directed trustee or other similar nondiscretionary
capacity), or (B) by an ERISA Plan with respect to which the Owner
Participant (or any Affiliate thereof) is a "plan sponsor" within the
meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the Tax
Indemnity Agreement and any other Operative Agreement, an amount equal to the
lesser of (x) the sum of such Tax benefit plus any other permanent Tax benefit
actually realized by such Indemnitee as the result of any payment made by such
Indemnitee pursuant to this sentence and (y) the amount of such payment
pursuant to this Section 9.02 by the Lessee to such Indemnitee plus the amount
of any other payments by the Lessee to such Indemnitee theretofore made
pursuant to this Section 9.02 less the amount of any payments by such
Indemnitee to the Lessee theretofore made pursuant to this Section 9.02 (and
the excess, if any, of the amount described in clause (x) above over the
amount described in clause (y) above shall be carried forward and applied to
reduce pro tanto any subsequent obligations of the Lessee to make payments to
such Indemnitee pursuant to this Section 9.02), it being intended that no
Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has received notice for which the Lessee is, or may be, liable
under this Article 9; provided, however, that failure to give such notice
shall not terminate any of the rights of the Indemnitees under this Article 9,
except (with respect to such Indemnitee) to the extent that the Lessee has
been materially prejudiced by the failure to provide such notice. Unless
otherwise provided in the Operative Agreements, any amount payable to an
Indemnitee pursuant to this Article 9 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v)
hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Payment Default or
Event of Default shall have occurred and be continuing or shall arise at any
time during the claim and (iii) the Lessee shall have first acknowledged in
writing to such Indemnitee the Lessee's obligation to indemnify such
Indemnitee hereunder in respect of such claim, defend any such claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent (A) such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel or on the grounds that such proceeding
involves the potential imposition of criminal liability on such Indemnitee or
(B) such proceeding will involve any material danger of the sale, forfeiture
or loss of, or the creation of any Lien on the Aircraft or the Trust Estate
(unless the Lessee posts a bond or other security reasonably acceptable in
form and substance to such Indemnitee) or involve any material risk of civil
liability to such Indemnitee for which it is not indemnified hereunder.
Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal
fees or expenses of such Indemnitee in connection with the defense of such
claim shall be indemnified hereunder unless the fees or expenses were incurred
at the written request of the Lessee or such insurers. Subject to the
requirement of any policy of insurance applicable to a claim, an Indemnitee
may participate at its own expense at any judicial proceeding controlled by
the Lessee or its insurers pursuant to the preceding provisions, to the extent
that such party's participation does not, in the opinion of the independent
counsel appointed by the Lessee or its insurers to conduct such proceedings,
interfere with such control; and such participation shall not constitute a
waiver of the indemnification provided in this Section 9.06. No Indemnitee
shall enter into any settlement or other compromise with respect to any claim
described in this Section 9.06 without the prior written consent of the
Lessee, which consent shall not unreasonably be withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Article 9 with
respect to such claim. The Lessee shall not enter into any settlement or
compromise which the Lessee has not agreed to discharge or with respect to
which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the
prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities after the expiration or other
termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing (or fairly attributable
to the Lessee's acts or omissions) prior to such termination or expiration or
incurred in the process of (i) the return or disposition of the Aircraft under
Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or
the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
Section 9.10. Obligations of Lessee Unsecured. Notwithstanding
anything in this Article 9 to the contrary, the Lessee shall hold the Owner
Participant harmless on an After-Tax Basis from any Taxes or losses arising
from or in connection with the transactions contemplated by Section 17.02
hereof.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment) all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby on the Certificate Closing Date and the
Delivery Date: (i) the fees and expenses of counsel for the Owner Participant;
(ii) the fees and expenses of the transaction documentation counsel and
counsel for the Owner Trustee, the Indenture Trustee, the Pass Through Trustee
and the Underwriters (other than those fees, expenses and disbursements
payable by the Underwriters pursuant to the Underwriting Agreement); (iii) the
fees and expenses of Daugherty, Fowler & Peregrin; (iv) any initial fees and
expenses of the Pass Through Trustee and the fees and expenses of the Owner
Trustee and the Indenture Trustee; (v) any compensation, commissions and
discounts payable to the Underwriters pursuant to the Underwriting Agreement;
(vi) the fees, if any, incurred in printing the Pass Through Certificates;
(vii) the fees and expenses incurred in connection with printing any amendment
to the Registration Statement on Form S-3 bearing Registration No. 33-56569,
printing any Preliminary Prospectus or Prospectus (as such terms are defined
in the Underwriting Agreement) for the offering of the Pass Through
Certificates; (viii) the fees and expenses of Arthur Andersen, LLP; (ix) the
fees and expenses of Moody's and S&P; (x) the fees and expenses (including
computer time-sharing charges) of First Chicago Leasing Corporation; (xi) the
reasonable out-of-pocket expenses of the Owner Participant, including,
without limitation, any amounts paid in connection with any
appraisal report prepared on behalf of the Owner Participant; (xii)
reimbursement to the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee for any and all fees, expenses and
disbursements of the character referred to above or otherwise incurred in
connection with the negotiation, preparation, execution and delivery, filing
and recording of the Operative Agreements and the documents contemplated
thereby, including, without limitation, travel expenses and disbursements
which shall have been paid by such party; (xiii) printing and duplicating
expenses and all fees, taxes and other charges payable in connection with the
recording or filing on or before the Delivery Date of the instruments
described in this Agreement; (xiv) initial fees, initial expenses, initial
disbursements and the initial costs of distributing the Certificates (but not
the continuing fees, expenses, disbursements and costs of distribution) of
FSBU, as lessor under the Lease and as Owner Trustee under the Trust Agreement
and with respect to the administration of the Lease and the Lessor's Estate,
and of the Indenture Trustee as trustee under the Indenture with respect to
the administration of the Trust Indenture Estate; (xv) any other amounts
approved by the Lessee and the Owner Participant.
The fees and expenses described in clauses (ii) through (x) of
this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant, and (2) to the extent such fees and expenses are incurred but are
not specifically attributable to the Owner Participant, in the proportion that
the principal amount of the Certificates bears to the total amount of the Pass
Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is 1.19%
of the Purchase Price (the "Estimated Expense Amount"). Transaction Costs
shall be paid in the manner provided in Section 3.04 hereof.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of the
foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom, or (b) the
enforcement of the obligations of the Lessee hereunder or under the other
Operative Agreements, including, without limitation, the entering into or
giving or withholding of any amendments or supplements or waivers or
consents (whether or not consummated), including without limitation, any
amendment, supplement, waiver or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under this Agreement, the Lease, the Indenture, the
Certificates, the Tax Indemnity Agreement, the Purchase Agreement
Assignment or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement (including
any adjustment pursuant to Section 3.04 of the Lease) or is requested by
the Lessee or necessitated by the action or inaction of the Lessee;
provided, however, that the Lessee shall not be responsible for fees and
expenses incurred in connection with the offer, sale or other transfer
(whether pursuant to Section 7.03(d) hereof or otherwise) by the Owner
Participant after the Certificate Closing Date of any interest in the
Aircraft, the Lessor's Estate, the Beneficial Interest or the Trust
Agreement or any similar interest (and the Owner Participant shall be
responsible for all such fees and expenses), unless such offer, sale or
transfer shall occur (A) after the Lease has been declared in default or if
the transfer is pursuant to the exercise of remedies under Article 17 of
the Lease or (B) in connection with the termination of the Lease or action
or direction of the Lessee pursuant to Section 4.02, Article 10 or Article
11 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement, the Trust Agreement, the Lease, the Lease
Supplement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the Indenture, the Indenture Supplement and any other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Transportation Code and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, AVSA's FAA Bill of Sale,
AVSA's Warranty Bill of Sale, the Lease or any other Operative Agreement to
which the Owner Participant is a party and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant be
liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, the ownership
of the Aircraft, the administration of the Lessor's Estate or the Trust
Indenture Estate or otherwise, whether or not such action or inaction is
caused by the willful misconduct or gross negligence of the Owner Trustee or
the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Trust Agreement, the
Indenture or the Certificates, except that no section of the Indenture or the
Trust Agreement shall be amended or modified in any manner which materially
adversely affects the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. Pass Through Trustee's Acknowledgment. The Pass
Through Trustee hereby acknowledges and agrees to be bound by all of the terms
and conditions of the Indenture, including without limitation, Section 8.01
thereof regarding the rights of the Owner Participant to purchase the
Certificates under circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758; or to such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5826, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 800 Westchester
Avenue, Rye Brook, New York 10573-1301, Attention: Vice President Leasing
with a copy to Director, Portfolio Administration, telephone (914)
335-5000, facsimile (914) 335-1287, or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee; and
(d) If to the Indenture Trustee or the Pass Through Trustee, to its
office at Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, telephone (617) 664-5414, facsimile
(617) 664-5371; or to such other address as the Indenture Trustee or the
Pass Through Trustee, as the case may be, shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to two refinancings in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"). Such
Refinancings may be placed in either the private or public markets and shall
be denominated in United States dollars (or in any other foreign currency so
long as the Owner Participant is satisfied there is no foreign currency risk
to it), and shall be on terms that do not materially adversely affect the
Owner Participant. The Owner Participant agrees to negotiate promptly in good
faith to conclude an agreement with the Lessee as to the terms of any such
Refinancing transaction (including the terms of any debt to be issued in
connection with such refinancing and the documentation to be executed in
connection therewith). Without the prior written consent of the Owner
Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant in a manner satisfactory to it for any liabilities under federal,
state or foreign securities laws resulting from such offering. The aggregate
principal amount of the new Certificates issued in connection with each
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days prior written notice (three (3) Business Days
with respect to the initial Refinancing) of the scheduled closing date of such
Refinancing and the Owner Participant shall have been provided such longer
period as it shall have required for a reasonable opportunity to review the
relevant documentation and the Owner Participant shall have determined in good
faith that neither it nor the Owner Trustee shall suffer any loss or expense
or bear any increased risk as a result of such Refinancing (including, without
limitation, any risk with respect to taxes or other adverse consequences to
the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for which it has not been or will not
have been indemnified by the Lessee in a manner reasonably satisfactory to the
Owner Participant, nor shall its rights against all other parties taken as a
whole be adversely affected compared to such rights in effect under the
Operative Agreements prior to such proposed Refinancing.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, which
consent may be withheld in its sole discretion, no such refinancing shall (1)
cause the aggregate principal amount of the indebtedness to be substituted for
the Loan Certificates to exceed the aggregate principal amount of the then
outstanding Loan Certificates, (2) cause the weighted average life of such
indebtedness to be different by more than 6 months than the remaining weighted
average life of the then outstanding Loan Certificates, or (3) cause the date
of maturity of such indebtedness to be later than the date of maturity of the
Loan Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
breakage costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any breakage costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing or would occur immediately after
giving effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase of
the Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan or individual retirement account, which is
subject to Section 4975(c) of the Code, (individually or collectively, an
"ERISA Plan"), the Lessee will permit the placement of the Refinancing loan
certificates with an ERISA Plan only if either (A) if such placement is in
the form of pass through certificates, the sole underwriter or the manager
or co-manager of the underwriting syndicate or the selling or placement
agent of the Refinancing loan certificates represents to the Lessee that it
has a prohibited transaction exemption from the U.S. Department of Labor
with respect to pass through certificates (such as Prohibited Transaction
Exemption 89-88 or any other comparable exemption) or (B) purchasers of the
Refinancing loan certificates provide a representation (which may be in the
form of a deemed representation) regarding their source of funds used in
acquiring the Refinancing loan certificates and, if such purchasers
represent that they are using funds of an ERISA Plan in acquiring the
Refinancing loan certificates, such purchasers further represent that (1)
either they are relying on a prohibited transaction exemption from the U.S.
Department of Labor with respect to their purchase and holding of the
Refinancing loan certificates and they provide representations regarding the
satisfaction of the relevant conditions of such an exemption or (2) their
purchase and holding of the Refinancing loan certificates will not
constitute a non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code. The reliance on any such exemption will not
be conditional on the Owner Participant's representation concerning its
party in interest or other status with respect to ERISA Plans. If neither
exemption referred to in clause (A) or (B) of this paragraph (viii) is
valid or applicable in any respect to the purchase and holding of the
Refinancing loan certificates, or if the representation in clause (B) of
this paragraph (viii) that such purchase and holding will not constitute a
non-exempt prohibited transaction is not correct, whichever is applicable,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Sections 8 and 9 hereof for Taxes and
Expenses resulting from any "prohibited transaction", within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with
respect to the placement of the Refinancing loan certificates with, or the
holding of the Refinancing loan certificates by, any ERISA Plan with
respect to which the Owner Participant is a party in interest, within the
meaning of Section 3(14) of ERISA, or a disqualified person, within the
meaning of Section 4975 of the Code, provided, however, that if the Lessee
shall fail to obtain either of the representations set forth in clause (A)
or (B) of this paragraph (viii), such indemnity shall not be subject to the
exceptions set forth under Sections 8.01(b)(xii)(A) and (B) and
9.01(b)(ix)(A) and (B) hereof; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing using private debt (not including debt issued
pursuant to an exemption from registration under the Securities Act relying on
Rule 144A promulgated thereunder but otherwise marketed in a manner
substantially similar to securities registered under the Securities Act, and
not including debt issued in connection with any offering of securities
registered under the Securities Act) due on each remaining Rent Payment Date
on or commencing on the Rent Payment Date next succeeding the date mutually
agreed to by the Owner Participant, the Lessee and the Indenture Trustee on
which the Owner Participant shall make such modification (the "Reoptimization
Date"). Promptly after making such modification, the Owner Participant shall
furnish each party hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that it is the intent of the parties for
Federal, state, local and foreign income tax purposes that the Owner
Participant will be treated as the owner of the Aircraft and the Lessee will
be treated as the lessee of the Aircraft.
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). Promptly upon receipt of such notification but, in any event, no
later than the earlier of the Delivery Date and the Cut-Off Date, the Lessee
shall pay to the Indenture Trustee, on behalf of the Owner Trustee, for
deposit into the Collateral Account, an amount equal to such Losses (net of
any investment earnings).
(b) The Lessee shall pay to the Indenture Trustee, on behalf of the
Owner Trustee, on the Commencement Date an amount equal to the aggregate
amount of interest accrued on the Certificates from (and including) the
Certificate Closing Date to (but excluding) the Delivery Date.
(c) If the Aircraft has neither (i) been purchased by the Owner
Trustee on the Delivery Date nor (ii) been acquired by the Lessee in the
manner contemplated by Section 3.05(a)(ii) hereof, the Lessee agrees to pay to
the Indenture Trustee, on behalf of the Owner Trustee, on the 15th day
following the Cut-Off Date the excess, if any, of the amounts payable under
Section 6.02(b)(1) of the Indenture over the amounts released from the
Collateral Account under Section 2.16 of the Indenture.
(d) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee at its principal office at Two
International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department, or as the Indenture Trustee may otherwise direct
within the United States, by wire transfer of immediately available funds in
U.S. Dollars no later than 10:30 a.m., New York City time, on the due date of
such payment.
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive an Opinion of Counsel (as defined in the Pass Through
Agreement) necessary, in its sole discretion, to establish that the Indenture
Trustee's consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture and the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee. Each of FSBU and SSB is entering into this
Agreement solely in their respective capacities (except to the extent
otherwise expressly indicated), in the case of FSBU, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, in the case of
SSB, not in its individual capacity but solely as Indenture Trustee under the
Indenture and as Pass Through Trustee under the Pass Through Agreement, and
except as otherwise expressly provided in this Agreement or in the Lease, the
Indenture, the Pass Through Agreement or the Trust Agreement, neither FSBU,
nor SSB, shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of FSBU and SSB accepts the benefits running to
it under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens
and (g) taxes, fees or other charges on, or based on, or measured by, any
fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each
instance obtain the prior written approval of each other party to this
Agreement concerning the exact text and timing of news releases, articles and
other information releases to the public media concerning any Operative
Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or
indirectly on account of any amount payable as Make-Whole Premium,
principal or interest on the Certificates, or any other amount payable on any
Certificate that is provided in the Operative Agreements to be nonrecourse to
the Owner Participant and (iii) the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Participant such Recourse Amount. For purposes of this
Section 17.10, "Recourse Amount" means the amount by which the portion of such
payment by the Owner Participant on account of clause (ii) above received by
the Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Lessee and the other parties hereto agree that the transactions contemplated
by the Operative Agreements are expressly intended to be, shall be and should
be construed so as to be entitled to the benefits and protection of Section
1110 of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this 5th day of June, 1996.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name:Robert D. Henning
Title:Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
PMCC LEASING CORPORATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1996-A1
Federal Express Corporation Trust No. N669FE
Interest Rate: 7.85%
Maturity: January 30, 2015
Principal Amount: $52,858,000.00
2. Federal Express Corporation Pass Through Trust, 1996-A2
Federal Express Corporation Trust No. N669FE
Interest Rate: 8.17%
Maturity: January 30, 2018
Principal Amount: $9,213,000.00
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease. Prior to delivery of the initial Lease Supplement, references in the
Operative Agreements (including Section 3.05 of the Participation Agreement)
to Aircraft shall mean the Airbus A300F4-605R airframe bearing FAA
Registration Number N669FE and Manufacturer's serial number 774, together with
two General Electric CF6-80C2-A5F engines bearing Manufacturer's serial
numbers 705-241 and 705-242.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on or prior to the Delivery Date or any date thereafter in connection
with the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time with the consent
of the Lessor and delivered to the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N669FE), dated the Certificate Closing Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal
Express Corporation Trust No. N669FE), dated the Certificate Closing Date,
among the Lessee, the Owner Trustee, not in its individual capacity, but
solely as Owner Trustee, the Owner Participant and the Indenture Trustee not
in its individual capacity, but solely as Indenture Trustee, as originally
executed or as amended, modified or supplemented with the consent of all the
parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.02(h) of the Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France, and its successors and
assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
June 1, 1996, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse
of time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Commencement Date and ending at the end of the day on September 25, 2019,
or such earlier date on which the Lease shall be terminated as provided
therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in which the office or agency in the United States is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Salt Lake City, Utah.
Certificate Closing Date. The date of the closing with respect to
the purchase of Certificates by the Pass Through Trustee contemplated by
Section 2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N669FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury, provided that the Owner Participant or the
Lessee has notified the other party of such change in writing prior to the
Delivery Date.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Commencement Date. July 30, 1996.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid as provided in
Section 3.02 of the Participation Agreement.
Consent and Agreement. The Consent and Agreement dated as of June
1, 1996 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Administration. The principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Participant and the Owner Trustee.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or such other office at which the Owner
Trustee's corporate trust business shall be administered which the Owner
Trustee shall have specified by notice in writing to the Lessee, the Owner
Participant and the Indenture Trustee.
CRAF Program. Has the meaning specified in Section 7.01(f) of the
Lease.
Cut-Off Date. September 30, 1996.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also must have a
combined capital and surplus of at least $100,000,000 and a rating of A or
better from the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the
District of Columbia, or any domestic branch of a foreign bank, which in any
such case at all times (a) has either (x) a long-term unsecured debt rating of
at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of
P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a
least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by
S&P and (c) is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by manufacturer's serial numbers in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or
12.02 of the Lease, together with all Parts related thereto. Except as
otherwise provided, at such time as a Replacement Engine shall be so
substituted and the Engine for which the substitution is made shall be
released from the Lien of the Indenture, such replaced Engine shall cease to
be an "Engine" under the Lease. The term "Engines" means, as of any date of
determination, both Engines then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of June 1, 1996,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N669FE), dated as of June 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 7.06 of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
FSBU. First Security Bank of Utah, National Association, a
national banking association.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming the Aircraft (or other property) is
unencumbered by the Lease. In such determination, except for purposes of
Section 17.01 of the Lease (when it shall be determined based upon the actual
condition and location of the Aircraft), it shall be assumed that the Aircraft
is in the condition required under the Lease in the case of return of the
Aircraft pursuant to Article 12 of the Lease and Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement dated as of
June 1, 1996 between the Owner Trustee and the Indenture Trustee.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the Lessee
of the Engines as originally executed or as modified, amended or supplemented
in accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, any Owner Participant Guarantor, and any
successor (including any trustee which may succeed to the Lessor's interest
under the Lease), Affiliate, assign, officer, director, employee, agent and
servant of any of the foregoing, the Lessor's Estate and the Trust Indenture
Estate. Neither the Certificate Holder nor any holder of a Pass Through
Certificate shall be deemed to be an Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N669FE), dated as of June 1, 1996, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement, and as said Indenture may from time to time be
further supplemented or amended, including any amendment or supplement thereto
entered into from time to time pursuant to the applicable provisions of the
Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N669FE) to be dated the Delivery Date, as such Indenture and Security
Agreement Supplement shall be amended or supplemented from time to time and
any other supplement to the Indenture, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the
Lessee has not indemnified (and is not obligated to indemnify) the Indenture
Trustee in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and
ending at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N669FE) dated as of June 1, 1996, entered into by the Lessor and the Lessee
concurrently with the execution and delivery of the Indenture, as said Lease
may from time to time be supplemented or amended, or its terms waived or
modified, to the extent permitted by, and in accordance with, the terms of the
Indenture, including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N669FE) to be dated the Delivery Date, as such Lease
Supplement shall be amended or supplemented from time to time and any other
supplement to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and
its successors and permitted assigns.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary
Agreement, the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity or the Owner Participant) and requisition,
indemnity or other payments of any kind for or with respect to the Aircraft
(except amounts owing to the Owner Participant, to the Indenture Trustee, to
the Owner Trustee in its individual capacity, or to any of their respective
directors, officers, employees and agents pursuant to Articles 8 and 9 of the
Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any
Excepted Payment.
Lessor's Liens. Liens on the Lessor's Estate or the Trust
Indenture Estate arising as a result of (i) claims against the Lessor, in its
individual capacity or as Owner Trustee, or the Owner Participant, in each
case not related to the transactions contemplated by the Operative Agreements,
(ii) acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Article 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from time
to time in the Collateral Account and all the products, investments, earnings
and proceeds of the foregoing, including, but not limited to, all proceeds of
the investment or conversion thereof, voluntary or involuntary, into cash,
Specified Investments or other property, all rights to payment of any and
every kind, and other forms of obligations, and instruments and other property
which at any time constitute all or part or are included in the proceeds of
any of the foregoing.
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to the excess, if any, of
(i) the present values of all remaining scheduled payments of such principal
amount or portion thereof and interest thereon (excluding interest accrued
from the immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent, the
Tax Indemnity Agreement and any Assignment and Assumption Agreement, each as
amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of
the Indenture; provided, that if such Certificates are to be
prepaid, notice of such prepayment has been duly given pursuant to
the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement, and its successors and permitted assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages, as the case may be, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N669FE), dated as of June 1, 1996, among the
Lessee, the Owner Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as owner trustee, the Owner
Participant, the Indenture Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as indenture trustee and the
Pass Through Trustee not in its individual capacity except as otherwise
expressly provided therein, but solely as pass through trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of February 1, 1993, as amended and restated as of October 1, 1995 between the
Lessee and the Pass Through Trustee, as such Pass Through Agreement may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof.
Pass Through Certificates. Any of the 1996 Pass Through
Certificates, Series A1 or 1996 Pass Through Certificates, Series A2, in each
case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means both of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust,
1996-A1 or Federal Express Pass Through Trust, 1996-A2, in each case formed
pursuant to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. September 25, 2019 and each January 30 and July 30
commencing on July 30, 1996.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Certificates having
a Maturity in 2015, June 11, 2008 and with respect to the Certificates having a
Maturity in 2018, November 24, 2016.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. The proposed date of termination of the
Lease as specified by the Lessee in its notice given pursuant to Section 10.01
thereof.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N669FE), dated as of June 1, 1996
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Ancillary
Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), January 15 for January 30
Payment Dates and July 15 for July 30 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. September 25, 2019 and each January 30 and July
30 commencing on July 30, 1996.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
SSB. State Street Bank and Trust Company, a Massachusetts trust
company.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
Securities Act. The Securities Act of 1933, as amended.
Series Supplement. The Series Supplement 1996-A1 to be executed
and delivered by the Lessee and the Pass Through Trustee or the Series
Supplement 1996-A2 to be executed and delivered by the Lessee and the Pass
Through Trustee, in each case as such Series Supplement may be modified,
supplemented or amended from time to time in accordance with the provisions
thereof and "Series Supplements" means both such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Specified Investments. Shall mean (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 voting
organization; (c) overnight federal funds transactions with members of the
Federal Reserve Systems 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.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value for the Aircraft shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of Stipulated Loss Value as does not
constitute an Excepted Payment, at least sufficient to pay in full as of such
date of payment the aggregate unpaid principal amount of and accrued interest
on the Certificates outstanding on such date of payment. Subject to the
immediately preceding sentence, it is understood and agreed that the amounts
set forth on Schedule III of the Lease, for dates other than Rent Payment
Dates on which arrears Basic Rent is due, fully reflect appropriate Basic Rent
accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Stipulated Loss Value is to be calculated with reference to any such
date; provided that if amounts in respect of Stipulated Loss Value are payable
under the Operative Agreements after the Stipulated Loss Determination Date in
respect of which such Stipulated Loss Value was determined, the Lessor shall
be compensated during the period from the Stipulated Loss Determination Date
to such payment date in accordance with the provisions of the Operative
Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant, the
Indenture Trustee or others, including, without limitation, payments of
Stipulated Loss Value, FPO Price and amounts calculated by reference to
Termination Value, any amounts of Make-Whole Premium payable under the
Indenture to the extent provided in Section 3.03 of the Lease, and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N669FE), dated as of June 1, 1996, between the
Lessee and the Owner Participant, as from time to time modified, amended or
supplemented pursuant to its applicable provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2003 in the case of Article 10 of the Lease, and
in the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date
falling on July 30, 2017, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent
Payment Date that is on or after the seventh anniversary of the Commencement
Date and (iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time
as provided in Section 3.04 of the Lease). Notwithstanding any other
provisions of the Lease, the Participation Agreement or the Indenture, each
Termination Value shall be, under any circumstances and in any event, an
amount, together with so much of the arrears portion of Basic Rent due and
owing through the date of payment of any amount calculated by reference to
Termination Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule IV of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent through such date and, accordingly, no further accrual or credit shall be
required through such date whenever Termination Value is to be calculated with
reference to any such date; provided that if amounts in respect of Termination
Value are payable under the Operative Agreements after the Termination Date in
respect of which such Termination Value was determined, the Lessor shall be
compensated during the period from the Termination Date to such payment date
in accordance with the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. (i) In the case of a Certificate having a
Maturity within one year after the Prepayment Date the average yield to
maturity on a government bond equivalent basis of the applicable United States
Treasury Bill due the week of Maturity of such Certificate and (ii) in the
case of a Certificate having a Maturity one year or more after the Prepayment
Date, the average yield of the most actively traded United States Treasury
Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate
Systems, Inc., a financial news service, or if such report is not available,
a source deemed comparable by the Independent Investment Banker selected to
determine the Make-Whole Premium and reasonably acceptable to the Lessee)
corresponding in maturity to the Remaining Weighted Average Life of such
Certificate (or, if there is no corresponding maturity, an interpolation of
maturities by the Independent Investment Banker), in each case determined by
the Independent Investment Banker selected to determine the Make-Whole Premium
based on the average of the yields to stated maturity determined from the bid
prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business
Day preceding the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N669FE), dated as of June 1, 1996, between the Owner Participant and
the Owner Trustee in its individual capacity, as from time to time modified,
amended or supplemented pursuant to its applicable provisions and in
accordance with the Operative Agreements.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. Goldman, Sachs & Co., J.P. Morgan Securities Inc.
and Morgan Stanley & Co. Incorporated.
Underwriting Agreement. The Underwriting Agreement dated June 5,
1996 among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Netherlands
Austria New Zealand
Belgium Norway
Canada Philippines
Denmark Portugal
Finland Republic of China
(Taiwan)
France
Singapore
Germany
Sweden
Greece
Switzerland
Iceland
Thailand
Ireland
United Kingdom
Japan
Luxembourg
SCHEDULE IV
DEBT PORTION
Debt Portion $62,071,000.00
EXHIBIT A(1)(a)(i)
[Letterhead of Federal Express]
[Certificate Closing Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N669FE), dated as of June 1, 1996 (the "Participation Agreement"), among
Federal, as Lessee, PMCC Leasing Corporation, as Owner Participant, First
Security Bank of Utah, National Association, a national banking association,
not in its individual capacity, except as otherwise stated, but solely as
Owner Trustee under the Trust Agreement, State Street Bank and Trust
Company, a Massachusetts trust company, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee under the
Indenture and State Street Bank and Trust Company, as Pass Through Trustee,
relating to the Aircraft. This opinion is being delivered pursuant to
Section 4.01(k)(i) of the Participation Agreement. Capitalized terms not
otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the financing on the Delivery Date of a portion of the Owner Trustee's payment
of the Purchase Price of one Airbus A300F4-605R aircraft (the "Aircraft"),
using the proceeds from the public offering of the Pass Through Certificates.
Two Series of Pass Through Certificates will be issued by two Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Trust Indenture and Security Agreement (Federal Express Corporation
Trust No. N669FE) dated as of June 1, 1996 ("Indenture"), between the Owner
Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined
or caused to be examined by attorneys under my supervision, (i) executed
counterparts of the Pass Through Agreement, the Series Supplements and the
Operative Agreements to be delivered on the Certificate Closing Date (the
"Certificate Closing Date Documents") and (ii) the forms of the Operative
Agreements to be delivered on the Delivery Date. We have relied upon originals
or copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Certificate
Closing Date Documents, the accuracy of which we have not independently
investigated or verified. In such examination, we have assumed the
genuineness of all signatures (other than the signatures of Federal) and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
assumed that each of the parties to each of the Certificate Closing Date
Documents, other than Federal, has full power, authority and legal right to
enter into such Certificate Closing Date Documents and that each such
Certificate Closing Date Document has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Certificate Closing
Date Documents to which it is a party. Federal is duly qualified to do
business and is in good standing in the State of Tennessee and each other
state of the United States in which its operations or the nature of its
business requires Federal to so qualify, except where the failure to so
qualify would not have a material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Certificate Closing Date Documents to which
Federal is a party has or had, on the date of execution thereof, been duly
authorized, executed and delivered by Federal and each constitutes the legal,
valid and binding obligation of Federal enforceable against Federal in
accordance with its terms. Each of the Operative Agreements to which Federal
is to be a party and which are to be executed on the Delivery Date has been
duly authorized by Federal.
4. Neither the execution and delivery by Federal of the
Certificate Closing Date Documents to which Federal is a party, nor the
consummation of any of the transactions by Federal contemplated thereby, nor
the performance of the obligations thereunder by Federal, did at the time of
execution and delivery, or does presently (a) require any stockholder approval
or violate the certificate of incorporation or by-laws of Federal or (b)
conflict with or contravene the provisions of, or constitute a default under,
or result in the creation of any Lien (other than Liens permitted under
Section 6.01(a) of the Lease) upon the property of Federal under any law,
governmental rule or regulation, or the charter or bylaws of Federal or any
order, writ, injunction or decree of any court or governmental authority
against Federal or by which any of its properties may be bound or any
indenture, mortgage, contract or other agreement known to me to which Federal
is a party or by which it may be bound or, require the approval or consent of
any trustee or the holders of any indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Certificate Closing Date Documents to which it is a party, nor the
consummation of any transactions by Federal contemplated thereby, nor the
performance of the obligations thereunder by Federal, did or does, as the case
may be, (a) require the consent or approval of, the giving of notice to, or
(except as described or contemplated in the Participation Agreement and the
Lease, all of which are required to be performed on or prior to the Certificate
Closing Date and which shall have been accomplished on or prior to the
Certificate Closing Date) the registration with, or the taking of any other
action in respect of, the Aeronautics Authority, the Securities and Exchange
Commission or any other authority or agency of the federal government or of
the State of Tennessee other than (i) the registration of the issuance and
sale of the Pass Through Certificates under the Securities Act and (ii)
compliance with the securities laws of each applicable state, or (b)
contravene any judgment or order applicable to or binding on Federal or any
law or governmental rule or regulation of the United States or of the State of
Tennessee.
6. There is no pending, or to my knowledge, threatened action
or proceeding before any court or administrative agency which individually (or
in the aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on (A) except for the matters described (a)
under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in Federal's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 29, 1996) and (b) in the Lessee's Current Report on
Form 8-K dated April 30, 1996, as to which I can express no opinion at this
time concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Certificate Closing Date
Documents.
7. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
8. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in the
State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
9. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Certificate Closing Date Documents to which Federal is a
party are based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Certificate Closing Date Documents, the governing law with
respect to each of the Certificate Closing Date Documents is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally (whether
such enforceability is considered in a proceeding in equity or at law). The
enforceability of the remedies provided under the Lease may also be limited by
applicable laws which may affect the remedies provided therein but which do
not in my opinion affect the validity of the Lease or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
_______________________
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(1)(a)(ii)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N669FE), dated as of June 1, 1996 (the "Participation Agreement"), among
Federal, as Lessee, PMCC Leasing Corporation, as Owner Participant, First
Security Bank of Utah, National Association, a national banking association,
not in its individual capacity, except as otherwise stated, but solely as
Owner Trustee under the Trust Agreement, State Street Bank and Trust
Company, a Massachusetts trust company, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee under the
Indenture and State Street Bank and Trust Company, as Pass Through Trustee,
relating to the Aircraft. This opinion is being delivered pursuant to
Section 4.02(d)(i) of the Participation Agreement. Capitalized terms not
otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the financing on the Delivery Date of a portion of the Owner Trustee's payment
of the Purchase Price of one Airbus A300F4-605R aircraft (the "Aircraft"),
using the proceeds from the public offering of the Pass Through Certificates.
Two Series of Pass Through Certificates were issued by two Pass Through Trusts
formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that were issued
under the Trust Indenture and Security Agreement (Federal Express Corporation
Trust No. N669FE) dated as of June 1, 1996, as supplemented by the related
Indenture and Security Agreement Supplement ("Indenture"), between the Owner
Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have examined
or caused to be examined by attorneys under my supervision, executed
counterparts of the Operative Agreements, the Pass Through Agreement and each
Series Supplement (the "Transaction Agreements"). We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have also assumed
that each of the parties to each of the Transaction Agreements, other than
Federal, has full power, authority and legal right to enter into such
Transaction Agreements and that each such Transaction Agreement has been
duly authorized, executed and delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a
party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms.
4. Neither the execution and delivery by Federal of the
Transaction Agreements to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Transaction Agreements to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a)
require the consent or approval of, the giving of notice to, or (except as
described or contemplated in the Participation Agreement and the Lease, all
of which were or are required to be performed on or prior to the Delivery
Date and which were or shall have been accomplished on or prior to the
Delivery Date) the registration with, or the taking of any other action in
respect of, the Aeronautics Authority, the Securities and Exchange
Commission or any other authority or agency of the federal government or of
the State of Tennessee, or (b) contravene any judgment or order applicable
to or binding on Federal or any law or governmental rule or regulation of
the United States or of the State of Tennessee.
6. There is no pending, or to my knowledge, threatened action
or proceeding before any court or administrative agency which individually (or
in the aggregate in the case of any group of related lawsuits) (i) is expected
to have a material adverse effect on (A) except for the matters described (a)
under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995 (as updated by Note 7 to the financial
statements included in Federal's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 29, 1996) and (b) in the Lessee's Current Report of
Form 8-K dated April 30, 1996, as to which I can express no opinion at this
time concerning Federal's liability (if any) or the effect of any adverse
determination upon the business, condition (financial or otherwise) or
operations of Federal, the financial condition of Federal or (B) the ability
of Federal to perform its obligations under the Transaction Agreements, or
(ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code, and except for the filing
and, where appropriate, recording, pursuant to the Transportation Code of (A)
AVSA's FAA Bill of Sale, (B) the Trust Agreement, (C) the Lease (with the
Lease Supplement covering the Aircraft, the Indenture and the Indenture and
Security Agreement Supplement covering the Aircraft attached as exhibits)
and (D) the Indenture (with the Indenture and Security Agreement Supplement
covering the Aircraft attached as an exhibit), no further action, including
any filing or recording of any document is necessary or advisable in order
to establish and perfect the Owner Trustee's title to and interest in the
Aircraft as against Federal and any third parties, or to perfect the first
mortgage lien on the Aircraft in favor of the Indenture Trustee in each
case with respect to such portion of the Aircraft as is covered by the
recording system established by the Transportation Code.
8. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
9. On the date hereof the Owner Trustee received good and
valid title to the Aircraft free and clear of all Liens on file with the FAA,
except for Liens permitted under Section 6.01(a) of the Lease.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Transaction Agreements to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Transaction Agreements, the governing law with respect to each
of the Transaction Agreements is identical in all relevant respects to the law
of the State of Tennessee. Insofar as the foregoing opinion relates to the
enforceability of any instrument, such enforceability is subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally (whether such enforceability is considered in a
proceeding in equity or at law). The enforceability of the remedies provided
under the Lease may also be limited by applicable laws which may affect the
remedies provided therein but which do not in my opinion affect the
validity of the Lease or make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have
relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith,
to the extent such matters are addressed in such counsel's opinion and
subject to the assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my
prior written consent.
Very truly yours,
__________________________
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(1)(b)(i)
[Letterhead of Davis Polk & Wardwell]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank of Utah, National Association, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement,
State Street Bank and Trust Company, not in its individual capacity, except as
otherwise stated, but solely as Indenture Trustee under the Indenture, and
State Street Bank and Trust Company, as Pass Through Trustee, relating to the
Aircraft. This opinion is being delivered pursuant to Section 4.01(k)(v) of
the Participation Agreement. Capitalized terms not otherwise defined herein
have the meanings assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for
the financing on the Delivery Date of a portion of the Owner Trustee's payment
of the Purchase Price of one Airbus A300F4-605R Aircraft using the proceeds
from the public offering of the Pass Through Certificates. On the Certificate
Closing Date, two Series of Pass Through Certificates will be issued by
separate Pass Through Trusts, each formed to acquire, among other securities,
the Certificates bearing a particular interest rate and having a particular
Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have
examined executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Certificate Closing Date Documents") and the forms of the Operative
Agreements to be delivered on the Delivery Date. We have also examined
originals, or copies certified to our satisfaction, of such other agreements,
documents, certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such
opinions. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. Assuming (i) the due authorization, execution and delivery
of the Certificate Closing Date Documents by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Certificate Closing Date Documents, (iii) that the execution, delivery and
performance by each of the Certificate Closing Date Documents by each of the
parties thereto will not violate the respective parties' constituent
documents, (iv) the due authorization, execution, issuance and delivery by
the Owner Trustee, and the due authentication by the Indenture Trustee, of
the Certificates to be issued under the Indenture in accordance with the
terms of the Indenture, (v) the due authorization, execution, issuance,
delivery and authentication by the Pass Through Trustee of the Pass Through
Certificates to be issued under the Pass Through Agreement and the Series
Supplement relating to such Pass Through Certificates, in each case in
accordance with the terms of the Pass Through Agreement and such Series
Supplement, and (vi) that the form of each Certificate Closing Date
Document is in compliance with all applicable laws and governmental rules
and regulations (other than the laws of the United States and the State of
New York), then: (A) to the extent governed by New York law, each
Certificate Closing Date Document in form constitutes a legal, valid and
binding agreement of each party thereto enforceable against each such party
in accordance with its terms; (B) the Indenture creates, for the benefit
of the Holders, the security interest in the Trust Indenture Estate that it
purports to create, except that no opinion is given with respect to
perfection of such security interest on the date hereof; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will
be legal, valid and binding obligations of the Owner Trustee enforceable
against the Owner Trustee in accordance with their terms and the terms of
the Indenture and will be entitled to the benefits of the Indenture,
including the benefit of the security interest created thereby, except that
no opinion is given with respect to perfection of such security interest on
the date hereof; (D) the Pass Through Certificates, when issued to and
acquired by the Underwriters in accordance with the Underwriting Agreement,
will be legal, valid and binding obligations of the Pass Through Trustee
enforceable against the Pass Through Trustee in accordance with their terms
and will be entitled to the benefits of the Pass Through Agreement and the
Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which
are part of the Trust Indenture Estate is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders.
2. (a) Each of the Certificate Closing Date Documents to which
Federal Express is a party has been duly authorized, executed and delivered by
Federal Express. Each of the Operative Agreements to which Federal Express is
to be a party and which are to be delivered on the Delivery Date has been
authorized by Federal Express.
(b) The execution, delivery and performance by Federal Express
of each of the Certificate Closing Date Documents to which Federal Express
is a party do not, or did not on the date of execution thereof, violate,
and fully comply, or did fully comply on the date of execution thereof,
with, any laws and governmental rules and regulations of the State of New
York that may be applicable to Federal Express. The opinion set forth in
this paragraph 2(b) is rendered without regard to the taking of any action
or the conduct of any other business by Federal Express in the State of New
York other than the transactions contemplated by the Certificate Closing
Date Documents.
3. The execution, delivery and performance of the Certificate
Closing Date Documents (other than the Certificates) by the Owner Trustee in
its individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner Trustee
in its trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 3 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank of Utah, National Association in its individual or trust
capacity in the State of New York not related to the transactions contemplated
by the Certificate Closing Date Documents. We have assumed that First
Security Bank of Utah, National Association has made the filings necessary to
comply with Section 131.3 of the Banking Law of the State of New York, however
we express no opinion as to whether First Security Bank of Utah, National
Association is required to comply with said Section 131.3.
4. Federal Express's participation in the transactions
contemplated by the Certificate Closing Date Documents does not and will not
constitute a violation of Section 7 of the Securities Exchange Act of 1934.
5. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinion of George W. Hearn,
Vice President - Law of Federal Express to be delivered to you and
dated the date hereof, for purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware.
(c) The opinion contained in paragraph 1(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
Very truly yours,
__________________________
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(1)(b)(ii)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express, as Lessee, PMCC Leasing Corporation, as
Owner Participant, First Security Bank of Utah, National Association, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement,
State Street Bank and Trust Company, not in its individual capacity, except as
otherwise stated, but solely as Indenture Trustee under the Indenture, and
State Street Bank and Trust Company, as Pass Through Trustee, relating to the
Aircraft. This opinion is being delivered pursuant to Section 4.02(d)(ii) of
the Participation Agreement. Capitalized terms not otherwise defined herein
have the meanings assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for
the financing on the Delivery Date of the Owner Trustee's payment of a portion
of the Purchase Price of one Airbus A300F4-605R Aircraft (the "Aircraft")
using the proceeds from the public offering of the Pass Through
Certificates. On the Certificate Closing Date, two Series of Pass Through
Certificates were issued by separate Pass Through Trusts, each formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity issued under the Indenture.
The Aircraft is to be leased to Federal Express by the Owner Trustee
pursuant to the Lease and subjected to the Lien of the Indenture, and is to
be delivered by the Owner Trustee to the Lessee on this date, and in
connection with the delivery of the Aircraft, the Owner Trustee and Federal
Express will execute and deliver the Lease Supplement, and the Owner
Trustee will execute and deliver the Indenture and Security Agreement
Supplement.
In connection with the opinions expressed below, we have
examined executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by
the recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement
and the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) AVSA's FAA Bill of Sale, (B) the Trust
Agreement, (C) the Lease (with the Lease Supplement covering the Aircraft,
the Indenture and the Indenture and Security Agreement Supplement covering
the Aircraft attached as exhibits) and (D) the Indenture (with the
Indenture and Security Agreement Supplement covering the Aircraft attached
as an exhibit), pursuant to the Transportation Code, and assuming that at
the time of such filing no other documents relating to the Aircraft have
been filed pursuant to the Transportation Code.
3. Assuming (i) the due authorization, execution and delivery
of the Transaction Agreements by each of the parties to each such document
(other than Federal Express), (ii) each such party has full power and legal
right to enter into and perform its respective obligations under the
Transaction Agreements, (iii) that the execution, delivery and performance by
each of the Transaction Agreements by each of the parties thereto will not
violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates issued under
the Indenture in accordance with the terms of the Indenture, (v) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates issued under the Pass Through
Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vi) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and are entitled to the benefits of
the Indenture, including the benefit of the security interest created thereby;
and (D) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, to the Lien of the Indenture
in favor of the Holders. The opinions set forth in this paragraph 3 are
subject to the due filing and recording, where appropriate, with the FAA of
the documents referred to in paragraph 2 above.
4. (a) Each of the Transaction Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express
of each of the Transaction Agreements to which Federal Express is a party do
not, or did not on the date of execution thereof, violate, and fully comply,
or did fully comply on the date of execution thereof, with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 4(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Transaction
Agreements (other than the Certificates) by the Owner Trustee in its
individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any
laws and governmental rules and regulations of the State of New York that
may be applicable to the Owner Trustee in its individual or trust capacity,
as the case may be. The opinion set forth in this paragraph 5 is rendered
without regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
First Security Bank of Utah, National Association in its individual or
trust capacity in the State of New York not related to the transactions
contemplated by the Transaction Agreements. We have assumed that First
Security Bank of Utah, National Association has made the filings necessary
to comply with Section 131.3 of the Banking Law of the State of New York,
however we express no opinion as to whether First Security Bank of Utah,
National Association is required to comply with said Section 131.3.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statement referred to in Section 4.02(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture and Security Agreement Supplement, pursuant
to the Granting Clause of the Indenture, creates, as security for the
Certificates duly issued and to be issued under the Indenture, the first
priority security interest in the Aircraft it purports to create, the
perfection and rank thereof being subject to the registration with the FAA of
the Aircraft in the name of the Owner Trustee and the due filing and, where
appropriate, recording in accordance with the Transportation Code of the
documents referred to in paragraph 2 above. We express no opinion with
respect to the status of any security interest in any portion of the Aircraft
which does not constitute an "aircraft" or "aircraft engine", as defined in
paragraphs (6) and (7) of Section 40102(a) of the Transportation Code.
8. Federal Express's participation in the transactions
contemplated by the Transaction Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
9. Except for the filings and recordings referred to in
paragraph 2 above, neither the execution and delivery by Federal Express of
the Participation Agreement or any other Operative Agreement to which it is a
party, nor the consummation of any of the transactions by Federal Express
contemplated thereby, requires the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, the Securities and
Exchange Commission or any other Federal or New York State governmental
authority.
10. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as
lessor under and by reason of the Lease. The Lease, including the rights
under Section 1110 of the United States Bankruptcy Code, has been assigned
to the Indenture Trustee pursuant to the Indenture as part of the
collateral for the Certificates and, as assignee, the Indenture Trustee has
the benefit of Section 1110.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty,
Fowler & Peregrin and George W. Hearn, Vice President - Law of
Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware. We express no opinion as to any matters
involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
Very truly yours,
__________________________
Davis Polk & Wardwell
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(2)(a)
[Letterhead of Simpson Thacher & Bartlett]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special New York counsel for PMCC Leasing
Corporation ("PMCC") in connection with the transactions contemplated by the
Participation Agreement (Federal Express Corporation Trust No. N669FE), dated
as of June 1, 1996 (the "Participation Agreement"), among Federal Express
Corporation, as lessee, First Security Bank of Utah, National Association, not
in its individual capacity, but solely as owner trustee, PMCC, as owner
participant, State Street Bank and Trust Company, not in its individual
capacity but solely as indenture trustee and State Street Bank and Trust
Company, not in its individual capacity but solely as pass through trustee.
This opinion is being furnished to you pursuant to Section 4.01(k)(ii) of the
Participation Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to them in the Participation
Agreement.
We have examined executed counterparts of the Participation
Agreement, the Trust Agreement, the Tax Indemnity Agreement, the Ancillary
Agreement I and the Ancillary Agreement II (collectively, the "Owner
Participant Documents") and we have made such other and further investigations
as we have deemed necessary or appropriate for purposes of this opinion. In
our examination we have assumed, with your permission, and without independent
investigation or inquiry, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
With your permission, we have further assumed that (i) the Owner
Participant Documents have been duly authorized, executed and delivered by
each of the parties thereto, (ii) the respective parties thereto have the
power and authority to execute, deliver and perform the Owner Participant
Documents, (iii) the execution, delivery and performance of the Owner
Participant Documents by the parties thereto do not and will not violate
the certificate of incorporation, by-laws or other organizations documents
of any such party or any bond, debenture, note, mortgage, indenture, lease
or other agreement or instrument to which any such party is a party or by
which any such party is bound and does and will fully comply with all laws
an regulations applicable to each such party and (iv) the Owner Participant
Documents constitute valid, legal and binding obligations of the parties
thereto (other than PMCC), enforceable against such parties (other than
PMCC) in accordance with their respective terms.
Based upon the foregoing, we are of the opinion that:
1. The Participation Agreement and the Tax Indemnity Agreement
constitute valid and legally binding obligations of PMCC enforceable against
PMCC in accordance with their respective terms.
2. The execution and delivery by the Owner Participant of the Owner
Participant Documents will not result in any violation of any Federal or New
York statute or any order, rule or regulation issued pursuant to any New York
or Federal statute by any New York or Federal Court or governmental agency or
body having jurisdiction over the Owner Participant.
3. No consent, approval, authorization, order, registration or
qualification under any Federal or New York statute is required to be obtained
by the Owner Participant for the execution and delivery by the Owner
Participant of the Owner Participant Documents.
Our opinion in paragraph 1 is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York and express
no opinion herein concerning any law other than the laws of the State of New
York.
This opinion is rendered to you in connection with the
above-described transaction. This opinion may not be relied by you for any
other purpose, or relied upon by or furnished to any other person, firm or
corporation without our prior written consent, except that the Owner
Participant may furnish a copy of this opinion to a potential transferee or
participant of the interest of such entity or otherwise as required by a
governmental authority.
Very truly yours,
________________________________
Simpson Thacher & Bartlett
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(2)(b)
[Letterhead of PMCC]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
In my capacity as General Counsel and Secretary of Philip Morris
Capital Corporation, a Delaware corporation, I have supervised corporate
proceedings of PMCC Leasing Corporation, a Delaware corporation (the "Owner
Participant"), in connection with the Owner Participant's participation in the
transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N669FE), dated as of June 1, 1996 (the
"Participation Agreement"), among the Owner Participant, Federal Express
Corporation as Lessee; First Security Bank of Utah, National Association, not
in its individual capacity but solely as owner trustee; State Street Bank and
Trust Company, not in its individual capacity, except as otherwise stated, but
solely as indenture trustee; and State Street Bank and Trust Company, as pass
through trustee. This opinion is delivered pursuant to Section 4.01(k)(ii) of
the Participation Agreement. Capitalized terms used herein but not otherwise
defined herein, shall have the respective meanings set forth in Schedule II to
the Participation Agreement.
In connection with this opinion, I have examined originals, or
copies certified or otherwise identified to my satisfaction of the
Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement, the
Ancillary Agreement I and the Ancillary Agreement II (each such document to be
hereafter referred to individually as an "Operative Document" and collectively
as the "Operative Documents"). I have also examined such corporate documents,
records and instruments of the Owner Participant as in my judgement are
necessary or appropriate to enable me to render the opinions expressed below.
In rendering such opinions, I have relied upon the representations and
warranties contained in or made pursuant to the Operative Documents and have
assumed the due authorization, execution and delivery of all documents and
instruments by all parties thereto other than the Owner Participant.
Based on the foregoing and subject to the qualifications and
matters of reliance set forth herein, I am of the opinion that:
1. The Owner Participant is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full corporate power, authority and legal right to
carry on its business as now conducted, and is duly authorized and
empowered to execute and deliver the Operative Documents and to
fulfill and comply with the terms, conditions and other provisions
thereof.
2. The Operative Documents have been duly authorized by all
necessary corporate action on the part of the Owner Participant, and
have been duly executed and delivered by the Owner Participant.
3. No filing with, notice to, or authorization or approval
from any governmental or public body or authority is required under
the laws of the State of New York, the laws of the United States of
American, or the General Corporation Law of the State of Delaware in
connection with the execution, delivery and performance by the Owner
Participant of the Operative Documents.
4. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Owner Participant) pending or, to my
knowledge, threatened against or affecting the Owner Participant or
any property rights of the Owner Participant at law or in equity or
before any commission or other administrative agency which, either
individually or in the aggregate, could materially and adversely
affect the condition, financial or otherwise, of the Owner
Participant or its ability to perform its obligations under the
Operative Documents or which would affect the legality, validity or
enforceability of such Operative Documents.
5. Neither the execution and delivery of the Operative
Documents, the consummation of the transactions therein contemplated
nor the fulfillment of or compliance with the terms, conditions and
other provisions thereof will conflict with, or result in any breach
of, any of the terms, conditions or provisions of (i) any law or
regulation binding upon the Owner Participant, (ii) any order,
injunction or decree of any court or governmental instrumentality
binding upon the Owner Participant, (iii) the Certificate of
Incorporation or Bylaws of the Owner Participant, or (iv) any bond,
debenture, note, mortgage indenture or other agreement or instrument
to which the Owner Participant is now a party or by which the
property of the Owner Participant may be bound.
I am a member of the bar of the State of New York, and I do not
purport to be conversant with, or to express any opinion herein concerning,
the laws of any jurisdiction other than those of the State of New York and the
United States of America and the General Corporation Law of the State of
Delaware. In addition, I express no opinion concerning the laws of the State
of New York, the United States of America or any other jurisdiction applicable
to the offering or sale of securities. Further, I have made no investigation
and express no opinion, as to any aviation law or other laws, statutes, rules
or regulations applicable due to the particular nature of the equipment
subject to the Lease.
This opinion is solely for the benefit of the addresses hereof
and their respective successors and assigns for use in connection with the
transactions contemplated by the Operative Documents and may not be relied
upon by any other person or for any other purpose without my express written
consent. This opinion may be relied upon by Messrs. Simpson, Thacher &
Bartlett in rendering their opinion of even date herewith.
Very truly yours,
__________________________
John S. Savage
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(3)
[Letterhead of Bingham, Dana & Gould]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N669FE), dated as
of June 1, 1996 (the "Indenture") between First Security Bank of Utah,
National Association, not in its individual capacity but solely as Owner
Trustee (the "Owner Trustee") and the Indenture Trustee, in connection with
the transactions contemplated by that certain Participation Agreement
(Federal Express Corporation Trust No. N669FE), dated as of June 1, 1996
(the "Participation Agreement"), among Federal Express Corporation, as
Lessee (the "Lessee"); PMCC Leasing Corporation, as Owner Participant (the
"Owner Participant"); the Owner Trustee; and the Indenture Trustee. This
opinion is being delivered pursuant to Section 4.01(k)(iii) of the
Participation Agreement. Except as otherwise defined herein, all
capitalized terms used herein shall have the respective meanings set forth
in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Indenture Trustee, as the case may be, is a party to be delivered on
the Certificate Closing Date (collectively, the "Indenture Trustee Documents")
and the forms of the Operative Agreements to be delivered on the Delivery
Date, the Certificate of the Massachusetts Commissioner of Banks relating to
State Street and originals, or copies certified or otherwise identified to our
satisfaction, of such other documents, corporate records, certificates, or
other instruments as we have deemed necessary or advisable for the purposes
of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Indenture Trustee), the conformity to
the originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Indenture Trustee, as
applicable, is subject to the following general qualifications:
(i) as to any Indenture Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Indenture Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
Pursuant to the Indenture, the Owner Trustee purports to grant
to the Indenture Trustee a security interest, inter alia, in those securities
and instruments, presently owned or hereafter acquired by the Owner Trustee,
that are from time to time credited to an account numbered [ ] (the
"Account") established by the Owner Trustee with the Indenture Trustee and
which securities and instruments the Owner Trustee has directed the Indenture
Trustee to identify on the books and records of the Indenture Trustee as being
subject to a security interest in favor of the Indenture Trustee to secure the
payment to the Certificate Holders of the Owner Trustee's obligations (the
"Obligations") under the Indenture. Those securities and instruments which
the Owner Trustee has directed the Indenture Trustee to so identify on the
books of the Indenture Trustee as being subject to such security interest,
and which, at the time of reference thereto, have not been withdrawn from
such identification or the Account, are hereinafter referred to,
collectively, as the "Collateral." We have assumed with your permission for
purposes of this opinion that the Collateral consists solely of (a)
"securities", either "uncertificated securities" or "certificated
securities", as each such term is defined in Section 8-102 of the Uniform
Commercial Code as currently in effect in the Commonwealth of Massachusetts
(the "Massachusetts UCC"), (b) "instruments" (as such term is defined in
Section 9-105(1)(i) of the Massachusetts UCC) and (c) "general intangibles"
(as such term is defined in Section 9-106 of the Massachusetts UCC).
Our opinions in paragraphs 8,9 and 10 below are subject to the
further following exceptions, qualifications and assumptions:
(a) We have assumed without any independent investigation that each
party to the transactions contemplated by the Indenture at all times relevant
thereto was duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it was incorporated or organized, and had
and has the full power, authority and legal right under its certificate of
incorporation, memorandum and articles of organization and other governing
documents, corporate or other enterprise legislation and applicable laws, as
the case may be, to execute and perform, obligations under all documents
executed by it in connection with those transactions.
(b) We have assumed without any independent investigation (i) the
due authorization, execution and delivery of the Indenture by the Owner
Trustee, (ii) that the execution, delivery and performance by the Owner
Trustee of the Indenture does not and will not conflict with, or result in
a breach of, the terms, conditions or provisions of, or result in a
violation of, or constitute a default or require any consent (other than
such consents as have been duly obtained) under, any organizational
document, any order, judgment, arbitration award or stipulation, or any
agreement, to which the Owner Trustee is a party or is subject or by which
any of its properties or assets is bound, (iii) that the Owner Trustee has
received "value" as defined under the Massachusetts UCC, for the incurrence
of the Obligations, (iv) that the Obligations constitute valid and binding
obligations of the Owner Trustee in favor of the Certificate Holders, (v)
that, whenever the Indenture Trustee receives instructions from the Owner
Trustee for the Indenture Trustee to note on its books and records that any
securities or instruments credited to the Account are to be subject to a
security interest in favor of the Indenture Trustee to secure the payment
of the Obligations, such instructions will have been duly authorized by or
on behalf of the Owner Trustee and (vii) that, when the Indenture Trustee
is to act in connection with any of the transactions contemplated by the
Indenture, it is acting in its capacity as Indenture Trustee.
(c) We have assumed that the execution, delivery and performance of
the Indenture by the Owner Trustee does not and will not contravene or
constitute a default under, any provision of any applicable law, rule or
regulation and no consent, authorization, approval, order, license or other
action by and no notice to or filing with any individual, corporation,
partnership, trust,, unincorporated association, or other legal entity or
organization or any government, court, agency or political subdivision, is
required on or prior to the date hereof in connection with the execution,
delivery and performance of the Indenture by the Owner Trustee under any law,
rule or regulation or any judgement, decree or order of any court or
governmental or regulatory authority, which has not been already obtained or
given.
(d) We have assumed that the obligations secured under the Indenture
are the valid, binding and enforceable obligations of the Owner Trustee. The
enforceability of any obligation of the Owner Trustee under the Indenture may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, marshalling or other laws and rules of law affecting the
enforcement of rights and remedies (including such as may deny giving effect
to waiver of debtors' rights) of creditors generally. The enforcement of any
rights and the availability of any specific or equitable relief of any kind
may in all cases be subject to an implied duty of good faith and to general
principles of equity (regardless of whether such enforceability or relief is
considered in a proceeding at law or in equity) and, as to any rights to
collateral security, will be subject to a duty to act in a commercially
reasonable manner.
(e) We have made no examination of, and no opinion is given herein
as to, the Owner Trustee's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims against,
the Collateral, other than the security interest in favor of the Indenture
Trustee as contemplated by the Indenture, and have assumed that the Owner
Trustee has, or at the time of any purported attachment of the security
interest in the relevant Collateral will have, rights in the Collateral.
(f) The perfection and the effect of perfection and non-perfection
of a security interest in the Collateral that comprises "uncertificated
securities" are, pursuant to Section 9-103(6) of the Massachusetts UCC, and
the effectiveness of registration by the issuer and the rights and duties of
the issuer with respect to the registration of transfer, pledge or release of
an "uncertificated security" are, pursuant to Section 8-106 of the
Massachusetts UCC, in each case, governed by the laws of the respective
jurisdictions of organization of the issuer or issuers of such securities,
including the conflict of laws rules of such jurisdictions. Therefore, we
express no opinion with respect to such matters regarding "uncertificated
securities" issued by issuers organized outside the Commonwealth of
Massachusetts. We point out that, pursuant to Section 306.118 of Title 31 of
the United States Code of Federal Regulations ("CFR"), United States
"book-entry Treasury securities" maintained by a "Reserve Bank" (as each such
term is defined in Section 306.115 of Title 31 of the CFR) and, pursuant to
other relevant sections of the CFR, various other securities issued or
guaranteed by the federal government of the United States or an agency thereof
or a corporation sponsored thereby and maintained by a "Reserve Bank" (as such
term is defined in such other relevant section of the CFR) that are not
represented by certificates are deemed to be certificated securities for
purposes of transfer and pledge under applicable law, including under the
Massachusetts UCC. Accordingly, references set forth in this opinion to
"uncertificated securities" do not include "book-entry Treasury securities" or
such other uncertificated federal securities.
(g) We have also assumed that (i) any securities comprised in the
Collateral and held by Depository Trust Company or another clearing
corporation will be held by Depository Trust Company or such other clearing
corporation for the direct account of the Indenture Trustee and not for the
account of the Indenture Trustee through any other financial intermediary,
(ii) any securities comprised in the Collateral and not constituting either
(x) "certificated securities" (as defined in Section 8-102 of the
Massachusetts UCC) for which the Indenture Trustee physically holds the
certificate or certificates evidencing solely such securities, or (y)
"uncertificated securities" (as defined in Section 8-102 of the
Massachusetts UCC) for which the Indenture Trustee is the registered owner
on the books of the issuer solely of such securities, will constitute, or
will be held as part of, a fungible bulk of such "securities" that are
registered in the name of the Indenture Trustee or are shown on the
Indenture Trustee's account on the books of another financial intermediary,
(iii) any "certificated securities" (as defined in Section 8-102 of the
Massachusetts UCC) comprised in the Collateral, if held directly by the
Indenture Trustee, will be at all times in the physical possession of the
Indenture Trustee, and any other "instruments" (as defined in Section 9-
105(1)(i) of the Massachusetts UCC) comprised in the Collateral will be at
all times held directly by and in the physical possession of the Indenture
Trustee, and (iv) any securities comprised in the Collateral consisting of
"book-entry Treasury securities" or other uncertificated federal securities
will be credited to a direct account of the Indenture Trustee with a
Reserve Bank (as such term is defined in the relevant section of the CFR)
and not for the account of the Indenture Trustee through a financial
intermediary.
(h) We do not express any opinion as to the attachment or perfection
of any security interest in (i) any securities that are maintained with, or
held on the system of, Cedel S.A., or any like maintenance, clearing or
settlement system operating outside of the United States of America, (ii) any
"certificated securities" (as defined in Section 8-102 of the Massachusetts
UCC) or "instruments" (as defined in Section 9-105(1)(i) of the Massachusetts
UCC), if, at any time during which such Collateral is subject to the interest
purported to be granted pursuant to the Indenture, such Collateral is
physically located outside the Commonwealth of Massachusetts, (iii) any
collateral of a type other than "securities" or "general intangibles" (as
defined in Section 9-106 of the Massachusetts UCC) or "instruments" (as
defined in Section 9-105(1)(i) of the Massachusetts UCC), (iv) the Account, to
the extent that the Account constitutes an asset separate from the property
credited thereto, other than as set forth in paragraph 8 below, (v) any
Collateral which, at the time of reference thereto, the Owner Trustee has a
right to withdraw from the Account in accordance with the terms of the
Indenture or which is no longer identified as subject to a security interest
in favor of the Indenture Trustee or has otherwise been withdrawn from the
Account, or (vi) any identifiable proceeds of any Collateral (A) following the
lapse of the ten day period set forth in Section 9-306(3) of the Massachusetts
UCC, to the extent that such proceeds do not constitute securities or
instruments in which a security interest is perfected under the Massachusetts
UCC, in the manner contemplated by this opinion, as if such proceeds were
original Collateral, (B) where such proceeds constitute securities and in
which proceeds a security interest is not perfected under the Massachusetts
UCC, in the manner contemplated by this opinion, as if such proceeds were
original collateral, or (C) where the proceeds constitute collateral which is
excluded from Article 8 or 9 of the Massachusetts UCC. Furthermore, because
the Owner Trustee does not purport to be "located" in the Commonwealth of
Massachusetts within the meaning of Section 9-103(3)(b) of the Massachusetts
UCC, we do not express any opinion as to the perfection of any security
interest in Collateral that constitutes "general intangibles" (as defined in
Section 9-106 of the Massachusetts UCC).
(i) Other than the perfection of any security interest in favor of
the Indenture Trustee as contemplated by the Indenture in any of the
Collateral, we express no opinion as to the priority of such security interest
over any other or competing interest in or claims against such Collateral.
(j) We have assumed that (i) all securities from time to time
credited to the Account and to be comprised in the Collateral will have been
"transferred" (within the meaning of Section 8-313(1) of the Massachusetts
UCC) to the Indenture Trustee by the issuers or prior holders of such
Collateral, (ii) the records of the Indenture Trustee indicate and will, at
the time of reference thereto, indicate that the aggregate amount of each
security comprised in the Collateral, together with all other such securities
carried by the Indenture Trustee for its customers and for its proprietary
account, is at least equal to the aggregate amount of such security carried by
it for its customers and for its proprietary account, (iii) the books and
records of the Indenture Trustee indicate and will, at the time of reference
thereto, indicate that the securities to be comprised in the Collateral are
registered on the books and records of the Indenture Trustee as being for the
beneficial account of the Owner Trustee, subject to, as identified on such
books and records, the security interest therein in favor of the Indenture
Trustee.
(k) With respect to property as to which the security interest
purported to be granted pursuant to the Indenture attaches after the date
hereof, we call to your attention that Section 552 of the Bankruptcy Code
limits the extent to which assets acquired by a debtor after the commencement
of a case under the United States Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor before
the commencement of such case. We further call to your attention that under
Section 547 of the Bankruptcy Code, a security interest that attaches within
the relevant period set forth in Section 547(b)(4) of the Bankruptcy Code may
be avoidable under certain circumstances.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts, is
a "citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has the full corporate power and authority to
execute, deliver and perform its obligations under the Indenture Trustee
Documents and, in its capacity as Indenture Trustee, to authenticate the
Certificates delivered on the Certificate Closing Date and to perform its
other obligations under the Indenture Trustee Documents.
2. The execution and delivery of the Indenture Trustee
Documents by State Street, in its individual capacity or as Indenture Trustee,
as the case may be, and compliance by State Street or the Indenture Trustee,
as the case may be, individually or as Indenture Trustee, with all of the
provisions thereof do not contravene any Massachusetts or Federal law, rule or
regulation governing the banking or trust powers of State Street or the
Indenture Trustee, or any order or judgment known to us, of any Massachusetts
or Federal court or governmental authority applicable to or binding on State
Street, individually or as Indenture Trustee, or contravene the provisions of,
or constitute a default under, or result in the creation of a Lien on any
property of State Street or the Indenture Trustee under, its charter documents
or By-Laws or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, in each case known
to us, or any other agreement or instrument, in each case known to us, to
which State Street, individually or as Indenture Trustee, is a party or by
which it or any of its property may be bound or affected, other than the Lien
of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the
Indenture Trustee, and no filing, recording, publication or registration in
any public office is required under Massachusetts or Federal law pertaining to
its banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Indenture Trustee, as the case may be, of the
Indenture Trustee Documents and of the certificate of authentication, as
Indenture Trustee, on the Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Indenture
Trustee, as the case may be.
4. Each of the Indenture Trustee Documents has been duly
authorized, executed and delivered by State Street, in its individual capacity
or as Indenture Trustee, as the case may be, and each such document
constitutes a legal, valid and binding obligation of State Street, in its
individual capacity or as Indenture Trustee, as the case may be,
enforceable against State Street, in its individual capacity or as
Indenture Trustee, as the case may be, in accordance with its terms. Each
of the Operative Agreements to be executed by the Indenture Trustee on the
Delivery Date has been duly authorized by State Street, in its individual
capacity or as Indenture Trustee, as the case may be, and each such
document will constitute a legal, valid and binding obligation of State
Street, in its individual capacity or as Indenture Trustee, as the case may
be, enforceable against State Street, in its individual capacity or as
Indenture Trustee, as the case may be, in accordance with its terms.
5. The Certificates issued and dated the Certificate Closing
Date have been duly authenticated and delivered by the Indenture Trustee
pursuant to the terms of the Indenture.
6. There are no fees, taxes or other governmental charges
payable by the Owner Trustee, the Indenture Trustee (except taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) or the
Certificate Holders to the Commonwealth of Massachusetts or any political
subdivision thereof in connection with the execution, delivery or performance
of any of the Operative Agreements or in connection with the issuance and
acquisition of the Certificates by the Certificate Holders or the beneficial
interests of the Certificate Holders in the Trust Indenture Estate solely
because the Indenture Trustee in its individual capacity (a) is incorporated
under the laws of the Commonwealth of Massachusetts, (b) has its principal
place of business in the Commonwealth of Massachusetts, (c) performs (in its
individual capacity or as Indenture Trustee) any or all of its duties under
the Indenture Trustee Documents in the Commonwealth of Massachusetts, and (d)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee Documents in the Commonwealth of Massachusetts. Neither the
Indenture Trustee nor the trust created under the Indenture will be subject to
any fee, tax or other governmental charge (except for taxes imposed on fees
payable to the Indenture Trustee in its individual capacity) under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof in
existence on the date hereof, on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Indenture
Estate solely because the Indenture Trustee in its individual capacity (a) is
incorporated under the laws of the Commonwealth of Massachusetts, (b) has its
principal place of business in the Commonwealth of Massachusetts, (c) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the Commonwealth of Massachusetts,
and (d) engages in any activities unrelated to the transactions contemplated
by the Indenture Trustee Documents in the Commonwealth of Massachusetts.
There is no fee, tax or other governmental charge (except for taxes imposed on
fees payable to the Indenture Trustee in its individual capacity) under the
laws of the Commonwealth of Massachusetts or any political subdivision
thereof in existence on the date hereof, on, based on or measured by any
payments under the Certificates by reason of the creation of the trust
under the Indenture solely because the Indenture Trustee in its individual
capacity (a) is incorporated under the laws of the Commonwealth of
Massachusetts, (b) has its principal place of business in the Commonwealth
of Massachusetts, (c) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee Documents in
the Commonwealth of Massachusetts, and (d) engages in any activities
unrelated to the transactions contemplated by the Indenture Trustee
Documents in the Commonwealth of Massachusetts. We express no opinion as
to whether or not any fees, taxes or other charges are now or hereafter may
be payable by the Owner Participant to the Commonwealth of Massachusetts or
any political subdivision thereof in connection with (a) the execution,
delivery or performance by any of the Indenture, the Participation
Agreement or any of the other Operative Agreements and (b) the making by
the Owner Participant of its investment in the Aircraft.
7. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State
Street, individually or as Indenture Trustee, to perform its obligations
under the Indenture Trustee Documents.
8. Although there is no controlling precedent in the
Commonwealth of Massachusetts (the "Commonwealth") as to the manner of
perfection of a security interest in "deposit accounts", assuming that the
Account continues to be maintained with State Street as Indenture Trustee in
the Commonwealth, for the benefit of the Certificate Holders (and continues to
be administered in accordance with the terms of the Indenture), we believe
that upon presentation of the issue to the Supreme Judicial Court of the
Commonwealth (the "SJC") applying the internal substantive laws of the
Commonwealth, the SJC would have a reasonable basis in existing case law of
the Commonwealth and commercial practice in the Commonwealth upon which to
recognize a valid and perfected common law security interest of the Indenture
Trustee, for the benefit of the Certificate Holders, in the Owner Trustee's
right, title and interest in the Account.
9. The Indenture Trustee has, under the terms of the
Massachusetts UCC, a perfected security interest in the Collateral that
constitutes "securities" (as such term is defined in Section 8-102 of the
Massachusetts UCC), or "instruments" (as defined in Section 9-105(1)(i) of the
Massachusetts UCC), and in the identifiable proceeds thereof to secure the
payment of the Obligations.
10. The Indenture creates, under the terms of the
Massachusetts UCC, a valid security interest in the Collateral that
constitutes "general intangibles" (as such term is defined in Section 9-106
of the Massachusetts UCC) and in the identifiable proceeds thereof to
secure the payment of the Obligations.
Very truly yours,
__________________________
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(4)(a)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of Utah,
National Association, a national banking association ("First Security"), in
connection with the Trust Agreement (Federal Express Corporation Trust No.
N669FE), dated as of June 1, 1996 (the "Trust Agreement"), between First
Security and PMCC Leasing Corporation, a Delaware corporation (the "Owner
Participant"). Pursuant to the Participation Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee, the Owner
Participant, First Security, not in its individual capacity except as
otherwise expressly set forth therein but solely as Owner Trustee (the
"Owner Trustee") under the Trust Agreement, State Street Bank and Trust
Company, as Indenture Trustee and State Street Bank and Trust Company, as
Pass Through Trustee, one Airbus A300F4-605R aircraft bearing U.S.
Registration No. N669FE (the "Aircraft") is being financed. This opinion
is furnished pursuant to Section 4.01(k)(iv) of the Participation
Agreement. Capitalized terms used herein and not otherwise defined are
used as defined in the Participation Agreement, except that references
herein to any instrument shall mean such instrument as in effect on the
date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Lease;
(e) The Purchase Agreement Assignment;
(f) The Engine Warranty Assignment;
(g) The Ancillary Agreement I;
(h) The Ancillary Agreement II:
(i) The French Pledge Agreement (each of the documents
identified in paragraphs (a) through (i) above being
collectively referred to as the "Owner Trustee
Documents"); and
(j) The Certificates being issued today (the "Certificates").
We have also examined the forms of the Lease Supplement
relating to the Aircraft to be dated the Delivery Date and the Indenture and
Security Agreement Supplement relating to the Aircraft to be dated the
Delivery Date.
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national
banking association, with banking and trust powers, is a Citizen of
the United States within the meaning of Section 40102(a)(15) of the
Transportation Code, and each of First Security and the Owner
Trustee, as the case may be, has or had, on the date of execution
thereof, full corporate power, authority and legal right to execute,
deliver and perform each of the Owner Trustee Documents to which it
is or is to be a party and to issue, execute, deliver and perform the
Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner Trustee
Document to which it is a party; each such document constitutes a
legal, valid and binding obligation of the Owner Trustee (and, to the
extent set forth in the respective Owner Trustee Document, of First
Security) enforceable against the Owner Trustee (and, to the extent
set forth in the respective Owner Trustee Document, against First
Security) in accordance with its terms; and assuming the Trust
Agreement was properly authorized, executed and delivered by the
Owner Participant and that the terms of the Trust Agreement are not
in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement
constitutes, under the laws of the State of Utah, a legal, valid and
binding obligation of the Owner Participant enforceable against the
Owner Participant in accordance with its terms. The Certificates
have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and
constitute the legal, valid and binding obligations of the Owner
Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture; and the Certificates are
entitled to the benefits and security afforded by the Indenture in
accordance with their terms and the terms of the Indenture.
3. To our knowledge, there exist no Liens affecting the title
of the Owner Trustee to the Lessor's Estate resulting from claims
against First Security not related to the ownership of the Lessor's
Estate or the administration of the Lessor's Estate or any other
transaction pursuant to the Indenture or any document included in the
Trust Indenture Estate.
4. Under the laws of the State of Utah, all of the properties
which are part of the Trust Indenture Estate have been pledged and
mortgaged with the Indenture Trustee as part of the Trust Indenture
Estate and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent
provided in the Indenture, to the Lien of the Indenture in favor of
the Holders of the Certificates.
5. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture Trustee's
taking possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including
the filing or recording of any document, is necessary (i) to create
under the UCC the security interest in the Trust Indenture Estate
(including the grant and assignment unto the Indenture Trustee of the
security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation
Agreement) which the Indenture by its terms purports to create in
favor of the Indenture Trustee, and (ii) to perfect in the State of
Utah such security interest, except for the filing of a UCC financing
statement complying with the formal requisites of Section 9-402 of
the UCC in the office of the Division of Corporations and Commercial
Code of the State of Utah with respect to the security interest,
which filing has been duly effected, and the filing of continuation
statements with respect thereto required to be filed at periodic
intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust
under Utah law, the trust created by the Trust Agreement has been duly
created and exists for the benefit of the Owner Participant, and the
Trust Agreement create for the benefit of the Owner Participant the
interest in the properties referred to in Section 1.02 of the Trust
Agreement which the Trust Agreement by its terms purports to create,
which interest is subject and subordinate to the security interests
created by the Indenture to the extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any court or administrative or governmental authority or
agency of the State of Utah or the United States of America governing
the banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement.
9. The execution, delivery and performance by the Owner Trustee
or First Security, as the case may be, of each of the Owner Trustee
Documents and the issuance, execution, delivery and performance of the
Certificates by the Owner Trustee are not or were not, on the date of
execution thereof, in violation of the charter or by-laws of First
Security or of any law, governmental rule, or regulation of the State
of Utah or the United States of America governing the banking or
trust powers of First Security or, to our knowledge, of any
indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument
to which it is a party or by which it is bound or, to our knowledge,
of any judgment or order of the State of Utah or the United States of
America relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under the
laws of the State of Utah or any political subdivision thereof in
existence on the date hereof on, based on or measured by any payments
under the Certificates or the beneficial interests in the Lessor's
Estate, by reason of the creation of the trust under the Trust
Agreement, pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement, within
the State of Utah, which would not have been imposed if First
Security did not have its principal place of business and did not
perform its obligations under the Owner Trustee Documents in the
State of Utah.
11. Neither a Utah court nor a federal court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with their terms
and the Participation Agreement or with the consent of the Indenture
Trustee, as long as the Lien of the Indenture on the Trust Indenture
Estate has not been released or payment of the principal of, and
premium, if any, and interest on, the Certificates have not been made
in full.
12. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms and the terms of the
Participation Agreement or with the consent of the Indenture Trustee,
creditors of any person that is an Owner Participant, holders of a
lien against the assets of any such person that is an Owner
Participant, holders of a lien against the assets of any such person,
such as trustees, receivers or liquidators (whether or not any
insolvency proceeding has been commenced) (collectively, the
"Creditors") may acquire valid claims and liens, as to the Trust
Estate, only against the rights of such Owner Participant under the
Trust Agreement or in the Trust Estate, and do not have, and may not
through the enforcement of such Creditor's rights acquire, any greater
rights than such Owner Participant with respect to the Trust Agreement
or the Trust Estate.
13. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its
properties in any court or before any administrative agency or
arbitrator, which, if adversely determined, would materially
adversely affect the ability of First Security or the Owner Trustee,
as the case may be, to perform its obligations under any of the Owner
Trustee Documents, and there are no pending or, to our knowledge,
threatened actions or proceedings before any court, administrative
agency or tribunal involving First Security or the Owner Trustee, as
the case may be, in connection with the transactions contemplated by
any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah, the federal laws of the United States of America governing the banking
and trust powers of First Security and Title II of the United States Code
entitled "Bankruptcy". However, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended (except
with respect to the opinion set forth in paragraph 1 above concerning the
citizenship of First Security) and (iii) state securities or blue sky laws.
Insofar as the foregoing opinions relate to the validity and enforceability in
the State of Utah of the Certificates and the other Owner Trustee Documents
expressed to be governed by the laws of the State of New York, we have assumed
that the laws of New York are identical to the laws of Utah in all material
respects, and that the Certificates and such Owner Trustee Documents
constitute legal, valid, binding and enforceable documents or instruments
under such laws (as to which we express no opinion). No opinion is expressed
as to the priority of any security interest or as to title to any part of the
Trust Estate.
B. The foregoing opinions regarding enforceability of any
document or instrument, except for the opinions set forth in paragraphs 11 and
12 above, are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of the
Owner Trustee or First Security) on documents and instruments examined by us
are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
Very truly yours,
__________________________
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(4)(b)
[Letterhead of Ray, Quinney & Nebeker]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of Utah,
National Association, a national banking association ("First Security"), in
connection with the Trust Agreement (Federal Express Corporation Trust No.
N669FE), dated as of June 1, 1996 (the "Trust Agreement"), between First
Security and PMCC Leasing Corporation, a Delaware corporation (the "Owner
Participant"). Pursuant to the Participation Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee, the Owner
Participant, First Security, not in its individual capacity except as otherwise
expressly set forth therein but solely as Owner Trustee (the "Owner Trustee")
under the Trust Agreement, State Street Bank and Trust Company, as Indenture
Trustee and State Street Bank and Trust Company, as Pass Through Trustee, one
Airbus A300F4-605R aircraft bearing U.S. Registration No. N669FE (the
"Aircraft") is being financed. This opinion is furnished pursuant to Section
4.02(d)(vi) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined are used as defined in the Participation Agreement,
except that references herein to any instrument shall mean such instrument as
in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement relating
to the Aircraft and dated the date hereof (the "Indenture
Supplement");
(e) The Lease;
(f) The Lease Supplement relating to the Aircraft and dated
the date hereof (the "Lease Supplement");
(g) The Purchase Agreement Assignment;
(h) The Engine Warranty Assignment;
(i) The Ancillary Agreement I;
(j) The Ancillary Agreement II:
(k) The French Pledge Agreement (each of the documents
identified in paragraphs (a) through (k) above being
collectively referred to as the "Owner Trustee
Documents"); and
(j) The Certificates issued on the Certificate Closing Date
(the "Certificates").
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national
banking association, with banking and trust powers, is a Citizen of
the United States within the meaning of Section 40102(a)(15) of the
Transportation Code, and each of First Security and the Owner
Trustee, as the case may be, has or had, on the date of execution
thereof, full corporate power, authority and legal right to execute,
deliver and perform each of the Owner Trustee Documents to which it
is a party and to issue, execute, deliver and perform the
Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner Trustee
Document to which it is a party; each such document constitutes a
legal, valid and binding obligation of the Owner Trustee (and, to the
extent set forth in the respective Owner Trustee Document, of First
Security) enforceable against the Owner Trustee (and, to the extent
set forth in the respective Owner Trustee Document, against First
Security) in accordance with its terms; and assuming the Trust
Agreement was properly authorized, executed and delivered by the
Owner Participant and that the terms of the Trust Agreement are not
in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement
constitutes, under the laws of the State of Utah, a legal, valid and
binding obligation of the Owner Participant enforceable against the
Owner Participant in accordance with its terms. On the Certificate
Closing Date, the Certificates were duly issued, executed and
delivered by the Owner Trustee, pursuant to authorization contained
in the Trust Agreement, and constituted the legal, valid and binding
obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the
Indenture; and the Certificates are entitled to the benefits and
security afforded by the Indenture in accordance with their terms and
the terms of the Indenture.
3. The Owner Trustee received from AVSA such title to the
Aircraft as AVSA conveyed to the Owner Trustee, subject to the rights
of the Owner Trustee and the Lessee under the Lease and the security
interest created pursuant to the Indenture and the Indenture
Supplement.
4. To our knowledge, there exist no Liens affecting the title
of the Owner Trustee to the Lessor's Estate resulting from claims
against First Security not related to the ownership of the Lessor's
Estate or the administration of the Lessor's Estate or any other
transaction pursuant to the Indenture or any document included in the
Trust Indenture Estate.
5. Under the laws of the State of Utah, all of the properties
which are part of the Trust Indenture Estate have been pledged and
mortgaged with the Indenture Trustee as part of the Trust Indenture
Estate and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent
provided in the Indenture, to the Lien of the Indenture in favor of
the holders of the Certificates issued and to be issued under the
Indenture.
6. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture Trustee's
taking possession of all monies and securities (including instruments)
constituting part of the Trust Indenture Estate, no action, including
the filing or recording of any document, is necessary (i) to create
under the UCC the security interest in the Trust Indenture Estate
(including the grant and assignment unto the Indenture Trustee of the
security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation
Agreement) which the Indenture by its terms purports to create in
favor of the Indenture Trustee, and (ii) to perfect in the State of
Utah such security interest, except for the filing of a UCC financing
statement complying with the formal requisites of Section 9-402 of
the UCC in the office of the Division of Corporations and Commercial
Code of the State of Utah with respect to the security interest,
which filing has been duly effected, and the filing of continuation
statements with respect thereto required to be filed at periodic
intervals under the UCC.
7. On the Certificate Closing Date, the Trust Agreement duly
created a legal and valid trust under Utah law, the trust created by
the Trust Agreement has been duly created and exists for the benefit
of the Owner Participant, and the Trust Agreement create for the
benefit of the Owner Participant the interest in the properties
referred to in Section 1.02 of the Trust Agreement which the Trust
Agreement by its terms purports to create, which interest is subject
and subordinate to the security interests created by the Indenture to
the extent provided in the Indenture.
8. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any court or administrative or governmental authority or
agency of the State of Utah or the United States of America governing
the banking or trust powers of First Security.
9. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement.
10. The execution, delivery and performance by the Owner
Trustee or First Security, as the case may be, of each of the Owner
Trustee Documents and the issuance, execution, delivery and
performance of the Certificates by the Owner Trustee are not or were
not, on the date of execution thereof, in violation of the charter or
by-laws of First Security or of any law, governmental rule, or
regulation of the State of Utah or the United States of America
governing the banking or trust powers of First Security or, to our
knowledge, of any indenture, mortgage, bank credit agreement, note or
bond purchase agreement, long-term lease, license or other agreement
or instrument to which it is a party or by which it is bound or, to
our knowledge, of any judgment or order of the State of Utah or the
United States of America relating to the banking or trust powers of
First Security.
11. There is no fee, tax or other governmental charge under the
laws of the State of Utah or any political subdivision thereof in
existence on the date hereof on, based on or measured by any payments
under the Certificates or the beneficial interests in the Lessor's
Estate, by reason of the creation of the trust under the Trust
Agreement, pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement, within
the State of Utah, which would not have been imposed if First
Security did not have its principal place of business and did not
perform its obligations under the Owner Trustee Documents in the
State of Utah.
12. Neither a Utah court nor a federal court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms or
with the consent of the Indenture Trustee, as long as the Lien of the
Indenture on the Trust Indenture Estate has not been released or
payment of the principal of, and premium, if any, and interest on,
the Certificates have not been made in full.
13. Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms or with the consent of the
Indenture Trustee, creditors of any person that is an Owner
Participant, holders of a lien against the assets of any such person
that is an Owner Participant, holders of a lien against the assets of
any such person, such as trustees, receivers or liquidators (whether
or not any insolvency proceeding has been commenced) (collectively,
the "Creditors") may acquire valid claims and liens, as to the Trust
Estate, only against the rights of such Owner Participant under the
Trust Agreement or in the Trust Estate, and do not have, and may not
through the enforcement of such Creditor's rights acquire, any
greater rights than such Owner Participant with respect to the Trust
Agreement or the Trust Estate.
14. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Owner Trustee, as the case may be, or any of its
properties in any court or before any administrative agency or
arbitrator, which, if adversely determined, would materially
adversely affect the ability of First Security or the Owner Trustee,
as the case may be, to perform its obligations under any of the Owner
Trustee Documents, and there are no pending or, to our knowledge,
threatened actions or proceedings before any court, administrative
agency or tribunal involving First Security or the Owner Trustee, as
the case may be, in connection with the transactions contemplated by
any of the Owner Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah, the federal laws of the United States of America governing the banking
and trust powers of First Security and Title II of the United States Code
entitled "Bankruptcy". However, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended (except
with respect to the opinion set forth in paragraph 1 above concerning the
citizenship of First Security) and (iii) state securities or blue sky laws.
Insofar as the foregoing opinions relate to the validity and enforceability in
the State of Utah of the Certificates and the other Owner Trustee Documents
expressed to be governed by the laws of the State of New York, we have assumed
that the laws of New York are identical to the laws of Utah in all material
respects, and that the Certificates and such Owner Trustee Documents
constitute legal, valid, binding and enforceable documents or instruments
under such laws (as to which we express no opinion). No opinion is expressed
as to the priority of any security interest or as to title to any part of the
Trust Estate.
B. The foregoing opinions regarding enforceability of any
document or instrument, except for the opinions set forth in paragraphs 12 and
13 above, are subject to (i) applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of the
Owner Trustee or First Security) on documents and instruments examined by us
are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee on the date hereof.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
Very truly yours,
__________________________
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(5)
[Letterhead of Bingham, Dana & Gould]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company, a Massachusetts trust company, individually ("State Street"), and as
Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass
Through Trust Agreement dated as of February 1, 1993, as amended and restated
as of October 1, 1995 (the "Pass Through Trust Agreement"), as supplemented by
the Series Supplements dated the date hereof between Federal Express
Corporation and the Pass Through Trustee, designated as Series Supplement
1996-A1 and 1996-A2, respectively (the "Series Supplements") and the
Participation Agreement (Federal Express Corporation Trust No. N669FE) dated
as of June 1, 1996 (as amended and restated, the "Participation Agreement")
among Federal Express, as Lessee, PMCC Leasing Corporation, as Owner
Participant, First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity, except as otherwise
stated, but solely as Owner Trustee under the Trust Agreement, State Street
Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture and State Street Bank and Trust Company, a Massachusetts trust
company, not in its individual capacity, except as otherwise stated, but
solely the Pass Through Trustee. This opinion is being delivered pursuant to
Section 4.01(l)(ix) of the Participation Agreement. Except as otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings set forth in Schedule II to the Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each Operative Agreement to which State Street
or the Pass Through Trustee, as the case may be, is a party, the Pass Through
Trust Agreement and the Series Supplements (collectively, the "Pass Through
Trustee Documents"), the Certificate of the Massachusetts Commissioner of
Banks relating to State Street and originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates, or other instruments as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Pass Through Trustee), the conformity
to the originals of all documents reviewed by us as copies, the authenticity
and completeness of all original documents reviewed by us in original or copy
form and the legal competence of each individual executing any document (other
than on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or
awareness of the individual lawyer in the firm that signed this opinion, the
individual lawyers in the firm who have participated directly in the specific
transactions to which this opinion relates or in the preparation of this
opinion and the partner of the firm responsible for State Street corporate
trust matters, and without any special or additional investigation undertaken
for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street and the Pass Through Trustee,
as applicable, is subject to the following general qualifications:
(i) as to any Pass Through Trustee Document, we assume that such
agreement is the legal, valid and binding obligation of each other party
thereto;
(ii) the enforceability of any obligation of State Street and the
Pass Through Trustee may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshalling or other similar laws and
rules of law affecting the enforcement of rights and remedies (including such
as may deny giving effect to waivers of debtors' or guarantors' rights) of
creditors generally; and
(iii) the enforcement of any rights and availability of any specific
or equitable relief may in all cases by subject to an implied duty of good
faith and to general principals of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts and the Federal laws of
the United States of America. No opinion is expressed herein as to the
application or effect of federal securities laws or as to the securities or
so-called "Blue Sky" laws of any state or other jurisdiction. In addition,
other than our opinion expressed in Paragraph 1 hereof with respect to the
citizenship of State Street, no opinion is expressed as to matters governed by
the Transportation Code or by any other law, statute, rule or regulation of
the United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft, Airframe or the Engines.
With your permission and without investigation, with respect to
paragraph 4 below in connection with our opinion relating to the legality,
validity, binding effect and enforceability of the documents there referred
to, to the extent that the laws of the Commonwealth of Massachusetts do not
govern such documents, we have assumed that the laws of the jurisdiction whose
laws govern such documents are not materially different from the internal
substantive laws of the Commonwealth of Massachusetts.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a Massachusetts trust company, duly
organized and validly existing in good standing with the Massachusetts
Commissioner of Banks under the laws of the Commonwealth of Massachusetts with
full corporate power and authority to execute, deliver and carry out,
individually or as Pass Through Trustee, as the case may be, the terms of the
Pass Through Trustee Documents and, in its capacity as Pass Through Trustee,
to authenticate the Pass Through Certificates delivered on the Refunding Date.
Upon execution of the Series Supplements, the Pass Through Trustee will be
deemed to have duly executed the Pass Through Trust Agreement and thereupon
become the Pass Through Trustee under the Pass Through Trust Agreement and the
Series Supplements for all purposes thereof.
2. The execution and delivery of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) by State Street, in
its individual capacity or as Pass Through Trustee, as the case may be, and
compliance by State Street or the Pass Through Trustee, as the case may be,
individually or as Pass Through Trustee, with all of the provisions thereof do
not contravene any Massachusetts or Federal law, rule or regulation governing
the banking or trust powers of State Street or the Pass Through Trustee, or
any order or judgment known to us, of any Massachusetts or Federal court or
governmental authority applicable to or binding on State Street, individually
or as Pass Through Trustee, or contravene the provisions of, or constitute a
default under, or result in the creation of a Lien on any property of State
Street or the Pass Through Trustee under, its charter documents or By-Laws or
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, in each case known to us, or any
other agreement or instrument, in each case known to us, to which State Street,
individually or as Pass Through Trustee, is a party or by which it or any of
its property may be bound or affected, or any Massachusetts or Federal law,
rule or regulation governing the Pass Through Trustee's banking or trust
powers, or any judgement, order or decree known to us as to be applicable to
the Pass Through Trustee, in its individual or trust capacity, of any court,
regulatory body, administrative agency, government or governmental body having
jurisdiction over the Pass Through Trustee, in its individual or trust
capacity, other than the Lien of the Indenture.
3. No order, license, consent, permit, authorization or
approval of or exemption by, and no notice to or filing with, or the taking of
any other action in respect of, any Massachusetts or Federal governmental
authority governing the banking or trust powers of State Street or the Pass
Through Trustee, and no filing, recording, publication or registration in any
public office is required under Massachusetts or Federal law pertaining to its
banking or trust powers for the due execution, delivery or performance by
State Street, individually or as Pass Through Trustee, as the case may be, of
the Pass Through Trustee Documents (other than the Pass Through Trust
Agreement) and of the certificate of authentication, as Pass Through Trustee,
on the Pass Through Certificates, or for the legality, validity, binding
effect or enforceability thereof against State Street or the Pass Through
Trustee, as the case may be.
4. Each of the Pass Through Trustee Documents (other than
the Pass Through Trust Agreement) has been duly authorized, executed and
delivered by State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, and each Pass Through Trust Document constitutes
a legal, valid and binding obligation of State Street, in its individual
capacity or as Pass Through Trustee, as the case may be, enforceable against
State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, in accordance with its terms.
5. The Pass Through Certificates have been duly authorized
and validly executed, issued, delivered and authenticated by the Pass Through
Trustee pursuant to the Pass Through Trust Agreement and the Series
Supplements; and the Pass Through Certificates acquired by the Underwriters
under the Underwriting Agreement are enforceable against the Pass Through
Trustee and are entitled to the benefits of the related Pass Through Trust
Agreement and the related Series Supplements, except as the enforceability
thereof may be limited by (a) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), (b) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and (c) public policy
considerations (in the case of the indemnity provisions contained therein).
6. To the best of our knowledge, there are no pending or
threatened actions or proceedings against State Street before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of State
Street, individually or as Pass Through Trustee, to perform its obligations
under the Pass Through Trustee Documents.
7. There are no taxes, fees or other governmental charges
payable under the laws of the State of New York or any political subdivision
thereof in connection with the execution, delivery and performance by the Pass
Through Trustee, in its individual or trust capacity, as the case may be, of
the Pass Through Trustee Documents to which it is a party or in connection
with the execution, issuance and delivery of the Pass Through Certificates
by the Pass Through Trustee, pursuant to the Series Supplements.
8. Neither the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee, in its
individual or trust capacity, as the case may be, nor their respective
Affiliates, successors or assigns, will be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of New York or any political subdivision
thereof (other than taxes imposed on the fees received by State Street Bank
and Trust Company for acting as Pass Through Trustee under the Series
Supplements). Certificate holders who are not residents of or otherwise
subject to tax in New York will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net worth,
capital, franchise or doing business tax), fee or other governmental charge
under the laws of the State of New York or any political subdivision thereof
as a result of purchasing, owning (including receiving payments with respect
to) or selling a Pass Through Certificate. There are no applicable taxes
under the laws of the State of New York or any political subdivision thereof
upon or with respect to (a) the construction, mortgaging, financing,
refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, location, ownership, insurance, control, assembly,
possession, repossession, operation, use, condition, maintenance, repair,
sale, return, abandonment, replacement, preparation, installation, storage,
redelivery, manufacture, leasing, subleasing, modification, rebuilding,
importation, transfer of title, transfer of registration, exportation or other
application or disposition of the Aircraft or any interest in any thereof, (b)
payments of Rent or other receipts, income or earnings arising therefrom or
received with respect to the Aircraft or any interest in any thereof or
payable pursuant to the Lease, (c) any amount paid or payable pursuant to any
Operative Agreements, (d) the Aircraft or any interest therein or the
applicability of the Lease to the Aircraft or any interest in any thereof, (e)
any or all of the Operative Agreements, any or all of the Pass Through
Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification, assumption,
reissuance, refinancing or refunding of any or all thereof, and any other
documents contemplated thereby and amendments or supplements hereto and
thereto, (f) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to, any or all of the Pass Through
Certificates, whether as originally issued or pursuant to any refinancing,
refunding, assumption, modification or reissuance, or any other obligation
evidencing any loan in replacement of the loan evidenced by any or all of the
Pass Through Certificates, or (g) otherwise with respect to or in connection
with the transactions contemplated by the Pass Through Trust Agreement, the
Series Supplements, the Pass Through Certificates and the Operative
Agreements, which would not have been imposed if the Pass Through Trustee
had not had its principal place of business in, had not performed (either
in its individual capacity or as Pass Through Trustee) any or all of its
administrative duties under the Pass Through Trust Agreement, the Series
Supplements, the Pass Through Certificates and the Operative Agreements in,
and had not engaged in any activities unrelated to the transactions
contemplated by the Pass Through Trust Agreement, the Series Supplements,
the Pass Through Certificates and the Operative Agreements in, the State of
New York.
With respect to the opinions set forth in paragraphs 7 and 8
above, with your permission we have relied upon, and this opinion is limited
by, the assumptions set forth in the discussion entitled "Certain
Massachusetts Taxes" in the Prospectus Supplement to the Prospectus forming
part of Registration Number No. 33-56569 (the "Registration Statement") for
the registration of the Pass Through Certificates with the Securities and
Exchange Commission. In addition, we have assumed that each Pass Through
Trust (as defined in the Registration Statement) will constitute a grantor
trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code
of 1986, as amended (the "Code"), and will not be classified as a
corporation or as a Partnership (as defined in Section 7701 of the Code),
and each Pass Through Trust does not otherwise engage in business in New
York. We express no opinion as to the correctness of the foregoing
assumptions and we have conducted no independent investigation in this
regard.
Very truly yours,
__________________________
Bingham, Dana & Gould
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(6)
[Letter of General Electric Company]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N669FE
Reference is made to (i) that certain Participation Agreement
(Federal Express Corporation Trust No. N669FE), dated as of June 1, 1996 (the
"Participation Agreement") by and among Federal Express Corporation, as Lessee
("Fed Ex"), PMCC Leasing Corporation, as Owner Participant, First Security
Bank of Utah, National Association ("FSBU") (not in its individual capacity,
except as otherwise expressly set forth therein, but solely as Owner Trustee)
and State Street Bank and Trust Company (not in its individual capacity,
except as otherwise expressly set forth therein, but solely as Indenture
Trustee); (ii) that certain Purchase Agreement Assignment (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Purchase
Agreement Assignment") between Fed Ex, as Lessee and FSBU, as Lessor; (iii)
that certain Lease Agreement (Federal Express Corporation Trust No. N669FE),
dated as of June 1, 1996 (the "Lease") between FSBU (not in its individual
capacity, but solely as Owner Trustee), as Lessor and Fed Ex, as Lessee; (iv)
that certain Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (the "Trust
Indenture") between FSBU (not in its individual capacity), as Owner Trustee
and State Street Bank and Trust Company, as Indenture Trustee; and (v) that
certain Trust Agreement (Federal Express Corporation Trust No. N669FE),
dated as of June 1, 1996 (the "Trust Agreement") between FSBU (not in its
individual capacity), as Owner Trustee and PMCC Leasing Corporation, as
Trustor.
I am an attorney employed by General Electric Company, a New
York corporation (the "Engine Manufacturer") and as such have acted as counsel
for the Engine Manufacturer in connection with the execution and delivery by
the Engine Manufacturer of the Consent (the "Consent"), and the Engine
Warranty Assignment (Federal Express Corporation Trust No. N669FE) (the
"Engine Warranty Assignment"), each attached to the Participation Agreement as
Exhibit F and dated as of June 1, 1996. The Consent and the Engine Warranty
Assignment covers two GE CF6-80C2-A5F series engines bearing Engine
Manufacturer's serial numbers 705-241 and 705-242, respectively. In this
connection, I have, or an attorney under my supervision has, reviewed such
documents as I have deemed necessary for the purpose of this opinion,
including, but without limiting the generality of the foregoing, the General
Terms Agreement No. 6-9034, dated as of July 3, 1991 between the Engine
Manufacturer and Fed Ex (the "General Terms Agreement"), the Engine Product
Support Plan forming a part thereof (the "Engine Product Support Plan"), the
Participation Agreement, the Purchase Agreement Assignment, the Lease, the
Trust Indenture and the Trust Agreement.
In making such examinations, I have relied upon the accuracy of
original, certified, conformed, photocopied or telecopied copies of such
records, agreements, certificates and other documents as I have deemed
necessary or appropriate to enable me to render the opinions expressed herein.
In all such examinations, I have assumed the genuineness of signatures on
original documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by
public officials, I have assumed the same to have been properly given and
to be accurate. As to various questions of fact material to such opinions,
I have relied, when such relevant facts were not independently established
by me, solely upon the accuracy of the statements, representations and
warranties made in the Participation Agreement, the Purchase Agreement
Assignment, the Lease, the Trust Indenture and the Trust Agreement.
With your consent, and for the purposes of this opinion, I have
assumed (other than with respect to the Engine Manufacturer), the accuracy of
the following matters, but I have not made any independent investigation or
inquiry with respect thereto and I render no opinion on such matters:
(a) each of the Participation Agreement, the Purchase
Agreement Assignment, the Lease, the Trust Indenture, and the Trust
Agreement have been duly and validly authorized, executed and
delivered by all parties thereto and constitutes the legal, valid and
binding obligations of each of such parties in accordance with the
respective terms thereof; and
(b) the respective parties to the Participation Agreement, the
Purchase Agreement Assignment, the Lease, the Trust Indenture, and the
Trust Agreement have obtained, and there are in full force and
effect, any and all federal, state, local or foreign governmental
agencies and authorities in connection with the transactions
contemplated thereby, to the extent necessary for the legality,
validity and binding effect or enforceability of the Consent and the
Engine Warranty Assignment.
Based upon the foregoing, and subject to the specific
assumptions, qualifications and reliances herein set forth, and on the basis
of my consideration of such facts and law as I have deemed necessary for
purposes of this letter, it is my opinion that:
(1) The Engine Manufacturer has the full corporate power,
authority and the legal right to enter into and perform its
obligations under the General Terms Agreement, the Consent and the
Engine Warranty Assignment. The execution, delivery and performance
by the Engine Manufacturer of each of the General Terms Agreement,
the Consent and the Engine Warranty Assignment was duly authorized
by all necessary corporate action on the part of the Engine
Manufacturer.
(2) Each of the General Terms Agreement, the Consent and
Engine Warranty Assignment has been duly authorized, executed and
delivered by and constitutes a legal, valid and binding obligation of
the Engine Manufacturer, enforceable against the Engine Manufacturer
in accordance with the respective terms thereof, except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general equity principles.
(3) The Engine Product Support Plan insofar as it relates to
the Engine Warranties (as such term is defined in the Engine Warranty
Assignment), constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the terms thereof, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equity principles.
The foregoing opinions are limited to the laws of the State of
New York and the federal laws of the United States of America, but 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 aircraft. Further, no opinion is expressed as to
title to any engines or other property.
This opinion is furnished by me at your request for your sole
benefit and no other person or entity shall be entitled to rely on this opinion
without our express written consent. My opinion is limited to the matters
stated herein and no opinion is implied or may be inferred beyond the matters
expressly stated herein.
Very truly yours,
__________________________
David L. Lloyd, Jr.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(7)
[Letterhead of Clifford Chance]
[Delivery Date]
To The Opinion Addressees referred to in Schedule I hereof
Re: Federal Express Corporation Trust No. N669FE
Ladies and Gentlemen:
We are special French counsel for Airbus Industrie G.I.E.
("Airbus") and AVSA S.A.R.L. ("AVSA") and you have asked for our opinion in
connection with certain transactions contemplated in the Participation
Agreement (Federal Express Corporation Trust No. N669FE), dated as of June 1,
1996 (the "Participation Agreement") among Federal Express Corporation, as
Lessee ("Federal Express"), PMCC Leasing Corporation, as Owner Participant
("Owner Participant"), First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement ("Owner Trustee") and State Street
Bank and Trust Company, a Massachusetts trust company as Indenture Trustee
under the Indenture ("Indenture Trustee"), and relating to the Aircraft to be
operated by Federal Express.
This opinion is being delivered pursuant to Section 4.02(m)(x)
of the Participation Agreement.
Capitalized terms used in this opinion and not otherwise defined
shall have the meaning assigned thereto in the Participation Agreement.
We have examined:
(i) a copy of an Airbus A300-600R Freighter Purchase Agreement
dated as of July 3, 1991 and made between AVSA and Federal
Express with an executed Consent and Guaranty of Airbus of same
date attached thereto, sent to us by facsimile by AINA Holdings
Inc. ("AINA") on April 27, 1994;
(ii) a copy sent to us by facsimile by Davis Polk & Wardwell on
_________________ of an executed Purchase Agreement Assignment
dated as of June 1, 1996 (the "Purchase Agreement Assignment")
made between Federal Express and the Owner Trustee;
(iii) a copy sent to us by facsimile by AVSA on _________________ of
an executed but undated Airbus Industrie Consent and Agreement
to the Purchase Agreement Assignment;
(iv) a copy sent to us by facsimile by AVSA on _________________ of
an executed but undated AVSA Consent and Agreement to the
Purchase Agreement Assignment;
(v) a copy sent to us by facsimile by AVSA on _________________ of
an executed but undated Warranty Bill of Sale, relating to the
Aircraft and transferring title therein from AVSA to the Owner
Trustee ("AVSA Warranty Bill of Sale");
(vi) a copy sent to us by facsimile by AVSA on _________________ of
an executed but undated Airbus Industrie G.I.E. Warranty, in
favour of the Participants (the "Airbus Warranty") warranting
AVSA's Warranty Bill of Sale;
(vii) a copy sent to us by facsimile by AVSA on _________________ of
an undated FAA Bill of Sale executed by AVSA in favour of the
Owner Trustee;
(viii) a copy sent to us by facsimile by AVSA on May 3, 1995 of an
executed power of attorney dated September 1, 1994 appointing
Messrs. John Leahy and Michel Dechelotte, acting singly, as
attorneys-in-fact of Mr. Jean Pierson, Managing Director
("Administrateur Gerant") of Airbus;
(ix) a copy sent to us by facsimile by AVSA on September 15, 1995
of an executed power of attorney dated August 16, 1995
appointing J.C Mauries as attorney-in-fact of Mr. Jean Pierson,
Managing Director ("Administrateur Gerant") of Airbus;
(x) a copy sent to us by facsimile by AVSA on September 15, 1995
of an executed power of attorney dated August 16, 1995
appointing Xavier de Rouville as attorney-in-fact of Mr. Jean
Pierson, Managing Director ("Administrateur Gerant") of Airbus;
(xi) a copy sent to us by courier by AVSA on September 15, 1995 of
an executed power of attorney dated August 1, 1995 appointing
Ms. Michele Lascaux and Mr. Etienne O. de Coninck, acting
singly, as attorneys-in-fact of Mr. Christophe Mourey, Chief
Executive Officer ("Gerant") of AVSA; and
(xii) a copy sent to us by courier by AVSA on September 15, 1995 of
an executed power of attorney dated August 1, 1995 appointing
Ms. Marie-Pierre Merle-Beral and Michele Lascaux, Messrs.
Jacques Debeaulieu, Sylvain Lebeuf, Philippe Martin, Rainer von
Borstel and Alain Rochet, acting singly, as attorneys-in-fact
of Mr. Christophe Mourey, Chief Executive Officer ("Gerant") of
AVSA.
(the documents referred to in paragraphs (i) to (xii) being referred to herein
as the "Documents").
Based on the foregoing, and such other documents, records and
other instruments as we have deemed necessary or appropriate for the purpose
of this opinion, and assuming the Documents to have been duly executed by the
parties thereto (other than Airbus and AVSA), the genuineness of all signatures
and the completeness and conformity to the originals of all documents supplied
to us as copies or as facsimiles, we are of the opinion that, subject to the
qualifications set out below:
1. Airbus is a groupement d'interet economique duly organized and
existing under the laws of the French Republic, and has the
power and authority to carry on its business as now conducted.
The present members of Airbus are (i) Aerospatiale, Societe
Nationale Industrielle, (ii) Daimler-Benz Aerospace Airbus
GmbH, (iii) British Aerospace (Operations) Ltd. and (iv)
Construcciones Aeronauticas S.A., and each of such corporations
is, without the need to proceed against any collateral security
for the indebtedness of Airbus or to take any other legal
action or process (except for service on Airbus by huissier of
notice to perform and subsequent failure by Airbus to do so),
jointly and severally liable with the other members for the
debts of Airbus arising out of obligations contracted by Airbus
while such corporation is a member of Airbus.
2. AVSA is a societe a responsabilite limitee duly established and
existing under the laws of the French Republic and has the power
and authority to carry on its business as now conducted.
3. Each of Airbus and AVSA has full power and authority to enter
into and to execute, deliver and perform its obligations under
those of the Documents to which it is a party; such obligations
are legal, valid and binding upon them respectively, are
enforceable in accordance with their respective terms and rank
pari passu with the other unsecured obligations of Airbus or
AVSA, as the case may be.
4. All actions, authorizations, approvals, consents, conditions and
things required at law to be taken, fulfilled and done to
authorize the execution, delivery and performance by Airbus and
AVSA of those of the Documents to which they respectively are
party have been taken, obtained, fulfilled and done; and no
consents under any exchange control, laws, rules or regulations
of the French Republic are necessary in connection therewith.
5. Neither the execution and delivery and performance of the
Documents to which Airbus and AVSA respectively are a party,
nor the consummation of the transactions contemplated thereby,
contravenes or violates any law, governmental rule or regulation
applicable to or binding on Airbus or AVSA.
6. The choice of the laws of the State of New York to govern the
Documents (which are expressed to be so governed) is valid under
the laws of the French Republic, and a French court would uphold
such choice of law in any suit on the Documents brought in a
French court.
7. Under the laws of the French Republic, Airbus and AVSA are
subject to private commercial law and to suit, and neither
Airbus nor AVSA, nor their respective properties have any
immunity from the jurisdiction of any court or any legal
process (whether through service of notice, attachment prior to
notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise), except that:
(a) to the extent that Airbus or AVSA occupies or possesses
any property by virtue of any license or grant from the
French State, such property and the title of Airbus or
AVSA thereto may be immune from suit or execution on the
grounds of sovereignty, and
(b) suit and execution against Airbus and AVSA or their
respective property may be affected by action taken by the
French public authorities in the interests of national
defence or on the occurrence of exceptional circumstances
of paramount importance to the national interest of
France, as such concept is understood under the
Constitution, laws and regulations of France.
8. No French value added tax is due upon the transfer of title of
the Aircraft from AVSA to First Security Bank of Utah, National
Association as Owner Trustee.
9. In connection with the obligations of Airbus and AVSA under the
Documents, this opinion must be read subject to the following
qualifications and observations as to French law:
(a) the remedy of specific performance may not be available in
a French court;
(b) the enforcement against Airbus of any of the Documents to
which it is a party may be limited by applicable
bankruptcy, insolvency, arrangement, moratorium or
similar laws relating to or affecting the enforcement of
creditors' rights generally, as such laws are applied to
Airbus. The enforcement against AVSA of any of the
Documents to which it is a party may be limited by such
laws, as such laws are applied to AVSA. The enforcement
against any member of Airbus of any obligation of Airbus
contained in the Documents may be limited by such laws,
as such laws are applied to such member;
(c) in respect of payment obligations, a French court has
power under Article 1244-1 of the French Civil Code to
grant time to a debtor (not in excess of two years),
taking into account the position of the debtor and the
needs of the creditor;
(d) in order to ensure the validity as against third parties
of the assignment made in the Purchase Agreement
Assignment, it is necessary that notice of such
assignment be served on Airbus and AVSA by "huissier" in
accordance with the provisions of Article 1690 of the
French Civil Code;
(e) in the event of any proceedings being brought in a French
court in respect of a monetary obligation expressed to be
payable in a currency other than French Francs, a French
court would probably give judgment expressed as an order
to pay, not such currency, but its French Franc equivalent
at the time of payment or enforcement of judgment. With
respect to a bankruptcy, insolvency, liquidation,
moratorium, reorganization, reconstruction or similar
proceedings, French law may require that all claims or
debts be converted into French Francs at an exchange rate
determined by the court at a date related thereto, such as
the date of commencement of a winding-up;
(f) a determination or certificate as to any matter provided
for in the Documents might be held by a French court not
to be final, conclusive or binding, if such determination
or certificate could be shown to have an unreasonable,
incorrect or arbitrary basis or not to have been given or
made in good faith;
(g) claims may become barred by effluxion of time or may be or
become subject to defence of set-off or counterclaim;
(h) provisions in any Document providing that it or any other
Documents may be amended or varied or any provision
thereof waived only by an instrument in writing may not be
effective;
(i) a French court may stay proceedings if concurrent
proceedings are being brought elsewhere;
(j) we express no opinion as to whether any provision in the
Documents conferring a right of set-off or similar right
would be effective against a liquidator or a creditor; and
(k) our opinion as to the enforceability of the Documents
relates only to their enforceability in France in
circumstances where the competent French court has and
accepts jurisdiction. The term "enforceability" refers
to the legal character of the obligations assumed by the
parties under the documents, i.e., that they are of a
character which French law enforces or recognizes. It
does not mean that the Documents will be enforced in all
circumstances or in foreign jurisdictions or by or
against third parties or that any particular remedy will
be available.
(l) Article 899 of the French Tax Code provides that
agreements evidencing an undertaking to pay a sum of
money are subject to stamp tax ("droit de timbre") of a
nominal amount if made in the French Republic, if made in
a foreign country, such agreements are subject to a stamp
tax of a nominal amount before certain use thereof can be
made in the French Republic (Article 897 of the French
Tax Code). However non-payment of such stamp tax does
not affect the legality, validity or enforceability of
the agreements.
In rendering the foregoing opinions, we have assumed that the
Documents (expressed to be governed by New York law) constitute the legal,
valid and binding obligations of the parties under New York law.
We are qualified as French Avocats.
No opinion is expressed herein as to laws other than the laws of
the French Republic as of the date hereof. This opinion is for your use and
that of no one else, and is limited to (i) the matters specifically mentioned
herein, and (ii) the purpose set out above.
Very truly yours,
__________________________
Clifford Chance
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT A(8)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
4.02(d)(iii) of the Participation Agreement (Federal Express Corporation Trust
No. N669FE), dated as of June 1, 1996 (the "Participation Agreement") among
Federal Express Corporation, as Lessee (the "Lessee"), PMCC Leasing
Corporation, as Owner Participant (the "Owner Participant"), First Security
Bank of Utah, National Association, not in its individual capacity but solely
as Owner Trustee (the "Owner Trustee"), State Street Bank and Trust Company,
not in its individual capacity but solely as Indenture Trustee (the "Indenture
Trustee") and State Street Bank and Trust Company (the "Pass Through
Trustee"), with respect to that portion of Subtitle VII of Title 49 of the
United States Code relative to the recordation of instruments and the
registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal
Aviation Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated June __, 1996
(the "FAA Bill of Sale") from AVSA, as seller, conveying
title to the Airframe to the Owner Trustee, which FAA
Bill of Sale was filed at ____ _.m., C._.T.;
(b) AC Form 8050-1 Aircraft Registration Application dated
June __, 1996 (the "Aircraft Registration
Application") by the Owner Trustee, as applicant,
covering the Airframe, which Aircraft Registration
Application was filed at ____ _.m., C._.T.;
(c) Affidavit of the Owner Trustee dated June __, 1996 (the
"Owner Trustee Affidavit") pursuant to Section
47.7(c)(2)(ii) of Part 47 of the Federal Aviation
Regulations together with Affidavit of the Owner
Participant dated June __, 1996 (the "Owner Participant
Affidavit") attached thereto, which Owner Trustee
Affidavit with the Owner Participant Affidavit attached
was filed at ____ _.m., C._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N669FE) dated as of June 1, 1996
(the "Trust Agreement") between the Owner Participant and
the Owner Trustee, which Trust Agreement was filed at
____ _.m., C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N669FE)
dated as of June 1, 1996 (the "Trust Indenture") between
the Owner Trustee and the Indenture Trustee, with
executed counterpart of Indenture and Security Agreement
Supplement No. 1 (Federal Express Corporation Trust No.
N669FE) dated June __, 1996 (the "Trust Indenture
Supplement") between the Owner Trustee and the Indenture
Trustee, covering the Aircraft, attached thereto, which
Trust Indenture with the Trust Indenture Supplement
attached was filed at ____ _.m., C._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N669FE) dated as of June 1, 1996
(the "Lease") between the Owner Trustee, as lessor, and
the Lessee, with executed counterparts of the following
attached thereto: (i) Lease Supplement No. 1 (Federal
Express Corporation Trust No. N669FE) dated June __, 1996
(the "Lease Supplement") between the Owner Trustee, as
lessor, and the Lessee, covering the Aircraft; (ii) the
Trust Indenture; and (iii) the Trust Indenture
Supplement, which Lease with the foregoing attachments
(collectively, the "Lease Attachments") attached was
filed at ____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the
FAA filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments
and of such records of the FAA as we deemed necessary to render this opinion,
it is our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the
Lease Attachments attached are in due form for
recordation by and have been duly filed for
recordation with the FAA pursuant to and in accordance
with the provisions of 49 U.S.C. Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached
and the Trust Agreement are in due form for filing and
have been duly filed with the FAA pursuant to and in
accordance with the provisions of 49 U.S.C. Section
44103(a) and Section 47.7(c) of the Federal Aviation
Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit
with the Owner Participant Affidavit attached and the
Trust Agreement will cause the FAA to register the
Airframe, in due course, in the name of the Owner
Trustee and to issue to the Owner Trustee an AC Form
8050-3 Certificate of Aircraft Registration for the
Airframe, and the Airframe will be duly registered
pursuant to and in accordance with the provisions of
49 U.S.C. Section 44103(a);
4. the Owner Trustee has valid legal title to the Airframe
and the Aircraft is free and clear of all Liens, except
(i) the security interest created by the Trust Indenture,
as supplemented by the Trust Indenture Supplement, and
(ii) the rights of the parties under the Lease, as
supplemented by the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with
respect to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust
Indenture Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly
perfected first assignment of all the right, title and
interest of the Owner Trustee in, to and under the Lease
and the Lease Supplement (insofar as such assignment
affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section
44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been
duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such
security interest and assignment (insofar as such
assignment affects an interest covered by the recording
system established by the FAA pursuant to 49 U.S.C.
Section 44107), it being understood that no opinion is
herein expressed as to the validity, priority or
enforceability of such security interest and assignment
under local law or as to the recognition of the
perfection of such security interest and assignment as
against third parties in any legal proceeding outside the
United States;
7. no authorization, approval, consent, license or order of,
or registration with, or the giving of notice to, the FAA
is required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the execution and delivery by the Owner
Participant of the Participation Agreement or the Trust
Agreement, nor other consummation of the transactions
contemplated thereby by the Owner Participant, requires
the consent or approval of, or the giving of notice to,
or the registration of, or the taking of any other action
in respect of the FAA, except (x) the registration of the
Airframe, including the submission of the Aircraft
Registration Application, the Owner Trustee Affidavit,
the Owner Participant Affidavit and the Trust Agreement
to the FAA and (y) the filings for recordation specified
elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of
the United States. In rendering this opinion, we were subject to the accuracy
of the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties had actual notice.
In rendering this opinion we are assuming that there are no documents with
respect to the Aircraft which have been filed for recording under the
recording system of the FAA but have not yet been listed in the available
records of such system as having been so filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated June __, 1996, a copy
of which is attached hereto.
Very truly yours,
__________________________
Robert M. Peregrin
For the Firm
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 774 and U.S. Registration No. N669FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-241 and 705-242 (the "Engines") (the
Airframe and the Engines are referred to collectively as the "Aircraft").
Confidential Omissions
The Lease was filed with the FAA, with (i) the Owner Participant
Amount and Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule
III), (iii) the Termination Values (Schedule IV) and (iv) the Purchase Option
Schedule (Schedule V) omitted from the FAA filing counterpart thereof as
containing confidential financial information; and (v) the purchase price under
Section 4.02(a)(F) set forth in Schedule IV to the Participation Agreement,
which was not attached to the FAA filing counterpart of the Lease or otherwise
filed with the FAA for recordation.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Pass Through Trustee
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
PMCC Leasing Corporation
800 Westchester Avenue
Rye Brook, New York 10573
Underwriters
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.g]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.c.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.f]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(Federal Express Corporation Trust No. N669FE)
PURCHASE AGREEMENT ASSIGNMENT (Federal Express Corporation
Trust No. N669FE), dated as of June 1, 1996 between FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Assignor" or "Lessee"), and FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity but solely as Owner Trustee ("FSBU" or the
"Lessor") under the Trust Agreement (Federal Express Corporation Trust No.
N669FE), dated as of June 1, 1996 (as amended, modified or supplemented from
time to time, the "Trust Agreement"), between PMCC Leasing Corporation (the
"Owner Participant") and FSBU.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are
parties to the Purchase Agreement (as hereinafter defined), providing, among
other things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the
Lessor will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents
and Agreements (as hereinafter defined), (a) the Assignor desires to assign to
the Lessor (i) the Assignor's right under the Purchase Agreement and the
Consent and Guaranty (insofar as it relates to the Purchase Agreement) to
purchase the Aircraft and (ii) certain of the Assignor's remaining rights,
title and interests in, to and under the Purchase Agreement and the Consent
and Guaranty (insofar as they relate to the Purchase Agreement and the
Aircraft) and (b) the Lessor desires to accept the assignments and, except as
otherwise provided herein, to assume the obligations of the "Buyer" under the
Purchase Agreement, to the extent assigned to it pursuant hereto; and
WHEREAS, pursuant to the Indenture (as hereinafter defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as hereinafter defined) to the extent set forth therein; and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and
deliver their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment,
except as otherwise expressly provided or unless the context otherwise
requires, the following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 774, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a
responsabilite limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and
Agreement of AVSA attached hereto, as amended, modified or
supplemented from time to time.
"Bill of Sale" shall mean the bill of sale for the Aircraft to
be delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of
the Guarantor attached to the Purchase Agreement, together with all
amendments, waivers, and consents heretofore entered into or
heretofore granted thereunder and delivered to the Lessor.
"Consents and Agreements" shall mean the AVSA Consent and
Agreement and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French
groupement d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and
Agreement of the Guarantor attached hereto, as amended, modified or
supplemented from time to time.
"Indenture" shall mean the Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N669FE), dated as of
June 1, 1996, between the Lessor and the Indenture Trustee, as
amended, modified or supplemented from time to time.
"Indenture Trustee" shall mean State Street Bank and Trust
Company, a Massachusetts trust company, not in its individual
capacity but solely as Indenture Trustee under the Indenture and each
other person which may from time to time be acting as successor
trustee under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996, between the
Lessor and the Assignor, as amended, modified or supplemented from
time to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N669FE), dated as of June 1,
1996, among the Assignor, the Owner Participant (as defined herein),
the Pass Through Trustee (as defined therein), the Lessor, and the
Indenture Trustee, as amended, modified or supplemented from time to
time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto
and all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are
defined in the Lease shall, when used herein, have the meanings specified in
the Lease.
2. Assignment. (a) Generally. The Assignor has sold,
assigned, transferred and set over and does hereby sell, assign, transfer and
set over unto the Lessor (i) the right upon valid tender of the Aircraft by
AVSA in accordance with the Purchase Agreement to purchase the Aircraft
pursuant to the Purchase Agreement for the amount specified in the invoice in
respect thereof to be delivered by AVSA on the Delivery Date therefor
(including, without limitation, the right to accept delivery of the Aircraft
through an appointed representative which may be an employee of the Assignor)
and the right to be named the "Buyer" in the Bill of Sale and the right to
enforce the same under the Consent and Guaranty, (ii) the right to take and
hold the Aircraft and (iii) all of the Assignor's other right, title and
interest in and to the Purchase Agreement and the Consent and Guaranty (insofar
as it relates to the Purchase Agreement), as and to the extent that the same
relates to the Aircraft and, except to the extent reserved below, the
operation of the Aircraft, including, without limitation, in such assignment
to the Lessor (A) all claims for damages in respect of such Aircraft arising
as a result of any default by AVSA under the Purchase Agreement, or by any
vendor or other supplier of aircraft engines or other parts or equipment
installed on or in the Aircraft, including, without limitation, all warranty,
service life policy and indemnity provisions in the Purchase Agreement in
respect of the Aircraft and all claims thereunder and under the Consent and
Guaranty and (B) any and all rights of the Assignor to compel performance of
the terms of the Purchase Agreement and the Consent and Guaranty in respect of
the Aircraft, including all warranty and indemnification provisions in the
Purchase Agreement and the Consent and Guaranty and claims thereunder with
respect to the Aircraft; reserving to the Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft
other than the Aircraft and the purchase and operation of such
aircraft and to the extent that the Purchase Agreement and the
Consent and Guaranty relate to any other matters not directly
pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in
respect of the Aircraft under the Purchase Agreement or amounts
credited or to be credited or paid or to be paid by the Guarantor or
AVSA to the Assignor in respect of the Aircraft or otherwise (except
amounts credited with respect to warranty claims to the extent set
forth in Section 2(b) hereof) as of the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data
and service provided under Clauses 12 and 13 of the Purchase
Agreement, that AVSA and the Guarantor are obligated to provide or do
provide pursuant to the Purchase Agreement and the Consent and
Guaranty, respectively, with respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the
Purchase Agreement and the Consent and Guaranty as and to the extent
that the same relates to specification changes, performance and
operation pertaining to the Aircraft, other than sub-Clause 2.1 and
Clauses 12 and 13 of the Purchase Agreement and under the Consent and
Guaranty to the extent relating thereto,
(5) the right to obtain services, training, data and demonstration
and test flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's
plant pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter
agreements, as at any time amended, modified or supplemented, to the
Purchase Agreement, and under the Consent and Guaranty to the extent
relating thereto; provided, however, that the reservation set forth
in this Section 2(a)(7) shall not in any way limit the rights of the
Lessor arising under Sub-clause 2.1 and Clauses 12 and 13 of the
Purchase Agreement.
(b) Assignment of Rights. If and so long as there shall not
exist and be continuing an Event of Default, the Lessor hereby authorizes the
Lessee, to the exclusion of the Lessor, to exercise in the Lessee's name all
rights and powers of the "Buyer" under the Purchase Agreement and to retain
any recovery or benefit resulting from the enforcement of any warranty or
indemnity in respect of the Aircraft, except that the Lessee may not enter
into any change order or other amendment, modification or supplement to the
Purchase Agreement without the written consent or countersignature of the
Lessor if such change order, amendment, modification or supplement would
result in any rescission, cancellation or termination of the Purchase
Agreement in respect of the Aircraft or in any way limit the rights of the
Lessor arising under Clauses 12 and 13 of the Purchase Agreement or any of the
other rights assigned hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof the
Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, 2, Rond Point Maurice Bellonte, 31700 Blagnac,
France (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a)
Assignor Remains Liable. It is expressly agreed that, anything herein
contained to the contrary notwithstanding: (a) the Assignor shall at all
times remain liable to AVSA under the Purchase Agreement to perform all the
duties and obligations of the "Buyer" thereunder to the same extent as if this
Assignment had not been executed; (b) the exercise by the Lessor of any of the
rights assigned hereunder shall not release the Assignor from any of its
duties or obligations to AVSA under the Purchase Agreement except to the
extent that such exercise by the Lessor shall constitute performance of such
duties and obligations; and (c) except as provided in the next succeeding
paragraph, none of the Lessor, the Indenture Trustee nor any Participant shall
have any obligation or liability under the Purchase Agreement by reason of, or
arising out of, this Assignment or be obligated to perform any of the
obligations or duties of the Assignor under the Purchase Agreement or to make
any payment or to make any inquiry as to the sufficiency of any payment
received by any of them or to present or file any claim or to take any other
action to collect or enforce any claim for any payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the Purchase
Agreement, the Lessor confirms for the benefit of AVSA that, insofar as the
provisions of the Purchase Agreement relate to the Aircraft, in exercising any
rights under the Purchase Agreement, or in making any claim with respect to
the Aircraft or other goods and services delivered or to be delivered pursuant
to the Purchase Agreement, the terms and conditions of the Purchase Agreement
disclosed to the Lessor in writing shall apply to, and be binding upon, the
Lessor to the extent of its respective interests assigned hereunder to the
same extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained
herein shall (i) subject AVSA or the Guarantor to any liability to which it
would not otherwise be subject under the Purchase Agreement or (ii) modify in
any respect the contractual rights of AVSA or the Guarantor thereunder
(except, in each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have
occurred and be continuing, the Lessor and its successors and assigns to be
the Assignor's true and lawful attorney, irrevocably, with full power (in the
name of the Assignor or otherwise) to ask, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due and to
become due under, or arising out of, the Purchase Agreement and the Consent
and Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor,
its successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each
agree that, at any time and from time to time, upon the written request of any
other party hereto, it will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the
other may reasonably request in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants. The
Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally,
and the Assignor is not in default thereunder, and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease
is in effect, the Lessor agrees that it shall not enter into any agreement
that would amend, modify, supplement, rescind, cancel or terminate the
Purchase Agreement or the Consent and Guaranty in any respect or in any way
limit the rights of the Assignor arising under Clauses 12 and 13 of the
Purchase Agreement or any of the other rights assigned hereunder (except as
set forth above when there has been an Event of Default) without the prior
written consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by
the Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not
disclose to any third party the terms of the Purchase Agreement or this
Assignment, except (a) as required by applicable law or governmental
regulation, (b) as contemplated in the Lease or the Participation Agreement
(including as set forth in Section 17.01 of the Participation Agreement) or
(c) with the consent of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to
the assignment and pledge by the Lessor to the Indenture Trustee, as security
for the Certificates to be issued under the Indenture and the other
obligations secured thereby as specified in the Indenture, of all of the
Lessor's right, title and interest in and to the Purchase Agreement and the
Consent and Guaranty under this Assignment.
10. Counterparts. This Assignment 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.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters
contained herein shall be delivered in the manner and to the addresses
provided in Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ____________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Lessor
By ______________________
Name:
Title:
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment, between
Federal Express Corporation, a Delaware corporation, and First Security Bank
of Utah, National Association, a national banking association, not in its
individual capacity, but solely as Lessor, with respect to Federal Express
Corporation Trust No. N669FE, dated as of June 1, 1996, (hereinafter called
the "Assignment", the defined terms therein being hereinafter used with the
same meaning), and hereby confirms to the Assignor and the Lessor and their
respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, and agreements of the Guarantor under the Consent and Guaranty
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns, to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled to
receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect to
the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by AVSA to
the Lessor, the assignment of Assignor's rights and interests under the
Purchase Agreement and the Consent and Guaranty to the Lessor pursuant to
the Assignment, the assignment of the Lessor's rights and interests in the
Assignment to the Indenture Trustee pursuant to the Indenture and the lease
of the Aircraft by the Lessor to the Assignor under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement, the Guarantor will not assert any lien or claim
against the Aircraft or any part thereof or against the Lessee, the Lessor,
the Owner Participant or the Indenture Trustee arising on or prior to such
delivery or in respect of any work or services performed on or prior
thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic of
France and has the requisite power and authority to enter into and perform
its obligations under the Consent and Guaranty, the Airbus Guaranty and
this Consent and Agreement;
(B) the making and performance, in accordance with their terms of the
Consent and Guaranty, the Airbus Guaranty and this Consent and Agreement
have been duly authorized by all necessary corporate action on the part of
the Guarantor, do not require the consent or approval of the members of the
Guarantor, do not require the consent or approval of,or the giving of
notice to, or registration with, or the taking of any other action in
respect of, any French governmental authority or agency except for those
that have already been obtained and do not contravene any law binding on
the Guarantor or contravene the Guarantor's charter documents or any
indenture, credit agreement or other contractual agreement to which the
Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof and
at all times thereafter to and including the date of this Consent and
Agreement, and each of this Consent and Agreement and the Airbus Guaranty
constitutes, binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of June ___, 1996
AIRBUS INDUSTRIE G.I.E.
By _____________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite limitee
organized and existing under the laws of the Republic of France ("AVSA"),
hereby acknowledges notice of and consents to all of the terms of the Purchase
Agreement Assignment between Federal Express Corporation, a Delaware
corporation, and First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity, but solely as Lessor,
with respect to Federal Express Corporation Trust No. N669FE, dated as of June
1, 1996, (hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the Assignor
and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all representations,
warranties, indemnities and agreements of AVSA under the Purchase Agreement
with respect to the Aircraft shall inure to the benefit of the Lessor and
its respective successors and assigns to the same extent as if the Lessor
and its successors and assigns had originally been named the "Buyer" of the
Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be paid
by it under the Purchase Agreement, unless and until AVSA shall have
received written notice from the Indenture Trustee or the Lessor (or, after
the Indenture shall have been discharged in full, the Lessor) addressed to
it at the address and in the manner set forth in the Assignment that an
Event of Default has occurred and is continuing, whereupon AVSA will make
any and all payments thereafter required to be made by it under the
Purchase Agreement, to the extent that the right to receive such payment
has been assigned under the Assignment ("AVSA Payments"), directly to the
Indenture Trustee (or, after the Indenture shall have been discharged in
full, the Lessor) if AVSA shall have received notice as aforesaid that an
Event of Default has occurred and is continuing;
(iii) The Lessor shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part of
the Lessor owing to AVSA, except for the agreements of the Lessor set forth
in the Assignment, including, but not limited to Section 3(b) of the
Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to the
Purchase Agreement and payment in full for the Aircraft as described in the
Participation Agreement and the Assignment, AVSA will not assert any lien
or claim against the Aircraft or any part thereof arising on or prior to
such delivery or in respect of any work or services performed on or prior
thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and has
the requisite power and authority to enter into and perform its obligations
under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms, of
the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent or
approval of, the giving notice to, or registration with, or the taking of
any other action in respect of, any French governmental authority or agency
except for those that have already been obtained and do not contravene any
law binding on AVSA or contravene AVSA's charter documents or any
indenture, credit agreement or other contractual agreement to which AVSA is
a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and Agreement
constitutes a binding obligation of AVSA enforceable against AVSA in
accordance with its terms, subject to: (i) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), which principles do not make the remedies
available at law or in equity with respect to the Purchase Agreement and
this Consent and Agreement inadequate for the practical realization of the
benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of June ____, 1996
AVSA, S.A.R.L.
By:_______________________
Name:
Title:
EXHIBIT F
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N669FE)
Words and phrases appearing in this Engine Warranty Assignment (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3, 1991,
(the "GTA") by and between the Engine Manufacturer and Federal Express
Corporation ("Fed Ex"), including the Engine Product Support Plan at
Exhibit B, insofar as such Product Support Plan relates to the Engine
Warranties (the "Product Support Plan"), but excluding any and all
letter agreements attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine Warranty,
New Parts Warranty, Ultimate Life Warranty and Campaign Change
Warranty, as set forth in the Engine Manufacturer's Product Support
Plan which forms a part of the GTA, and as limited by the applicable
terms of such GTA and Product Support Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on the
aircraft at the time of delivery to the Assignor, each bearing Engine
Manufacturer's serial numbers 705-241 and 705-242, respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines which
are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines obtained
from the Engine Manufacturer's lease pool which are installed on the
aircraft for the limited purpose of permitting the continued
operation of the aircraft during the period necessary to effect or
complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation Trust No.
N669FE), dated as of June 1, 1996, (the "Lease") between First
Security Bank of Utah, National Association (not in its individual
capacity, but solely as Owner Trustee), as Lessor ("Lessor") and Fed
Ex, as Lessee, as amended, modified or supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells, assigns,
transfers and sets over unto the Lessor all of its rights, claims and
interests in and under the GTA and the Product Support Plan, as such apply to
the Engines, to enforce in the Lessor's own name such rights as Fed Ex may
have with respect to the Engine Warranties, to the extent the same relate to
the Engines, and to retain any benefit resulting therefrom; provided, however,
that there is reserved to Fed Ex all of its other rights, claims and interests
under the GTA except as expressly stated above. Fed Ex shall, during the term
of the Lease (but only so long as no Event of Default shall have occurred and
be continuing), have the benefit of and shall be entitled to enforce (as it
shall deem appropriate), either in its own name or (at the cost of Fed Ex) in
the name of the Lessor for the use and benefit of Fed Ex, any and all Engine
Warranties available to the Lessor under the GTA in respect of the Engines and
each Part thereof, and the Lessor agrees (but only so long as no Event of
Default shall have occurred and be continuing) at Fed Ex's expense to do,
execute and deliver such further acts, deeds, matters or things as may be
reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and the Lessor confirm
expressly for the benefit of the Engine Manufacturer that:
A. The Lessor agrees that it will not, without the prior written consent
of the Engine Manufacturer, disclose, directly or indirectly, to any
third party, any of the terms of the Engine Warranties disclosed to
it by the Engine Manufacturer incident to effecting the assignment
herein; provided, however, that (1) the Lessor may use, retain and
disclose such information on a confidential basis to its special
counsel, independent insurance brokers, bank examiners or similar
regulatory authorities, auditors and public accountants, (2) the
Lessor may use, retain and disclose on a confidential basis such
information to the Owner Participant, the Indenture Trustee, the Pass
Through Trustee and any Certificate Holder, as the case may be, and
their special counsel, independent insurance brokers, bank examiners
or similar regulatory authorities, auditors and public accountants,
(3) the Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other written
demand under color of legal right, but it shall first, as soon as
practicable upon receipt of such demand and to the extent permitted
by applicable laws, furnish a copy thereof to Fed Ex and to the
Engine Manufacturer, and the Lessor, to the extent permitted by
applicable law, shall afford Fed Ex and the Engine Manufacturer
reasonable opportunity, at the moving party's cost and expense, to
obtain a protective order or other assurance reasonably satisfactory
to the Engine Manufacturer of confidential treatment of the
information required to be disclosed, (4) the Lessor may disclose
such information as required to enforce its rights under the Engine
Warranties assigned to it pursuant to this Assignment, and (5) the
Lessor may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines or any beneficial interest
therein (subject to the execution by such prospective purchaser of a
written confidentiality statement setting forth the same or
substantially similar terms as those referred to in this paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, the Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any rights
under such Engine Warranties or in making any claim with respect
thereto, the applicable terms and conditions of the GTA, including
Article Eight (Limitation of Liability) and the Product Support Plan,
shall apply to, and be binding upon, the Lessor to the same extent as
Fed Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making any
claim with respect thereto, the applicable terms and conditions of
the GTA and the Product Support Plan or the Consent attached hereto
and incorporated herein shall apply to, and be binding upon, the
Lessor to the same extent as if named "Airline" therein. It is
expressly agreed that Fed Ex shall at all times remain liable to the
Engine Manufacturer under the GTA to perform all the duties and
obligations of Fed Ex thereunder to the same extent as if this
Assignment had not been executed. The performance by the Lessor of
any of the rights assigned hereunder shall not release Fed Ex from
any of its duties or obligations to the Engine Manufacturer under the
GTA except to the extent that such exercise by the Lessor shall
constitute performance of such duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and it
is consented to by all parties to this Assignment that the Lessor
shall collaterally assign its rights under the Lease and this
Assignment and will mortgage the Aircraft and Engines, to State
Street Bank and Trust Company as Indenture Trustee under the Trust
Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N669FE), dated as of June 1, 1996 (on the terms
set forth therein); however, no further extension or assignment
(except to a successor indenture trustee under such agreement) of any
remaining Engine Warranties, including but not limited to extensions
or assignments for security purposes, are permitted without the prior
written consent of the Engine Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change in
the authority of Fed Ex or the Lessor, as the case may be, to
exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof from the Indenture
Trustee or the Lessor. Such notice shall be sent to: Commercial
Contracts Director, GE Aircraft Engines, Mail Drop F17, One Neumann
Way, Box 156301, Cincinnati, Ohio 45215-6301, facsimile: (513)
243-8068.
F. This Assignment shall apply only in respect to each Engine and shall
not extend to any replacement or substitute engine. If, during the
term of this Assignment and the Lease, it becomes necessary to
replace or substitute an Engine due to a Failure (as such term is
defined in the Engine Product Support Plan, excluding normal wear,
tear and deterioration which can be restored by overhaul and repair),
damage or loss, the Assignor (or the Lessor) shall give the Engine
Manufacturer written notice of such Failure, damage or loss. The
notice shall include (i) a description of the event or circumstances
which constitute a Failure, damage or loss, and (ii) the serial
numbers of the (a) failed, damaged or lost Engine and (b) Replacement
Engine and shall be sent to: Customer Support Manager, GE Aircraft
Engines, 111 Merchant Street, Room 450, Cincinnati, Ohio 45246. The
Engine Manufacturer shall not be deemed to have knowledge of the need
for a replacement engine until it has received the aforementioned
notice.
In the event an Engine subject to this Assignment fails, is damaged
or lost, and such Engine is replaced by a Replacement Engine, the
Assignor and the Assignee shall, prior to, or contemporaneous with,
the delivery of such Replacement Engine, obtain the written consent
of the Engine Manufacturer (which it shall be obligated to give) that
the Engine Warranties as set forth in the Engine Product Support Plan
shall apply to such Replacement Engines. The Engine Manufacturer
shall not incur any obligation or liability for a Replacement Engine
under the Engine Warranties until the execution of the aforementioned
consent.
G. At any time and upon the written request of the Engine Manufacturer,
Fed Ex and the Lessor shall promptly and duly execute and deliver any
and all such further assurances, instruments and documents and take
all such further action, at the expense of Fed Ex, as the Engine
Manufacturer may reasonably request in order to obtain the full
benefit of Fed Ex and the Lessor's agreement as set forth in this
Assignment and the Consent attached hereto and incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the respective
interests of Fed Ex and the Lessor. So long as the Engine
Manufacturer acts in good faith in accordance with this Assignment,
the Engine Manufacturer may rely conclusively on any notice given
pursuant to this Assignment without inquiring as to the accuracy of,
or the entitlement of the party to give, such notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims and
interests, as and to the extent such relates to the purchase and operation of
engines other than the Engines subject to the Assignment, as well as other
matters not directly pertaining to the Engines, and Fed Ex will have or retain
under the GTA such rights, claims and interest not expressly assigned to the
Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by Martin Marietta.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of Default
or otherwise, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject
to the execution of an agreement to sell or lease such Engines, a General
Terms Agreement on the Engine Manufacturer's standard terms and conditions.
If, however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, General Electric Company, Federal Express Corporation
and First Security Bank of Utah, National Association have caused this Engine
Warranty Assignment to be duly executed and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: Robert D. Henning
Title: Assistant Treasurer and
Managing Director -
Structured Finance
First Security Bank of Utah,
National Association
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name:
Title:
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N669FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N669FE), dated as
of June 1, 1996 and entered into by and between Federal Express Corporation,
as Assignor ("Fed Ex") and First Security Bank of Utah, National Association
(not in its individual capacity, but solely as Owner Trustee) as Assignee
("Lessor"), (the "Purchase Agreement Assignment"); and (ii) the Lease
Agreement (Federal Express Corporation Trust No. N669FE), dated as of June 1,
1996 and entered into by and between Fed Ex, as Lessee and the Lessor, as
Lessor (as in effect from time to time, the "Lease") and (iii) the Trust
Indenture and Security Agreement (Federal Express Corporation Trust No.
N669FE), dated as of June 1, 1996 (the "Indenture"), between the Lessor and
State Street Bank and Trust Company, as Indenture Trustee ("Indenture
Trustee"). The Purchase Agreement Assignment and Lease cover two GE
CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
705-241 and 705-242, respectively, (the "Engines") as installed on the Airbus
A300F4-605R series aircraft bearing Manufacturer's serial number 774 (the
"Aircraft"). In connection with such Purchase Agreement Assignment and Lease,
reference is made to the General Terms Agreement No. 6-9034 dated as of July
3, 1991, between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), under which the Engine Manufacturer agreed to support certain GE
CF6-80C2-A5F series engines, including the Engines and spare parts therefor to
be purchased by Fed Ex from the Engine Manufacturer, as installed on certain
Airbus A300F4-605R series aircraft, including the Aircraft. Recognizing that
the Lessor and Fed Ex have entered into the Lease which provides for the lease
by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessor has
granted a security interest in the Engines and assigned certain of its rights
under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that
in furtherance of the Lease, it will so support such Engines and spare parts
therefor, subject to the applicable terms and conditions of the General Terms
Agreement, including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws of
the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not require
any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performance of the Engine Warranties, as defined
in the Engine Warranty Assignment attached hereto (the "Engine
Warranties") in accordance with their terms have been duly
authorized by all necessary corporate action on the part of the
Engine Manufacturer, do not require any shareholder approval
and do not contravene the Engine Manufacturer's certificate of
incorporation or by-laws or any debenture, credit agreement or
other contractual agreement to which the Engine Manufacturer is
a party or by which it is bound or any law binding on the
Engine Manufacturer; and
4. the Engine Warranties constitute, as of the date on which they
were made and at all times thereafter, and this Consent and the
Engine Warranty Assignment attached hereto are, binding
obligations of the Engine Manufacturer enforceable against the
Engine Manufacturer in accordance with its terms subject to:
(a) the limitation of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights
of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
This Consent shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
General Electric Company
______________________________
Name:
Title:
EXHIBIT G-1
[FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT]
BENEFICIAL INTEREST TRANSFER AGREEMENT (this "Document"), dated as
of _______ __, ____, between ______________, a ______________ corporation
("Transferor") and ______________, a ______________ corporation ("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer by
Transferor to Transferee of all of the rights, title and interest of
Transferor in and to its interest (the "Beneficial Interest") under the Trust
Agreement, dated as of _______________, 1996 (as heretofore amended, the
"Trust Agreement"), between Transferor and First Security Bank of Utah,
National Association, and the Lessor's Estate created thereunder, and all of
Transferor's rights and obligations under the Participation Agreement, dated
as of ____________, 1996 (the "Participation Agreement"), among Federal
Express Corporation, as Lessee, First Security Bank of Utah, National
Association, as Owner Trustee, PMCC Leasing Corporation, as Owner Participant,
State Street Bank and Trust Company, as Indenture Trustee and State Street
Bank and Trust Company, as Pass Through Trustee, and under the other Operative
Agreements and (b) the acceptance by Transferee of such transfer and the
assumption by Transferee of such obligations of Transferor thereunder; and
WHEREAS, Section 7.03(d) of the Participation Agreement permits
such transfer and assumption upon satisfaction of certain conditions
heretofore or concurrently herewith being observed;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Participation Agreement.
2. Transfer. Transferor does hereby sell, convey, assign,
transfer and set over, unto Transferee, as of the Effective Time (as defined
below), all of Transferor's present and future right, title and interest in
and to (a) all of the Beneficial Interest and (b) all of the Owner
Participant's rights and obligations under the Participation Agreement, the
Tax Indemnity Agreement, the Trust Agreement and the other Operative
Agreements and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
rights of Transferor as have arisen or accrued to Transferor prior to the
Effective Time (including without limitation, the right to receive any amounts
due or accrued to Transferor under the Operative Agreements as of a time prior
to the Effective Time and the right to receive any indemnity payment pursuant
to the Participation Agreement or the Tax Indemnity Agreement, with respect to
events occurring prior to such time); all of the foregoing that is being
transferred under this paragraph 2, the "Transferred Interest".
3. Assumption. Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of Transferor and the other parties
to the Participation Agreement, assumes and undertakes and agrees to perform
and discharge all of the duties and obligations of Transferor with respect to
the Transferred Interest whenever and wherever accrued (other than duties and
obligations of Transferor required to be performed by it on or prior to the
Effective Time). Transferee hereby confirms that, from and after the
Effective Time, Transferee (a) shall be deemed, to the extent set forth in
Section 2 hereof, the "Owner Participant" party to the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements and (b) shall be bound by all of the terms of the
Operative Agreements to the extent the same relate to the Transferred Interest.
4. Release of Transferor. At the Effective Time, Transferor
shall be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
Transferor shall in no event be released from any such duty or obligations
arising or relating to any event occurring prior to the Effective Time, or on
account of any breach by Transferor of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements, or for any
fraudulent or willful misconduct engaged in by it prior to the Effective Time,
or from any obligation that relates to any indemnity claimed by Transferor or
any Lessor's Lien attributable to Transferor.
5. Fees and Expenses. The fees, expenses and charges of the
parties to the Participation Agreement incurred in connection with the
transfer effected hereby shall be for the account of [specify
Transferor/Transferee].
6. Payments. Transferor hereby covenants and agrees to pay
over to Transferee, if and when received following the Effective Time, any
amounts (including any sums payable as interest in respect thereof) paid on
account of the Transferred Interest to or for the benefit of Transferor, and
Transferee hereby covenants and agrees to pay over to Transferor, if and when
received following the Effective Time, any amounts (including any sums payable
as interest in respect thereof) paid to or for the benefit of Transferee that
are not attributable to the Transferred Interest and to which Transferor is
otherwise entitled.
7. Investment Purpose. Transferee hereby represents and
warrants that, as of the date hereof, it is acquiring the Transferred Interest
for its account with no present intention of distributing such Transferred
Interest or any part thereof in any manner which would violate the Securities
Act of 1933, as amended, but without prejudice, however, to the right of
Transferee at all times to sell or otherwise dispose of all or any part of
such Transferred Interest in compliance with Section 7.03(d) of the
Participation Agreement.
8. Representations and Warranties of Transferor. Transferor
represents and warrants to Transferee that as of the Effective Time:
(a) Organization and Power. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal
right to execute, deliver and perform this Agreement and to enter into
and carry out the transactions contemplated hereby and in the other
Operative Agreements (the "Transactions").
(b) Authorization, Execution and Validity. This Agreement has
been duly authorized, executed and delivered by Transferor and
constitutes the legal, valid and binding obligation of Transferor,
enforceable against it in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity.
(c) Conflict. The execution, delivery and performance by
Transferor of this Agreement and compliance by Transferor with all of
the provisions hereof do not contravene any regulation or any order of
any governmental authority applicable to or binding on Transferor, or
contravene the provisions, or constitute a default by Transferor under,
its certificate of incorporation or by-laws or any indenture, mortgage,
contract or other agreement or instrument to which Transferor is a party
or by which Transferor or any of its Properties is bound or affected.
(d) Consents. No consent, approval or authorization of, or
filing, registration or qualification with, or the giving of notice or
the taking of any other action with respect to, any governmental
authority on the part of Transferor is required in connection with the
execution, delivery and performance by Transferor of this Agreement.
(e) Litigation. There are no proceedings pending or, to the
knowledge of Transferor, threatened against Transferor before any
governmental authority that would materially and adversely affect the
ability of Transferor to consummate the Transactions.
(f) No Liens. The Trust Estate is free of Lessor's Liens
attributable to Transferor.
(g) Compliance with Operative Agreements. Transferor has fully
performed all of its obligations under the Participation Agreement and
under each other Operative Agreement which obligations by their terms
are required to be satisfied or performed prior to the Effective Time or
prior to the consummation of the Transactions.
(h) Default. As a result of the transfer effected hereby, no
Indenture Default attributable to the Owner Participant or the Owner
Trustee has occurred and is continuing.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the
nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship,
design, patent or trademark infringement, operation, merchantability or
fitness for use of the Aircraft.
9. Representations and Warranties of Transferee.
Transferee represents and warrants to Transferor and to the other parties to
the Participation Agreement that as of the Effective Time:
(a) Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of [ ], has
the full corporate power, authority and legal right to carry on its
business as now conducted, and has full corporate power, authority and
legal right to execute, deliver and perform this Agreement and to enter
into and carry out the transactions contemplated hereby and in the other
Operative Agreements (the "Transactions");
(b) Transferee has full corporate power, authority and legal
right to execute, deliver and enter into this Agreement and the other
Operative Agreements and full corporate power and authority to perform
its obligations thereunder, and such execution, delivery and performance
do not and will not contravene any applicable law or any order of any
governmental authority applicable to or binding on the Transferee, or
contravene the provisions of, or constitute a default under, or result
in the creation of any Lien upon the property of the Transferee under,
its articles of incorporation or by-laws or any material indenture,
mortgage, contract or other agreement or instrument to which the
Transferee is a party or by which it or any of its property may be bound
or affected;
(c) the execution, delivery and performance of this Agreement by
the Transferee (i) has been duly authorized by all necessary corporate
action and (ii) does not require any approval of the shareholders of the
Transferee or any approval or consent of, or notice to, any trustee or
holders of any indebtedness or obligation of the Transferee, except for
such approvals and consents as have already been obtained;
(d) this Agreement has been duly executed and delivered by the
Transferee, and constitutes the legal, valid and binding obligation of
the Transferee, enforceable against the Transferee in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(e) there are no proceedings or actions pending or, to the
knowledge of the Transferee, threatened against the Transferee before
any governmental authority in which there is a reasonable probability of
an adverse determination that individually or in the aggregate would
materially and adversely impair the ability of the Transferee to perform
its obligations under this Agreement or the Operative Agreements, or
which involve the Transactions or question the validity of any Operative
Agreement to which the Owner Participant is a party or any action taken
or to be taken pursuant thereto; and the Transferee is not in default
with respect to any order of any governmental authority which involves
the Transactions or the default under which would materially and
adversely affect the ability of the Transferee to perform its
obligations under this Agreement or any of the Operative Agreements;
(f) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any governmental authority is required under any law for the
execution and delivery by the Transferee of this Agreement, or the
carrying out by the Transferee of any of the Transactions, other than
any such consent, approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken;
(g) the Lessor's Estate is free of any Lessor's Liens
attributable to the Transferee;
(h) the Transferee, upon execution of this Agreement, will not
be in default under any of the Operative Agreements;
(i) no part of the funds to be used by it to acquire the
interests acquired by the Owner Participant under the Participation
Agreement constitutes assets (within the meaning of ERISA and any
applicable rules and regulations) of any employee benefit plan subject
to Title I of ERISA or of any plan or individual retirement account
subject to Section 4975 of the Code;
(j) Transferee is a "U.S. Person" as defined in Section
7701(a)(30) of the Code and is not a tax resident of another country and
if it shall at any time cease to be such a "U.S. Person" or shall become
a tax resident of another country, it shall furnish to the Agent and
each Certificate Holder an indemnity, in form and substance reasonably
satisfactory to such Certificate Holder, for any Taxes that may be
imposed on such Holder as a result of its failure to be such a "U.S.
Person" or as a result of its being a tax resident of another country,
and it shall be personally liable for any debt service to the extent
that the receipt of rentals is reduced by reason of any withholding
Taxes that result from such failure to be such a "U.S. Person" or from
being a tax resident of another country;
(k) [After giving effect to a voting trust or similar
agreement(1), Transferee is a Citizen of the United States] [applicable
if Aircraft is registered in the United States or is proposed to be so
registered]
(l) On and as of the Effective Date, the representations and
warranties of the Owner Participant in Article 7 of the Participation
Agreement are true and correct as to the Transferee; and
(m) Transferee satisfies the conditions applicable to a
transferee of the Beneficial Interest set forth in Section 7.03(d) of
the Participation Agreement, including without limitation, the condition
set forth in the last sentence thereof [and to the extent the same has
been requested by the Lessee or the Indenture Trustee, Transferee has
heretofore provided to the Lessee and the Indenture Trustee its most
recent audited financial statements, which show a consolidated tangible
net worth or combined capital and surplus of at least $75,000,000]
[remove bracketed language if an Owner Participant Guaranty is
provided].
(n) the Transferee has, independently and without reliance upon
any other party (including without limitation the Transferor) and based
on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement, and the
Transferee has established adequate means of obtaining from Lessee on a
continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the financial
condition, operations, properties and prospects of Lessee.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the nature or
use of the equipment owned by the Owner Trustee, including, without
limitation, the airworthiness, value, condition, workmanship, design, patent
or trademark infringement, operation, merchantability or fitness for use of
the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of it under applicable aviation law.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
11. Effectiveness. This Agreement shall be effective upon the
mutual execution and delivery of this Agreement (the "Effective Time").
12. Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute a single instrument.
(1)Such voting trust or similar agreement must be reasonably satisfactory to
the Lessor and the Indenture Trustee.
It shall not be necessary that any counterpart be signed by both parties so
long as each party shall sign at least one counterpart.
13. Beneficiaries. Each of the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee, together with their
respective successors and permitted assigns, is and shall be deemed a third
party beneficiary of this Agreement entitled to enforce this Agreement
directly and in its own name and enforce any rights or claims of the parties
hereto.
14. Further Assurances. Each party agrees that from time to
time after the Effective Time, it shall execute and deliver or cause to be
executed and delivered such instruments, documents and papers, and take all
such further action as may be reasonably required in order to consummate fully
the purposes of this Agreement and to implement the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
[TRANSFEROR]
By:____________________________
Name:
Title:
[TRANSFEREE]
By:____________________________
Name:
Title:
EXHIBIT G-2
[FORM OF OWNER PARTICIPANT GUARANTY]
TRANSFEREE'S PARENT GUARANTY, dated as of ___________ __, ____,
(this "Guaranty") by ____________________, a ___________ corporation (the
"Guarantor"), to First Security Bank of Utah, National Association, in its
individual capacity and as Owner Trustee, State Street Bank and Trust Company,
as Indenture Trustee, State Street Bank and Trust Company, as Pass-Through
Trustee, and the Lessee referred to in the Participation Agreement described
below (collectively, together with their successors and assigns and the
holders from time to time of the Certificates, the "Beneficiaries").
W I T N E S S E T H :
WHEREAS, ___________, a ____________ corporation (the
"Transferor"), is party to the Participation Agreement, dated as of
____________, 1996 (as amended, modified or supplemented from time to time,
the "Participation Agreement"), among Federal Express Corporation, as Lessee,
PMCC Leasing Corporation, as Owner Participant, First Security Bank of Utah,
National Association, as Owner Trustee, State Street Bank and Trust Company,
as Indenture Trustee and State Street Bank and Trust Company, as Pass Through
Trustee; and
WHEREAS, the Transferor wishes to transfer, among other things,
all of the rights, title and interest of the Transferor in and to the
Beneficial Interest under the Trust Agreement and the Lessor's Estate created
thereunder, and all of the Transferor's rights and obligations under the
Participation Agreement, the Trust Agreement and the other Operative
Agreements to __________________, a _______________ [corporation] (together
with its successors and assigns, the "Transferee"), a subsidiary of the
Guarantor, pursuant to the Beneficial Interest Transfer Agreement, dated as of
the date hereof (the "Transfer Agreement"), between the Transferor and the
Transferee; and
WHEREAS, the terms of the Participation Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guaranty by the Guarantor;
NOW, THEREFORE, in order that the Transferor may make the
aforementioned transfer to the Transferee, the Guarantor hereby agrees with
and for the benefit of the Beneficiaries as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the
Participation Agreement or the Transfer Agreement.
2. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees, as primary obligor and not merely surety, to the Beneficiaries
the prompt and complete payment by the Transferee when due of all payment
payment obligations of the Transferee under the Operative Agreements without
offset or deduction and the timely performance of all other obligations of the
Transferee thereunder (such payment and other obligations, the "Obligations"),
and the Guarantor further agrees to pay any and all expenses (including,
without limitation, reasonable fees and expenses of counsel) that may
be paid or incurred by the Beneficiaries in enforcing any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantor under this Guaranty.
The Guarantor will not exercise any rights that it may now or
hereafter acquire against Transferee that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty,
the Transferred Interest or the Operative Agreements, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against Transferee or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from Transferee,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations have been performed in full and all
other amounts payable under this Guaranty shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the final payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of any Beneficiary and shall forthwith
be paid to such Beneficiary to be credited and applied to the Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Operative Agreements, or to be held as
collateral for any Obligations or other amounts payable under this Guaranty
thereafter arising.
3. No Subrogation. Notwithstanding anything to the contrary in
this Guaranty, the Guarantor hereby agrees not to assert any rights which may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the Bankruptcy Code, under common law or
otherwise) of any Beneficiary against the Transferee for the payment of the
Obligations until all of the Obligations shall have been satisfied by payment
and performance in full.
4. Amendments with Respect to the Obligations; Waiver of
Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment or
performance of any of the Obligations made by any Beneficiary may be rescinded
by such party and any of the obligations continued, and the Obligations, may,
from time to time, in whole or part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Beneficiary
and any Operative Agreement may be amended, modified, supplemented or
terminated, in whole or in part, in accordance with the provisions thereof
from time to time. When making any demand hereunder against the Guarantor, a
Beneficiary may, but shall be under no obligation to, make a similar demand on
the Transferee, and any failure by a Beneficiary to make any such demand or to
collect any payments from the Transferee or any release of the Transferee shall
not relieve the Guarantor of its obligations or liabilities hereunder, and
shall not impair or affect the rights and remedies, express or implied, or as
a matter of law, of any Beneficiary against the Guarantor. For the purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings. The Guarantor represents and warrants that it is the parent of
the Transferee, and agrees that its obligations hereunder shall continue
unimpaired, even if the Guarantor is no longer an Affiliate of the Transferee.
5. Guaranty Absolute and Unconditional. The Guarantor
guarantees that the Obligations will be paid and performed strictly in
accordance with the terms of the Transfer Agreement and the Operative
Agreements, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any such terms or the rights of any
Beneficiary with respect thereto. The obligations of the Guarantor under this
Guaranty are independent of the Obligations or any other obligations of any
other party, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether the
Transferee or any other party is joined in any such action or actions. The
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guaranty; and all dealings between the Transferee or the
Guarantor and any Beneficiary shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Guaranty. The Guarantor waives,
to the fullest extent permitted by applicable law, diligence, presentment,
promptness, protest, mitigation of damages by the Beneficiaries demand for
payment and notice of default or nonpayment to or upon the Transferee or the
Guarantor with respect to the Obligations. The Guarantor further waives any
right to revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Obligations, whether existing now or
in the future. The Guarantor understands and agrees that, to the fullest
extent permitted by applicable law, this Guaranty shall be construed as a
continuing, absolute and unconditional guaranty of payment and performance
(and not merely of collectibility) without regard to:
(a) the validity, regularity or enforceability of the Transfer
Agreement, any Operative Agreement, or any of the Obligations at any
time or from time to time held by any Beneficiary;
(b) any defense, set-off, rebate, adjustment, withholding,
deduction or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by the
Transferee against any Beneficiary or any agreement or instrument
relating thereto or;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations or any other
obligations of any other party under the Transfer Agreement, the
Operative Agreements, or any other amendment or waiver of or any consent
to departure from the Transfer Agreement or other Operative Agreements;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(e) any change, restructuring or termination of the corporate
structure or existence of the Guarantor or the Transferee or any of the
Affiliates of either;
(f) any defect in the title, condition, design, operation or
fitness of, or any interference with the operation, use or possession
of, the Aircraft;
(g) any failure to establish, perfect or preserve title to or
any security interest in or to the Aircraft or any other collateral
security for the Obligations; or
(h) any other circumstance whatsoever or any existence of or
reliance on any representation by any Beneficiary that might otherwise
constitute a defense available to, or a discharge of, the Guarantor or
any other guarantor or surety.
When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue
such rights and remedies as it may have against the Transferee for the
Obligations, and any failure by any Beneficiary to pursue such other rights or
remedies or to collect any payments from the Transferee, or any release of the
Transferee, shall not, to the fullest extent permitted by applicable law,
relieve the Guarantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Beneficiary against the Guarantor. This Guaranty is a
continuing guaranty and shall remain in full force and effect until the
earlier of (x) the date that all of the Obligations are satisfied by payment
and performance in full and (y) the date that all right, title and interest of
the Transferee shall have been transferred to a Person meeting the
requirements of Section 7.03(d) of the Participation Agreement in accordance
with said section; provided that this Guaranty shall remain in full force and
effect with respect to obligations relating to the period prior to such
transfer.
6. Reinstatement. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Beneficiary upon the insolvency, bankruptcy
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made and the Guarantor agrees that it will
indemnify any such Beneficiary on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) by
such Beneficiary in connection with such rescission or restoration.
7. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction, rebate,
adjustment or withholding, and shall be made in U.S. Dollars in immediately
available funds.
8. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and the Transferee is currently a subsidiary of the
Guarantor;
(b) the Guarantor has the power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guaranty
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor or any of its constitutive documents;
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or governmental authority and no
consent of any other person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty;
(f) the Guarantor is a [a bank, savings institution, finance
company, leasing company or trust company, national banking association
acting for its own account or in a fiduciary capacity as trustee or
agent under any pension, retirement, profit sharing or similar trust or
fund, insurance company, fraternal benefit society or corporation acting
for its own account having a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent)] of not
less than $75,000,000 [and has, if the same have been requested by the
Lessee or the Indenture Trustee, heretofore furnished to the Lessee and
the Indenture Trustee copies of its most recent audited financial
statements];
(g) there are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived; and
(h) the Guarantor has, independently and without reliance upon
any Beneficiary and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter
into this Guaranty, and the Guarantor has established adequate means of
obtaining from Transferee on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar
with, the financial condition, operations, properties and prospects of
Transferee.
9. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. Jurisdiction; Waiver of Jury Trial, Etc.
(a) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting
in New York, New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Guaranty, the Transfer
Agreement or any Operative Agreement to which it is or is to be a party, or
for recognition or enforcement of any judgment, and the Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The
Guarantor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty
shall affect any right that any party may otherwise have to bring any action
or proceeding relating to this Guaranty, the Transfer Agreement or any
Operative Agreement to which it is or is to be a party in the courts of any
jurisdiction.
(b) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty, the Transfer Agreement or any
Operative Agreement to which it is or is to be a party in any New York State
or federal court. The Guarantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
11. Section Headings. The Section headings used in this
Guaranty are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
12. No Waiver; Cumulative Remedies. No Beneficiary shall by any
act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any Beneficiary, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right power or privilege. A waiver by a
Beneficiary of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that such Beneficiary would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. Amendments and Waivers. None of the terms or provisions of
this Guaranty may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by the Guarantor and each Beneficiary.
14. Successors and Assigns. This Guaranty shall be binding upon
the successors and assigns of the Guarantor and shall inure to the benefit of
the Beneficiaries and their respective successors and permitted assigns but
Guarantor may not assign this Guaranty without prior written consent of the
Beneficiaries except to an assignee making, as of the date of such assignment,
(i) representations and warranties substantially similar to those contained in
Section 8 hereof and (ii) a representation that it is a U.S. citizen, unless,
in the case of the preceding clause (ii) any of (a) the aircraft is not then
registered in the United States nor contemplated to be so registered or (b) a
voting trust or similar arrangement reasonably satisfactory to the
Beneficiaries is in place with respect to such registration or (c) it is not
necessary for the Guarantor to be a U.S. citizen in order for the aircraft to
remain registered in the United States.
15. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given
or made, when delivered by hand or by mail, upon receipt, or, when delivered
by facsimile transmission, upon being sent and confirmed, addressed (a) in the
case of the Guarantor, to the Guarantor at the address set forth under its
signature below, and (b) in the case of any Beneficiary, to such Beneficiary
at the address provided for such Beneficiary in or pursuant to the
Participation Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
[NAME OF GUARANTOR]
_________________________________
Name:
Title:
__________________________________
__________________________________
__________________________________
Address for Notices: