EXHIBIT 4.c
==============================================================================
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N583FE)
Dated as of May 1, 1997
as amended and restated as of September 1, 1997
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial Owner Participant
BNY LEASING CORPORATION,
Owner Participant
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Indenture Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Pass Through Trustee
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Subordination Agent
______________________________
LEVERAGED LEASE OF ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT
SERIAL NO. 48421, REGISTRATION NO. N583FE
==============================================================================
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
PARTICIPATION IN INVESTMENT
Section 2.01. Commitments to Participate in Purchase Price............. 3
Section 2.02. Owner Participant's Instructions to Owner Trustee........ 6
Section 2.03. Transaction Costs........................................ 6
ARTICLE 3
DELIVERY OF AIRCRAFT; POSTPONEMENT
Section 3.01. Lessee's Notice of Delivery Date......................... 7
Section 3.02. Postponement of Delivery Date............................ 7
Section 3.03. Amendments to Certain Schedules.......................... 8
Section 3.04. Termination of Commitment................................ 8
Section 3.05. Closing.................................................. 8
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 9
Section 4.02. Opinion of Special Aviation Counsel Upon Registration.... 20
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 20
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 20
Section 6.02. Offering by Lessee....................................... 27
Section 6.03. Certain Covenants of Lessee.............................. 27
Section 6.04. Survival of Representations and Warranties............... 35
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 35
Section 7.02. Citizenship.............................................. 36
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 37
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 42
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 44
Section 7.06. Indenture Trustee's Notice of Default.................... 46
Section 7.07. Releases from Indenture.................................. 46
Section 7.08. Covenant of Quiet Enjoyment.............................. 46
Section 7.09. Pass Through Trustee's Representations and Warranties.... 46
Section 7.10. Survival of Representations, Warranties and Covenants.... 47
Section 7.11. Lessee's Assumption of the Certificates.................. 47
Section 7.12. Indebtedness of Owner Trustee............................ 49
Section 7.13. Compliance with Trust Agreement, Etc..................... 50
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 50
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 52
Section 8.02. After-Tax Basis.......................................... 57
Section 8.03. Time of Payment.......................................... 58
Section 8.04. Contests................................................. 58
Section 8.05. Refunds.................................................. 60
Section 8.06. Lessee's Reports......................................... 61
Section 8.07. Survival of Obligations.................................. 61
Section 8.08. Payment of Taxes......................................... 61
Section 8.09. Reimbursements by Indemnitees Generally.................. 62
Section 8.10. Application of Payments During Existence of Event of
Default.................................................. 62
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 62
Section 9.02. After-Tax Basis.......................................... 66
Section 9.03. Subrogation.............................................. 66
Section 9.04. Notice and Payment....................................... 67
Section 9.05. Refunds.................................................. 67
Section 9.06. Defense of Claims........................................ 67
Section 9.07. Survival of Obligations.................................. 68
Section 9.08. Effect of Other Indemnities.............................. 68
Section 9.09. Interest................................................. 69
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 69
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 71
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of Owner Participant........................ 73
Section 12.02. Interest of Holders of Certificates..................... 73
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 73
Section 13.02. Further Assurances...................................... 74
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgement......................................... 74
Section 13.04. No Retroactive Application.............................. 74
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 74
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 75
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 79
Section 17.02. Certain Payments........................................ 79
Section 17.03. Counterparts............................................ 79
Section 17.04. No Oral Modifications................................... 80
Section 17.05. Captions................................................ 80
Section 17.06. Successors and Assigns.................................. 80
Section 17.07. Concerning the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee............................ 80
Section 17.08. Severability............................................ 81
Section 17.09. Public Release of Information........................... 81
Section 17.10. Certain Limitations on Reorganization................... 81
Section 17.11. GOVERNING LAW........................................... 82
Section 17.12. Section 1110 Compliance................................. 82
Section 17.13. Reliance of Liquidity Providers......................... 82
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 82
SCHEDULE I Owner Participant's Commitment; Debt Portion
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) Opinion of Owner Participant's Special 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 Engine Manufacturer's Counsel
EXHIBIT A(7) Opinion of Pass Through Trustee's and Subordination Agent's
Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Engine Warranty Assignment and Engine Consent
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N583FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N583FE) dated as of May 1, 1997, as amended and restated as of September 1,
1997 (this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware
corporation (herein, together with its successors and permitted assigns, the
"Lessee" and the "Initial Owner Participant"), BNY LEASING CORPORATION, a New
York corporation (herein, together with its successors and permitted assigns,
the "Owner Participant"), STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
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"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, 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"), FIRST SECURITY BANK, NATIONAL ASSOCIATION,
a national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as pass through trustee of three
separate Pass Through Trusts (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
subordination agent (in such capacity as trustee, together with its successors
and permitted assigns, the "Subordination Agent").
WITNESSETH:
WHEREAS, on the Certificate Closing Date, the Lessee, the Initial
Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Subordination Agent entered into the Original Participation
Agreement (such term, and all other terms not heretofore defined, having the
meanings assigned thereto as provided in Article 1 below);
WHEREAS, immediately prior to the execution and delivery of the
Original Participation Agreement, the Initial Owner Participant entered into
the Original Trust Agreement relating to the Aircraft with SSB, pursuant to
which SSB agreed, among other things, to hold the Lessor's Estate for the
benefit of the Initial 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 occurred 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 was used
by the Pass Through Trustee to purchase for each such Pass Through Trust the
Certificates of the Series and Maturity applicable thereto.
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 Pass Through Trustee,
pursuant to which the Owner Trustee issued the Certificates to the
Subordination Agent on behalf of the Pass Through Trustee as evidence of the
loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of
which loans were deposited by the Indenture Trustee on behalf of the Owner
Trustee in the Collateral Account.
WHEREAS, the Certificates are held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee
for each of the Pass Through Trusts;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, (i) Kredietbank N.V., acting through its New York
Branch entered into two revolving credit agreements (each, a "Liquidity
Facility"), one for the benefit of the holders of Pass Through Certificates of
each of the Pass Through Trusts for the Series A Certificates and the Series B
Certificates, with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, each Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement;
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 on the Delivery Date, and the Lessee agreed to lease
the Aircraft from the Owner Trustee on the Delivery Date;
WHEREAS, the Initial Owner Participant wishes to transfer its
Beneficial Interest to the Owner Participant and the Owner Participant wishes
to acquire such Beneficial Interest from the Initial Owner Participant;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Owner Participant to purchase
the Aircraft from the Lessee on the Delivery Date subject to the terms and
conditions of this Agreement, the Engine Warranty Assignment and the Bills of
Sale;
WHEREAS, to fund the Owner Trustee's purchase of the Aircraft on the
Delivery Date, the Indenture Trustee will, subject to the conditions precedent
set forth herein, release the amounts held in the Collateral Account; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Subordination Agent have
agreed, to the extent they are parties thereto and, subject to the terms and
conditions hereinafter provided, to amend and restate the Original
Participation Agreement, the Original Indenture, the Original Lease and the
Original Trust Agreement.
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
PARTICIPATION IN INVESTMENT
Section 2.01. 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) as contemplated by Section 2.01(aa)
hereof, the Indenture Trustee agrees to make the transfer to the Lessee and
the Lessee agrees to make the transfer to the collateral account described in
Section 2.13 of the N584FE Indenture, (ii) the Indenture Trustee agrees to
release from the Collateral Account the Debt Portion to the Owner Trustee for
application to the Purchase Price as provided below, (iii) the Initial Owner
Participant agrees to transfer its Beneficial Interest to the Owner
Participant in consideration for the Owner Participant's participation in the
Lessor's payment of the Purchase Price through an investment in the Lessor's
Estate in an amount equal to the amount set forth on Schedule I hereto, and
(iv) the Lessee 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 Modification Agreement of any warranties thereunder, the
transfer by the Initial Owner Participant to the Owner Participant of its
Beneficial Interest and the transfer of title to the Aircraft from the Lessee
to the Owner Trustee, the following cash payments will be made by wire
transfer of immediately available funds on the Delivery Date: (A) immediately
prior to the transfer to the Owner Participant by the Initial Owner
Participant of its Beneficial Interest as contemplated by clause (iii) of
Section 2.01(a) hereof, 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 and by the Lessee to the collateral
account described in Section 2.13 of the N584FE Indenture, $2,533,000.00, and
(B) in connection with the transfer to the Owner Participant by the Initial
Owner Participant of its Beneficial Interest as contemplated by clause (iii) of
Section 2.01(a) hereof, by the Owner Trustee to the Lessee, an amount equal to
the Purchase Price.
(aa) Reallocation of Indebtedness. Subsequent to the Certificate
Closing Date, it was determined that an error had been made in the allocation
of indebtedness as between the Original Indenture and the "Indenture" as
defined in the Participation Agreement (Federal Express Corporation Trust No.
N584FE) dated as of May 1, 1997 among the Lessee, the Initial Owner
Participant, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Subordination Agent (the "N584FE Indenture"). Pursuant to
Section 13.01(e) of the Original Indenture, in order to correct the
aforementioned error, on the Delivery Date the aggregate outstanding principal
amount of the Series C Certificates will be reduced by $2,533,000.00 and a
corresponding increase will be made to the Series C equipment trust
certificates issued under the N584FE Indenture. In order to ensure that the
equipment trust certificates issued under the N584FE Indenture are
sufficiently collateralized, on the Delivery Date, immediately prior to the
transfer to the Owner Participant by the Initial Owner Participant of its
Beneficial Interest as contemplated by clause (iii) of Section 2.01(a) hereof,
the Indenture Trustee, on behalf of the Owner Trustee, will refund to the
Lessee the amount by which the aggregate outstanding principal amount of the
Series C Certificates has been reduced and the Lessee shall pay such amount
into the collateral account described in Section 2.13 of the N584FE Indenture.
(b) Payment of Commitments; Pre-Funding Investment. The Owner
Participant agrees, 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 3.01 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 State Street Bank and Trust Company,
Boston, Massachusetts, ABA Number: 011-000-028, Account Name: FedEx Equity
Payments, Account Number: 9900-314-7, Attention: Christy O'Connor, Re: FedEx
Equity Payment Account. The amount of the Owner Participant's Commitment
shall be held for the account of the Owner Participant and not as part of the
Lessor's Estate 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 2.01(c) hereof. The Lessee will pay the Owner
Participant interest at the Base Rate on the amount of its Commitment for the
period from the date such Commitment is made available to the Delivery Date or
the date on which such amounts are returned to the Owner Participant as the
case may be.
(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 Commitment, but the obligations of the Owner
Participant shall nevertheless remain subject to the terms and conditions of
this Agreement, until no later than September 30, 1997.
(ii) Subject to the provisions of Section 3.02 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 the 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 September 30, 1997, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or September 30, 1997, 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 2.01(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 2.02. 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 action
specified in Section 1.01 of the Trust Agreement and confirmation that all
conditions to closing set forth in Article 4 hereof were either met to the
satisfaction of the Owner Participant or, if not so met, were in any event
waived by it.
Section 2.03. Transaction Costs. Subject to Section 10.01 hereof,
if the transactions contemplated by this Agreement 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 promptly 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 the Owner Participant's breach of a
signed commitment letter, the Lessee shall have no obligation to pay any costs
and expenses incurred by the Owner Participant (including its own legal fees
and expenses and those of its counsel) in connection with the transactions
contemplated by this Agreement, but the Lessee shall be obligated to pay all
other Transaction Costs.
ARTICLE 3
DELIVERY OF AIRCRAFT; POSTPONEMENT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Subordination Agent, each Liquidity Provider 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. 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 Scheduled Delivery Date in accordance with the
terms of Section 2.01 hereof, the Owner Trustee will promptly give each party
confirmed facsimile notice thereof and the Lessee shall postpone the Delivery
Date to a date not later than the Cut-Off Date.
(b) Release of Obligations. If the Delivery Date has not occurred
on or prior to the Cut-Off Date (including by reason of the Aircraft not being
completed and delivered or by reason of application of the last paragraph of
Section 3.03 hereof, with no other equity investor having been identified by
the Lessee or by reason of an Owner Participant's failure to make the full
amount of its Commitment available in accordance with the terms of Section
2.01 hereof), then, in such event, the Owner Trustee shall not purchase the
Aircraft from the Lessee, 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 (i) the Lessee's obligation 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 2.01 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 2.01(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 3.02(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 3.03. Amendments to Certain Schedules. On the Delivery Date
(i) the Subordination Agent, on behalf of the Pass Through Trustee, shall
submit the Certificates to the Indenture Trustee, on behalf of the Owner
Trustee, for attachment thereto of an amended Schedule I and the making of
other related amendments and (ii) the Pass Through Trustee shall mail to the
holders of Pass Through Certificates a statement pursuant to Section 5.03 of
the Pass Through Agreement setting forth the revised Pool Balance and Pool
Factors as if the Delivery Date were a Special Distribution Date.
The Owner Trustee will give not less than 10 days' notice of the
Delivery Date. Any amendments contemplated by this Section 3.03 shall not
vary the Mandatory Economic Terms and on the Delivery Date the Lessee shall
deliver a certificate to the Pass Through Trustee and the Liquidity Providers
signed by the Vice President and Treasurer or any other authorized officer of
the Lessee certifying to such effect.
The Certificates and the amendments and restatements of the
Original Lease and the Original Indenture shall each reflect the amendments
contemplated by this Section 3.03.
Section 3.04. Termination of Commitment. Notwithstanding the other
provisions of this Article 3, the Owner Participant shall not be under any
obligation to make its Commitment available after September 30, 1997 and such
Commitment hereunder shall terminate at 3:00 p.m. (New York City time) on such
date, and such time shall be of the essence under this Agreement.
Section 3.05. 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. Subject to the last paragraph
of this Section 4.01, the obligations of the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent 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 Scheduled Delivery Date.
(b) Certificates. The Certificates shall have been amended as
contemplated in Section 3.03(i) hereof.
(c) Legal Investment. No change shall have occurred after the date
which is two days prior to the date of this Agreement 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, the Pass Through Trustee, the Subordination Agent 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,
the Subordination Agent 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, the Subordination Agent 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 Lessee, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture
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.
(d) Other Commitments; Approvals. The Owner Participant shall have
made available the required amount of its Commitment. 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 are required in
connection with any transaction contemplated by this Agreement, shall have
been duly obtained.
(e) 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,
the Subordination Agent 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, the Subordination Agent, each Liquidity Provider
and the Owner Trustee (provided that the sole chattel-paper original of
each of the Lease, the Lease Supplement and the Ancillary Agreement I shall
be delivered to the Indenture Trustee):
(i) the Lease, as amended and restated as of the date hereof;
(ii) the Trust Agreement, as amended and restated as of the date
hereof;
(iii) the Indenture, as amended and restated as of the date
hereof;
(iv) the Lease Supplement covering the Aircraft, dated the
Delivery Date;
(v) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(vi) [Reserved];
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement;
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Engine Warranty Assignment;
(xi) the Engine Consent; and
(xii) the Bills of Sale.
(f) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee, the Owner Participant and each Liquidity
Provider 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, the Owner Participant and each Liquidity Provider to
establish that the insurance required by Article 13 of the Lease is in
effect.
(g) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statement 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 Holders, and such financing statement shall have been duly filed in
the State of Connecticut; (ii) a form UCC-3 financing statement to amend
and restate the 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 transactions contemplated on the
Delivery Date such UCC-3 financing statement and UCC-1 financing statement
shall have been duly filed or duly submitted for filing in the State of
Connecticut, 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, and (iii) 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.
(h) 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 special 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 Delivery 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 Delivery 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 certificate of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Delivery Date;
(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 Delivery 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 articles of association 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 Delivery 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 articles of association 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
Delivery 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;
(vi) a copy of the articles of association and by-laws and other
instruments of the Subordination Agent, certified by the Secretary or
an Assistant Secretary of the Subordination Agent as of the Delivery
Date (or other like instruments satisfactory to the Lessee and the
Owner Participant) and evidence authorizing the execution, delivery
and performance by the Subordination Agent of this Agreement, the
Intercreditor Agreement 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 Subordination Agent in connection with
the transactions contemplated hereby; and
(vii) 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.
(i) 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 the 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 the Bills of Sale;
(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 FAA Bill of Sale, the Lease and the 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;
(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; and
(v) an OEM Amended Type Data Certificate with respect to the
Aircraft.
(j) 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, 1997 and (ii) in the Lessee's Current
Report on Form 8-K dated June 11, 1997, 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 consolidated financial statements of the Lessee as of May
31, 1997 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.
(k) 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.
(l) 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, the Subordination Agent and
the Indenture Trustee shall have received a certificate from each of SSB
and the Owner Trustee (in the case of the Lessee, the Pass Through Trustee,
the Owner Participant, the Subordination Agent and the Indenture Trustee),
FSB and the Indenture Trustee (in the case of the Lessee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the Owner
Trustee), FSB and the Pass Through Trustee (in the case of the Lessee, the
Indenture Trustee, the Owner Participant, the Subordination Agent and the
Owner Trustee) and FSB and the Subordination Agent (in the case of the
Lessee, the Indenture Trustee, the Owner Participant, the Pass Through
Trustee and the Owner Trustee) signed by a duly authorized officer of SSB
and FSB, respectively, dated the Delivery Date, stating with respect to SSB
and the Owner Trustee, with respect to FSB and the Indenture Trustee, with
respect to FSB and the Pass Through Trustee or with respect to FSB and the
Subordination Agent, as the case may be, that:
(i) the representations and warranties of SSB in its individual
capacity and as Owner Trustee, of FSB in its individual capacity and
as Indenture Trustee, of FSB in its individual capacity and as Pass
Through Trustee or of FSB in its individual capacity and as
Subordination Agent 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 SSB in its individual capacity or as Owner
Trustee, of FSB in its individual capacity or as Indenture Trustee,
of FSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default or of FSB in its
individual capacity or as Subordination Agent, an Event of Default or
an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or SSB and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(m) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee
and each Liquidity Provider (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, the Indenture Trustee or each Liquidity Provider, 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, Vice President - Law of the Lessee, in the
form of Exhibit A(1)(a) hereto and addressed to the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and each Liquidity Provider;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b) hereto and addressed to the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Fulbright & Jaworski L.L.P., special counsel for the Owner
Participant, in the form of Exhibit A(2) hereto and addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(iv) Ray, Quinney & Nebeker, 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, each Liquidity Provider and the
Lessee;
(v) Daugherty, Fowler & Peregrin, special aviation counsel, in the
form of Exhibit A(4) hereto and addressed to the Underwriters, the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(vi) Bingham, Dana & Gould, special counsel for the Owner Trustee,
in the form of Exhibit A(5) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee;
(vii) 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,
each Liquidity Provider and the Lessee; and
(viii) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, 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, each
Liquidity Provider and the Lessee.
(n) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with a copy of the conclusions 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 (determined without including in such value any
increase or decrease for inflation or deflation during the Basic
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;
(ii) the estimated useful life of the Aircraft is at least 133% of
the Lease Term;
(iii) the Purchase Price of the Aircraft is at least equal to 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 amounts payable by the Lessee upon the exercise of its
purchase options pursuant to Sections 4.02(a)(B) and 4.02(a)(F) of
the Lease are at least 103% of the currently estimated Fair Market
Value of the Aircraft on such dates, taking into account inflation or
deflation to such dates; and
(vi) the Aircraft is not limited use property.
(o) Statement Under Pass Through Agreement. The Pass Through Trustee
shall have mailed to the holders of Pass Through Certificates a statement
pursuant to Section 5.03 of the Pass Through Agreement setting forth the
revised Pool Balance and Pool Factors, as if the Delivery Date were a
Special Distribution Date.
(p) 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 (g) and (i) of
this Section 4.01, 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, value-added 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.
(q) No Material Adverse Change. 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, 1997 and (ii) in the Lessee's Current
Report on Form 8-K dated June 11, 1997, no material adverse change shall
have occurred in the financial condition, business or operations of the
Lessee from that shown in the audited consolidated financial statements of
the Lessee as of May 31, 1997 and nothing shall have occurred which will
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.
(r) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(s) 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.
(t) 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.
(u) Section 131.3 of the New York State Banking Law Filing. SSB
shall have delivered evidence of its filing made with the New York
Superintendent of Banking pursuant to Section 131.3 of the New York State
Banking Law.
(v) Release of Debt Portion. The Indenture Trustee shall have
released the Debt Portion from the Collateral Account.
(w) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. The Lessee shall have delivered a
certificate to the Pass Through Trustee and the Liquidity Providers signed
by the Vice President and Treasurer or any other duly authorized officer of
the Lessee stating that (i) the Operative Agreements which are amended and
restated as of the Delivery Date do not vary the Mandatory Economic Terms
and contain the Mandatory Document Terms and (ii) any substantive
modification of such documents from those in effect on the Certificate
Closing Date does not materially and adversely affect the Holders of Pass
Through Certificates and each Liquidity Provider and such certification
shall be true and correct.
(x) Rating Agency Confirmation. A Rating Agency Confirmation shall
have been delivered to the Pass Through Trustee.
Notwithstanding anything else to the contrary in this Section 4.01, it shall
not be a condition precedent to the obligations of the Indenture Trustee, the
Pass Through Trustee or the Subordination Agent that the conditions in Section
4.01(j) and (k) be satisfied if the Lessee certifies that the failure to
fulfill such condition precedent is not reasonably likely to materially
adversely affect the holders of Pass Through Certificates and, in the event of
such failure, there has been delivered to the Indenture Trustee written
confirmation from both Moody's and S&P of the rating on any class of Pass
Through Certificates.
Section 4.02. 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 the 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 the 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 lease the Aircraft from the Owner Trustee pursuant to
the Lease is subject to the conditions that, prior to or on the Delivery 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, Sections 4.01(e), (h)(ii)-(vii), (i)(ii)-(iv), (k), (l), (m)(ii)-(viii),
(u) and (v) hereof, the Owner Participant shall have made its Commitment
available in accordance with the terms of 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), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that as of 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 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 (other than the SEC) 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(m)(v) and 4.02 hereof and except for the filings referred to in
Section 4.01(g) hereof, all of which shall have been duly obtained or made
and shall be in full force and effect on and as of 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 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, 1997 and (ii) in the Lessee's Current Report on Form 8-K
dated June 11, 1997, 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 and its subsidiaries have 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), 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 pursuant to the filing
with the 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 Section 4.01(g) hereof and (D) the taking of
possession by the Indenture Trustee of the original counterpart of the
Lease, the Lease Supplement covering the Aircraft and the Ancillary
Agreement I, 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 will receive 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 Lease and the Lease
Supplement, the rights of the Indenture Trustee under the Indenture, 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, 1997, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1997, 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 and there has been no material
adverse change in the consolidated financial condition of the Lessee since
May 31, 1997;
(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 or 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
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;
(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
Section 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, individual retirement
annuity or an employee benefit plan subject to Section 4975 of the
Code, or any trust established under any such plan, account or
annuity, or of a "church plan", as defined in Section 3(33) of ERISA
or Section 414(e) of the Code, or of a "governmental plan", as
defined in Section 3(32) of ERISA or Section 414(d) of the Code,
subject to the laws of a state of the United States having
prohibitions on transactions with such church or governmental plan
substantially similar to Section 406 of ERISA or 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(g) and 4.02
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 shall have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes and value-added
taxes relating to the sale of the Aircraft by the Lessee to the Owner
Trustee which are then 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 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 or 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) on the Delivery Date, the Aircraft will, upon delivery, be fully
equipped to operate in commercial service and will comply with all
governmental requirements governing such service;
(x) neither the Lessee nor any of its Affiliates is engaged
principally in the business of extending credit for the purpose of buying
or carrying margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System) and no part of the proceeds
from the sale of the Certificates and/or sale of the Aircraft by the Lessee
to the Owner Trustee will be used to purchase or carry any such margin
stock, or to refinance any borrowing, the proceeds of which were used to
purchase or carry any such margin stock;
(y) there are no broker's or underwriter's 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
(z) 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
Certificate Closing 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 25 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 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 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) 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, so long as no Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing, if, at any time after December 31,
2004, 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, the Owner Trustee and the Indenture Trustee, 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, 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 at the request of the
Lessee or an Affiliate thereof, 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 taken
as a whole not materially less stringent than those of the FAA or at
least comparable to those, taken as a whole, required by the central
civil aviation authority of any of the United Kingdom, France,
Canada, Japan or Germany;
(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;
(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; and
(L) the civil aviation laws of such country do not impose unusual
requirements on registrants of civil aircraft that would be required
to be complied with by the Owner Participant which impose a material
administrative burden on the Owner Participant's business activities;
(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 the 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 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 (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, with the Aeronautics Authority on the Delivery
Date, the FAA Bill of Sale, the Application, the Affidavits, the Lease, the
Lease Supplement, the Trust Agreement, the Indenture and the Indenture and
Security Agreement Supplement in the following order of priority: first,
the FAA Bill of Sale, second, the Application with the Trust Agreement and
the Affidavits attached thereto, 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 1998, 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 (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 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 all of 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 Responsible Officer of the Lessee obtaining actual
knowledge of any condition or event which constitutes a Default or
any officer of the Lessee obtaining knowledge of any condition or
event which constitutes 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; and
(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.
(j) The Lessee shall not amend Section 6.06 of the Pass Through
Agreement or any Series Supplement without the prior written consent of the
Owner Participant.
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 making available
by the Owner Participant of its Commitment, the lease 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) [Reserved]
(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, 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, the
Subordination Agent, the Underwriters or any Affiliates of any thereof whether
or not such action or inaction is 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
authorized to act on its behalf (i) 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 (other than the Initial Owner Participant and the Owner
Participant) and (ii) except as contemplated in Section 8.02(a) of the
Indenture, shall own Certificates.
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 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 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, the
Indenture Trustee or the Owner Participant that such lack of United States
citizenship would have any adverse effect on the Lessee, the Indenture
Trustee, the Holders 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). 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 as of the
Delivery Date, that:
(i) it is a corporation duly organized and validly existing in good
standing under the laws of the State of New York 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 other Operative Agreements to which
it is or is to be a party;
(ii) the execution, delivery and performance by it of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements to which it is or is to be a party 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) and 6.02 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, the Trust Agreement and the other Operative Agreements to which
it is or is to be a 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 by-laws, 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, the Trust Agreement
and the other Operative Agreements to which it is or is to be a party have
been or on the Delivery Date will be duly executed and delivered by the
Owner Participant and constitute or on the Delivery 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 any of the 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, the
Tax Indemnity Agreement, the Trust Agreement or the other Operative
Agreements to which it is or is to be 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 if it shall at any time cease to be such a "U.S. Person", it shall
indemnify each Certificate Holder for any withholding Taxes that may be
imposed on such Holder as a result of the Owner Participant's failure to be
such a "U.S. Person"; 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) and that there will not be any Lessor's Lien
attributable to it (or an Affiliate thereof) on the Delivery Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee and any subsequent Holders
of the Certificates 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 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
the Delivery Date, 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 (or, in the case of an assignment,
conveyance or other transfer to an affiliate of the transferor, the transferor
may give notice at the time of or promptly following such transfer so long as
the transferor shall remain secondarily liable for all obligations of the Owner
Participant under the Operative Agreements to which the Owner Participant is a
party) and provided further that the Owner Participant 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 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 and
the Owner Participant shall remain secondarily liable for all such obligations
assumed by its successor as Owner Participant; provided, that the Owner
Participant need not so agree to remain and shall not be so secondarily liable
if 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 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 Section
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. 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 if
the transferee shall cease to be such a "U.S. Person" then each Certificate
Holder shall be provided an indemnity in form and substance satisfactory to
each such Certificate Holder for any Taxes that may be imposed on such
Certificate Holders (currently or in the future) due to 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
Section 6.01(m) 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. There will be no
restriction on the ability of the Owner Participant to merge with, consolidate
with, or transfer substantially all of its assets to, any other company,
provided such other company shall agree (by operation of law or otherwise) to
be bound by the terms of the Operative Agreements; provided that,
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.
In connection with the transfer by an Owner Participant to a
transferee Owner Participant, the Owner Trustee, the Lessee and the Indenture
Trustee shall be entitled to receive an opinion or opinions of counsel
reasonably satisfactory to each of them to the effect that the obligations of
such transferee under the Operative Agreements are legal, valid, binding and
enforceable in accordance with their terms, subject to customary exceptions,
and that such transfer will not be required to be registered under applicable
securities laws.
(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 SSB and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, SSB 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) as of 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 225 Asylum
Street, Goodwin Square, Hartford, Connecticut 06103, 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 other Operative
Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by SSB, 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 articles of association 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, executed and delivered by SSB, either in
its individual capacity or as the Owner Trustee, as the case may be, and
neither the execution and delivery thereof nor SSB's performance of or
compliance with any of the terms and provisions thereof will violate any
Federal or Connecticut law or regulation governing SSB'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 SSB in its individual capacity, constitute the
legal, valid and binding obligation of SSB 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 SSB in its individual capacity of
any of its obligations thereunder does not contravene any lease, regulation
or contractual restriction binding on SSB 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 SSB before any court or administrative agency which
would materially and adversely affect the ability of SSB, 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 SSB 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 Connecticut
governmental authority or agency governing its banking or trust powers; and
(vii) on the Delivery Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by the Lessee, the
Aircraft shall be free of Lessor's Liens attributable to SSB in its
individual capacity and SSB in its individual capacity is a Citizen of the
United States.
(b) Lessor's Liens. SSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity and that there will not be any
such Lessor's Liens on 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.
SSB, 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 attributable to it in its individual
capacity which may arise at any time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. SSB, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant, 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 SSB to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Actions With Respect to Lessor's Estate, Etc. Neither SSB, in
its individual capacity, nor the Owner Trustee will 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 7.05. 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 of the Delivery Date as
follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
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 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 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 Utah 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 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 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) on the Delivery Date, the Indenture Trustee will hold the
original counterparts of the Lease, the Lease Supplement and the Ancillary
Agreement I; and
(vi) 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 Certificate Closing 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) 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 and
that there will not be any Indenture Trustee's Liens on 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.
(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 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. Each of 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 such Person
nor any Person lawfully claiming through such Person (other than in the case
of the Owner Participant, the Indenture Trustee, the Pass Through Trustee or
the Owner Trustee) shall interfere with the Lessee's or any permitted
sublessee's right to quietly enjoy the Aircraft during the Term without
hindrance or disturbance by such Person.
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 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
and has the power and authority to enter into and perform its obligations
under this Agreement;
(ii) the execution, delivery and performance of this Agreement and
the performance of its obligations hereunder have been fully authorized by
all necessary corporate action on its part, and neither the execution and
delivery hereof nor its performance of any of the terms and provisions
hereof will violate any Federal or Utah 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;
(iii) this Agreement has been duly executed and delivered by it (in
its individual and trust capacities) and, assuming that this 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); and
(iv) the representations and warranties of the Pass Through Trustee
set forth in the Original Agreements to which it is a party were correct on
and as of the Certificate Closing 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 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Trustee (in its
individual or trust capacity), the Pass Through Trustee (in its individual or
trust capacity), the Indenture Trustee (in its individual or trust capacity)
and the Subordination Agent (in its individual or trust capacity) provided for
in this Article 7, and their respective obligations under any liability
resulting from breach of any thereof shall survive the making available by the
Owner Participant of its Commitment and the lease of the Aircraft.
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), (E) or (F) 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), (E) or (F) 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, and each of the parties
shall execute and deliver appropriate documentation (which insofar as it
relates to the release and discharge of the Owner Participant and the Owner
Trustee from their obligations under the Operative Agreements shall be
reasonably satisfactory to the Owner Participant) 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 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, SSB 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 (except in
connection with the exercise of remedies pursuant to Article 17 of the Lease).
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 Trustee 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.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of 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
and has the corporate power and authority to enter into and perform its
obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement and
the performance of its obligations hereunder have been fully 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 Utah 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;
(iii) this Agreement 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 or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
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);
(iv) there are no Taxes payable by the Subordination Agent imposed by
the State of Utah or any political subdivision or taxing authority thereof
in connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity Facilities or
the Intercreditor Agreement (other than franchise or other taxes based on
or measured by any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions contemplated by
the Intercreditor Agreement or any of the Liquidity Facilities), and there
are no Taxes payable by the Subordination Agent imposed by the State of
Utah or any political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination Agent of any of
the Certificates other than franchise or other taxes based on or measured
by any fees or compensation received by the Subordination Agent for
services rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities);
(v) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the Intercreditor Agreement
or any Liquidity Facility;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility;
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee; and
(viii) the representations and warranties of the Subordination Agent
set forth in the Original Agreements to which it is a party were correct on
and as of the Certificate Closing 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) Covenants. (i) The Subordination Agent agrees not to amend any
Liquidity Facility without the consent of the Lessee (so long as no Event of
Default shall have occurred and be continuing) and of the Owner Participant
(such consents not to be unreasonably withheld).
(ii) In connection with the deposit in the applicable Cash Account of
amounts drawn pursuant to any Downgrade Drawing under a Liquidity Facility, the
Subordination Agent agrees, so long as no Event of Default shall have occurred
and be continuing, to pay to the Lessee promptly following each Regular
Distribution Date any Investment Earnings on the amount so deposited which
remain after application of such Investment Earnings pursuant to Section 2.06
of such Liquidity Facility to the interest payable on such Downgrade Drawing
under Section 3.07 of such Liquidity Facility. Capitalized terms used in this
Section 7.14(b)(ii) and not defined in Schedule II hereto shall have the
meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally.
Without regard to the exceptions set forth in Section 8.01(b) hereof, all
payments of Rent will be free and clear of withholding of any Tax imposed by
any foreign or international taxing authority and, so long as the Owner
Participant is a U.S. Person (as defined in Section 7701 of the Existing
Code), imposed by the United States, any state or local government or taxing
authority in the United States, or the taxing authority of any United States
possession or territory and at the time that the Lessee is required to make
any such payment upon which any withholding is required, the Lessee shall pay
an additional amount of Rent such that the net amount of Rent actually
received by the Person entitled to receive such Rent will be equal to the
amount of Rent that such Person would have been due absent such withholding.
In addition, 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, 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) payments 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, by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or the Pass
Through Agreement any interest therein or by reason of the transactions
described in or contemplated by the Operative Agreements or the Pass
Through Agreement;
(v) the payment of the principal or interest or other amounts
payable with respect to the Pass Through Certificates or the Certificates;
(vi) the Pass Through Certificates or the Certificates or the
issuance, sale, acquisition, reamortization, 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 2.11 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic 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, 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 this indemnity, (A)
any such 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 if the Lessee
indemnifies the Owner Participant pursuant to this clause and as a result
thereof, the income tax payable by the Owner Participant in another
jurisdiction is reduced, the Owner Participant shall pay the Lessee the
amount of such reduction to the extent required and in accordance with the
provisions of Section 8.02 hereof) or (B) any Taxes indemnifiable by the
Lessee pursuant to the third sentence of Section 8.01(c) hereof;
(ii) Any value-added Tax imposed by any Federal taxing authority in
the United States;
(iii) Taxes imposed with respect to the Aircraft and arising out of
or measured by acts, omissions, events or periods of time (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 other 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 or
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;
(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 (unless attributable to a breach of representation,
warranty or covenant of the Lessee) 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.
(vi) Taxes imposed on 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 transfers resulting from a loss,
substitution or modification of the Aircraft, Engines or any Part, any
transfer of the Aircraft (other than at Fair Market Value), Engines or any
Part to the Lessee or other person in possession thereof, or transfers
attributable to an Event of Default; 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 original Indemnitee (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 and would
have been indemnifiable pursuant to Section 8.01(a) hereof 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 Section 2.13, 2.15, 2.16 or 2.17 of the Indenture 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 or (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;
(ix) [Reserved];
(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 with respect to the Owner Participant or an Indenture Trustee's Lien;
(xii) Any 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 such 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 Pass Through Certificate (or any funded
participation therein) (i) over which purchase or holding such Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), 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 such Owner Participant (or any Affiliate thereof) has the power,
directly or indirectly, to appoint or terminate, or to negotiate the terms
of the management agreement with, the person or persons having discretion
or control (other than in the capacity of a directed trustee or custodian),
over such purchase or holding; 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 to the extent imposed
on such unrelated activities.
Notwithstanding anything to the contrary contained in this Section 8.01(b), the
provisions of this Section 8.01(b) shall not apply to any Taxes in the nature
of sales, use, value-added, goods and services, transfer, recording, excise,
or registration Taxes imposed on or with respect to the Aircraft, any Part,
interest therein or title thereto arising prior to or in connection with the
acquisition, delivery or placing under lease of the foregoing.
(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 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 or on account of any amount required to be
withheld from a payment in respect of a Certificate, the Lessee will indemnify
(after taking into account any payments made by a Holder to or for the benefit
of the Owner Participant or the Owner Trustee pursuant to the preceding
sentence) 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 Taxes required to be withheld and any interest, penalties and additions to
tax with respect thereto, along with any other costs (including attorneys'
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 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 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 requests for information
from any taxing authority to the extent relating to such Taxes with respect to
which the Lessee may be required to indemnify hereunder; 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. Other than
with respect to claims in the nature of an Income Tax, the Lessee may, at its
option, contest (if legally permitted to do so 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.
The Lessee shall control any such contest and shall determine in its sole
discretion the manner in which to contest such Taxes and shall periodically or
upon the Indemnitee's request advise the Indemnitee of the progress of such
contest; the Lessee shall consider in good faith any suggestion made by the
Indemnitee as to the method of pursuing such contest. The Indemnitee shall
control any contest with respect to claims in the nature of an income Tax,
provided that the Lessee shall have the right to be consulted in good faith
with respect to any such contest, including governmental and judicial
conferences and the right to be consulted in good faith regarding 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 Lessor will not settle a contest without
consent of the Lessee, unless the Lessor 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 to pay and shall pay the Indemnitee on a current basis all reasonable
fees and expenses which such Indemnitee may incur as a result of contesting
such Taxes (including, without limitation, all reasonable legal and accounting
fees and disbursements incurred in connection with such contest) and (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. In no event
shall such Indemnitee be required 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 an opinion
of Fulbright & Jaworski L.L.P. (if such Indemnitee is the Owner Participant or
the Owner Trustee), or other tax counsel 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
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 and (v)
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 (including to the U.S. Supreme
Court), provided the foregoing requirements of this Section 8.04 are met.
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
Event of Default by the Lessee hereunder or under the Lease (in which case
payment shall not be made to the Lessee until such 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 which are the obligation of the
Lessee 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. If the
Lessee receives written notice from a taxing authority or otherwise of a Tax
that is imposed upon an Indemnitee but not indemnified against by the Lessee
hereunder, the Lessee will promptly forward a copy of such notice to such
Indemnitee.
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 by applicable law to collect by means of
deduction or withholding 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. Application of Payments During Existence of Event of
Default. Any amount payable to the Lessee pursuant to this Article 8 shall
not be paid to the Lessee if at the time of such payment any Event of Default
shall have occurred and be continuing. Such retained amount may be applied to
satisfy the obligations of the Lessee under the Operative Agreements. At such
time as there shall not be continuing any such Event of Default, such amount
shall be paid to the Lessee to the extent not previously applied in accordance
with the preceding sentence.
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(c)(i)
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 Intercreditor Agreement, the Liquidity
Facilities, the Pass Through Agreement, the Bills of Sale or any other
Operative Agreement or any other document entered into in connection
herewith or therewith 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, any Part, 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 or the environment, 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 ownership, manufacture, design, sale, return, purchase,
acceptance, rejection, delivery, non-delivery, condition, repair,
modification, alteration, servicing, rebuilding, airworthiness,
registration, reregistration, import, export, performance, non-performance,
lease, sublease, transfer, other disposition, merchantability, fitness for
use, alteration, substitution or replacement of any Aircraft, Airframe,
Engine, or Part, including, without limitation, latent and other defects,
whether or not discoverable, strict tort or statutory 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 Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements or the
Original 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 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 or the Initial Owner
Participant, as the case may be, 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) in respect of the Aircraft, is 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 circumstances or events occurring 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 or the Original Agreements;
(iii) except as provided in Section 9.02 hereof, 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 the express terms of this Agreement or any other Operative Agreement to
which the Owner Participant is a party (other than the Owner Participant's
obligations under Section 6.01 of the Trust Agreement) and for which the
Lessee is not otherwise obligated to reimburse the Owner Participant,
directly or indirectly;
(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 covenants, 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 (it being understood that the Owner Participant shall not be
responsible for any acts or omissions of the Initial Owner Participant);
(vi) [reserved];
(vii) is, in the case of the Owner Participant, Lessor's Liens to
the extent attributable to the Owner Participant; in the case of SSB,
Lessor's Liens to the extent attributable to SSB; 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 (w) in connection with a Refinancing, (x) as a result of
exercise of remedies in accordance with the Lease, (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 or
11.03 or Article 10 of the Lease; or
(ix) arises 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 Pass Through Certificate (or any funded
participation therein) (i) over which purchase or holding the Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), 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) has the power,
directly or indirectly, to appoint or terminate, or to negotiate the terms
of the management agreement with, the person or persons having discretion
or control (other than in the capacity of a directed trustee or custodian),
over such purchase or holding.
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 (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 under Section 6.01 of
the Trust Agreement and Section 7.01 of the Indenture and 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 in full 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 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 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 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; and
provided, further that in any judicial or administrative proceeding involving
a claim for which payment or indemnity is sought under this Article 9 and
other claims related or unrelated to the transactions contemplated by the
Operative Agreements, the Lessee will not be entitled to assume and control
the defense of such claim unless such claim is severed from such other claims
at the Lessee's expense; and provided further that the Lessee will not be
entitled to assume and control the defense of such claim if the same involves
a material danger of criminal liability or the sale, forfeiture or loss of, or
the creation of any Lien on, the Aircraft or Lessor's Estate or any part
thereof. 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.
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 making available by the Owner Participant of its Commitment and 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.
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.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. If the transactions contemplated hereby are consummated, the Owner
Participant shall pay (or reimburse the Lessee if the Lessee shall have
previously made such payment), all fees and expenses (but not in any event to
the extent the same exceed, in the aggregate, 1.5% of the Purchase Price) 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 for the Lessee and counsel for the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider 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 each Liquidity
Provider and the fees and expenses of the Owner Trustee, the Subordination
Agent 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. 333-07691,
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, 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, the Subordination Agent, each Liquidity Provider 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 SSB, 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, of the Indenture Trustee
as trustee under the Indenture with respect to the administration of the Trust
Indenture Estate and of the Subordination Agent acting under the Intercreditor
Agreement; and (xv) any other amounts approved by the Lessee and the Owner
Participant. The fees and expenses described in clauses (ii) through (x) and
clauses (xii) through (xiv) 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, Termination Value
and the EBO Amount set forth in the Lease have been prepared assuming the
aggregate amount payable by the Owner Participant pursuant to the preceding
paragraph is 1.33% 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, 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 and the Subordination Agent and the
continuing fees, expenses and disbursements (including reasonable counsel fees
and initial fees relating to the establishment of a replacement liquidity
provider) of the Liquidity Providers under each Liquidity Facility 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, the Subordination Agent, each Liquidity
Provider 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 enforcement of 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 Section 7.03(d) hereof or otherwise) by the Owner Participant
or the Owner Trustee after the Delivery 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,
(C) in connection with the termination of the Lease or (D) as a result of
an action or direction of the Lessee pursuant to Section 4.02 or Article 7,
8, 9, 10 or 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 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 UCC 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 promptly
appoint 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 Owner Participant. No Owner
Participant shall have any 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 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 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
Indenture, the Intercreditor Agreement and the Liquidity Facilities and to all
of the terms of said documents, and the Lessee acknowledges receipt of an
executed counterpart of such documents; 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
Indenture, the Intercreditor Agreement and the Liquidity Facilities 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, the
Intercreditor Agreement and the Liquidity Facilities 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 Owner Participant and, so long as the Lien of the Indenture is in effect,
the Indenture Trustee 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 and Subordination Agent's
Acknowledgement. The Pass Through Trustee and the Subordination Agent hereby
acknowledge and agree 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.
Section 13.04. 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 Delivery 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 and no provisions of such Original
Agreements shall in any way affect or be binding on the Owner Trustee and the
Owner Participant hereunder or under the other Operative Agreements except to
the extent restated therein with respect to periods following the Delivery
Date.
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 courier or
messenger 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
Boulevard, 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 it c/o State Street
Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, telephone (617)
664-5526, facsimile (617) 664-5371; 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 1290 Avenue of the
Americas, New York, New York 10104, Attention: Controller, telephone (212)
408-4917, facsimile (212) 246-1803; or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee;
(d) If to the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee, to its office at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department, telephone (801)
246-5053, facsimile (801) 246-5630; 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; and
(e) If to a Liquidity Provider, to its office at 125 West 55th
Street, New York, New York 10019, Attention: General Manager, telephone
(212) 541-0600, facsimile (212) 956-5580; or to such other address as a
Liquidity Provider shall from time to time designate in writing to the
Lessor, the Lessee and the Indenture Trustee.
ARTICLE 15
REFINANCING
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 on terms
satisfactory to the Lessee and the Owner Participant and may be placed outside
the United States, in United States dollars or other currency. The Lessee may
require the Owner Trustee to convey nominal title to the Aircraft for security
purposes only in a transaction structured as a conventional equipment trust
certificate financing. 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 including, without limitation, an offering
under Rule 144A promulgated under the Securities Act of 1933, as amended, (i)
the Owner Participant shall have a right of review (which shall be undertaken
promptly to accommodate the proposed Refinancing schedule) and approval (which
shall not be unreasonably withheld) with respect to the description of the
transaction in any offering materials to be used in connection with such
offering, and (ii) the Lessee shall indemnify the Owner Participant 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 (assuming no
principal on the old Certificates was due on the date of such Refinancing),
the final maturity of the new Certificates shall be no later than that of the
old Certificates, and the Owner Participant's equity investment in the
transaction shall not be increased.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 15
Business Days' prior written notice of the closing date of such Refinancing,
the Owner Participant shall have been provided such longer period required for
a reasonable opportunity to review and comment on 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 material adverse
effect upon the rights or obligations 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, without
limitation, 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,
Termination Values and EBO Amount 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),
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and Make-Whole Premium or any other 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) 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 foregoing conditions in this
Section 15.01 and 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 Event of Default shall have occurred and be continuing or no
Default or Event of Default will result from such Refinancing; and
(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) and 9.01(b)(ix) hereof.
ARTICLE 16
[RESERVED]
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. Certain Payments. The Lessee shall pay to the
Indenture Trustee on the first Payment Date subsequent to the Delivery Date,
interest accrued on the Certificates from and including the last Payment Date,
to, but excluding, the Delivery Date, such interest representing interest
accrued by and for the account of the Lessee as beneficiary under the Trust
Agreement prior to the Closing Date. Notwithstanding anything to the contrary
in the Operative Agreements, the parties hereto agree and acknowledge that
neither the Lessor nor the Owner Participant have any liability with respect
to amounts owed pursuant to the preceding sentence of this Article 17.02. In
addition, the Lessee will pay to the Indenture Trustee on behalf of the Owner
Trustee all amounts owed by the Owner Trustee pursuant to clause (b) of the
last paragraph of Section 2.04 of the Indenture.
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 and the Subordination Agent,
in its respective 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 and Section
2.03 hereof, 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 Subordination Agent 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 SSB and FSB is entering into this
Agreement solely in their respective capacities (except to the extent
otherwise expressly indicated), in the case of SSB, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, in the case of
FSB, 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 SSB,
nor FSB, shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of SSB and FSB 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 an 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.
Section 17.13. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that each Liquidity Provider may rely on such representations
and warranties to the same extent as if such representations and warranties
were made to such Liquidity Provider directly. The terms of this Agreement
shall inure to the benefit of each Liquidity Provider, their respective
successors and permitted assigns.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (and will
use commercially reasonable efforts to cause 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 and independent insurance
brokers for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation or arbitration 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 a subsidiary or Affiliate of the
parties hereto, (vi) to any assignee or participant (or prospective assignee
or participant) so long as such assignee or participant (or prospective
assignee or participant) 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 as of
the date first above written.
LESSEE:
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title: Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
BNY LEASING CORPORATION
By: _________________________________________
Name:
Title:
INDENTURE TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By: _________________________________________
Name: Greg A. Hawley
Title: Vice President
PASS THROUGH TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By: _________________________________________
Name: Greg A. Hawley
Title: Vice President
SUBORDINATION AGENT:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Subordination Agent
By: _________________________________________
Name: Greg A. Hawley
Title: Vice President
OWNER TRUSTEE:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Owner Trustee
By: _________________________________________
Name: Paul D. Allen
Title: Vice President
SCHEDULE I
OWNER PARTICIPANT'S COMMITMENT;
DEBT PORTION
Owner Participant's Commitment ................................. $22,914,000
Debt Portion.................................................... $58,486,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N583FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Intercreditor Agreement
and the Liquidity Facilities) 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. 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 received or deemed
to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any current reduction in Taxes resulting from such increased Taxes. 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.
Aircraft. The Airframe to be sold by the Lessee to the Owner
Trustee pursuant to the Participation Agreement and to be leased under the
Lease (or any permitted substitute airframe thereunder) together with three
Engines (or any Replacement Engine or Engines) 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) 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 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 I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N583FE), dated the Delivery 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 a copy of the conclusions to the
Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation
Agreement.
Average Life Date. For any Certificate, the date which follows the
prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
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.
Base Rate. For any day, a rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the Prime Rate
for such day. Each change in any interest rate provided for herein based upon
the Base Rate resulting from a change in the Base Rate shall take effect at
the time of such change in the Base Rate.
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 Delivery Date and ending at the end of the day on January 30, 2020, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the
Warranty Bill of Sale.
Business Day. Except as provided in the next succeeding sentence,
any day other than a Saturday or Sunday or day on which commercial banks are
authorized or required to close in New York, New York, Salt Lake City, Utah,
Memphis, Tennessee and the city in the United States in which the office or
agency is maintained by the Pass Through Trustee for the payment of the Pass
Through Certificates, and after the Lien of the Indenture has been discharged,
Hartford, Connecticut. With respect to notices and other communications to
the Lessee, Business Day shall mean any day other than a Saturday, Sunday or
day on which commercial banks are authorized or required to close in New York,
New York and Memphis, Tennessee.
Certificate Closing Date. May 28, 1997.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N583FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
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.
Class A Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
Class B Liquidity Provider. Has the meaning specified in Section
1.01 of the Intercreditor Agreement.
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.
Collateral Account Control Agreement. The Collateral Account
Control Agreement dated as of May 1, 1997 among State Street Bank and Trust
Company, the Indenture Trustee and the Owner Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 2.01 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Corporate Trust Administration. The Corporate Trust Administration
office of the Owner Trustee located at 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103, Attention: Corporation Trust Administration, 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.
Corporate Trust Department. The Corporate Trust Department office
of the Indenture Trustee located at 79 South Main Street, Salt Lake City, Utah
84111, 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.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv) of
the Lease.
Cut-Off Date. December 15, 1997.
Debt Portion. The amount specified as such on Schedule I 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 the Lessee 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 3.02(c) of the Participation Agreement.
EBO Amount. As defined in Section 4.02(a)(F) of the Lease.
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 has 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 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 September 1, 1997,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N583FE), dated as of September 1, 1997,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 15.01(d)(viii) 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 due
to destruction; (ii) the loss of such property or its use for a period in
excess of 30 days due to theft or disappearance or such longer period, not to
exceed 60 days from the end of such initial 30-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 beyond the end of the Term
(as the same may be extended) (unless such theft or disappearance constitutes
an Event of Loss pursuant to clause (i), (iii) or (iv) hereof); (iii) loss of
such property or its use for a period of 30 days due to damage beyond repair
or due to rendition of such property permanently unfit for normal use by the
Lessee for any reason whatsoever; (iv) any damage to such property which
results in an insurance settlement with respect to such property on the basis
of an actual or constructive or compromised total loss; (v) condemnation,
confiscation or seizure of, or requisition of title to such property by any
governmental authority or purported governmental authority or agency or
instrumentality thereof; (vi) condemnation, confiscation or seizure of, or
requisition or taking of use of such property by a foreign government or
instrumentality or agency of any such foreign government, for a period in
excess of 180 days or beyond the end of the Term (as the same may be extended)
or, if earlier, 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; (vii) requisition of use of such property by the
Government for a period extending beyond the end of the Term (as the same may
be extended); and (viii) 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 McDonnell Douglas MD-11 series aircraft equipped with engines of
the same make and model as the Engines for a period of six (6) consecutive
months, unless the Lessee, prior to the expiration of such six (6) 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 twelve (12) consecutive months, unless the Lessee, prior to
the expiration of such twelve (12) month period shall have conformed at least
one McDonnell Douglas MD-11 series aircraft (but not necessarily the Aircraft
or the Airframe) to the requirements of any such law, rule, regulation, order,
or other action and shall have commenced regular commercial use and shall be
diligently carrying forward, on a non-discriminatory basis, all steps
necessary or desirable to permit the normal use of the Aircraft by the Lessee,
but in no event beyond the end of the Term (as such Term may be extended). 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 (ii), (v) or (viii) 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 or other payments
(and interest thereon to the extent provided in the Operative Agreements) 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 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) 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 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) all rights to exercise any election or option or to
make any decision or determination or to give or receive any notice, consent,
waiver or approval or to take any other action in respect of, but only to the
extent relating to, an Excepted Payment, (viii) any right to restitution from
the Lessee in respect of, but only to the extent relating to, any Excepted
Payment resulting from a determination of invalidity of such Excepted Payment
and (ix) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (viii) above.
Existing Code. The Internal Revenue Code of 1986, as amended and
in effect on the Delivery Date, and any successor provision which is identical
in all material respects.
Expense; Expenses. As defined 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 to be dated the
Delivery Date.
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 the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined, in accordance with
Section 4.03 of the Lease, 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 the Aircraft. 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.
Fair Market Value. An amount determined, in accordance with
Section 4.03 of the Lease, 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 that the Aircraft (or other property) is unencumbered by the 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; provided that in connection with any
determination pursuant to or for the purposes of Article 17 of the Lease, the
Aircraft shall be appraised on an "as is, where is" basis.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the Fixed
Renewal Term equal to the amount set forth in Ancillary Agreement I.
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.
FSB. First Security Bank, National Association, a national banking
association.
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 SSB, in its individual capacity and as Owner
Trustee and Lessor, the Subordination Agent, in its individual capacity and in
its capacity as Subordination Agent, each Liquidity Provider, the Owner
Participant, the Indenture Trustee, in its individual capacity and as
Indenture 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 Pass Through Trustee 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. N583FE), dated as of May 1, 1997, as amended and
restated as of September 1, 1997, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. A 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. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof 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 or Expenses
imposed against the Indenture Trustee 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.
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.
Initial Owner Participant. Federal Express Corporation, a Delaware
corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
May 1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by the Lessee to the
Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N583FE) dated as of May 1, 1997, as amended and restated as of September 1,
1997, entered into by the Lessor and the Lessee concurrently with the
execution and delivery 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. Any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft pursuant to the terms of the Lease, which
Lease Supplement shall incorporate by reference the provisions of the Lease
including any amendments entered into subsequent to the Delivery Date.
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.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
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, the
Bills of Sale, the Modification 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, the
Owner Participant or the Indenture Trustee) 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). Notwithstanding the foregoing, "Lessor's Estate" shall not
include any Excepted Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein 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 expressly prohibited under or in
violation of the Operative Agreements or in the case of the Lessor in its
individual capacity arising from its gross negligence or willful misconduct,
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 claims 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 or
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 7, 8, 9, 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.
Liquidity Facility. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Liquidity Provider. Has the meaning specified in Section 1.01 of
the Intercreditor 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 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 value of the 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
outstanding principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule IV to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule V to the
Original Participation Agreement.
Manufacturer. McDonnell Douglas Corporation, a Maryland
corporation.
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, 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.
N584FE Indenture. Has the meaning set forth in Section 2.01(aa)
of the Participation Agreement.
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 are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and 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, if any, the Owner Trustee Guaranty, if any, the Ancillary Agreement
I, the Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Engine Consent, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Account
Control Agreement and the Tax Indemnity Agreement.
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 Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N583FE), dated as of May 1, 1997,
between the Owner Trustee and the Indenture Trustee as it was originally
executed and delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N583FE), dated as of May 1, 1997, between the Owner Trustee as
lessor, and the Lessee as it was originally executed and delivered on the
Certificate Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N583FE), dated as of May 1, 1997, among
the Lessee, the Initial Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee and the Subordination Agent as it was
originally executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N583FE), dated as of May 1, 1997, between the Initial
Owner Participant and the Owner Trustee as it was originally executed and
delivered on the Certificate Closing Date.
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 Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in
accordance with the Participation Agreement, its right, title and interest in
and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, 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 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 or the EBO Amount, 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. N583FE), dated as of May 1, 1997, as amended and
restated as of September 1, 1997, 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, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
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 May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through
Certificates, 1997-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. May 28, 1997.
Pass Through Trust. The Federal Express Corporation 1997-1 Pass
Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust
Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association, a
national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
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 the higher of 2% plus the Debt Rate and 1% plus the Prime
Rate (calculated on the basis of the actual number of days elapsed and a year
of 365 or 366 days) 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 15 and July 15 commencing on July 15,
1997.
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).
Pool Balance. Has the meaning specified in Article I to the Series
Supplement.
Pool Factors. Has the meaning specified in Article I to the Series
Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, December 27, 2011, with respect to the Series B Certificates,
February 5, 2010 and with respect to the Series C Certificates, March 22, 2007.
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.
Prime Rate. The rate of interest publicly announced from time to
time by The Bank of New York at its principal office in New York, New York as
its "prime rate" or, if such rate is unavailable, the rate of interest
publicly announced from time to time by Citibank, N.A. at its principal office
in New York, New York as its "base funding rate" or "prime rate", as the case
may be.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
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 Price. The amount specified as such in Ancillary
Agreement I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date
or the Transfer Date, if applicable, a written confirmation from each of the
Rating Agencies that the use of such Operative Agreement with such
modifications would not result in (i) a reduction of the rating for any Class
of Pass Through Certificates below the then current rating for such Class of
Pass Through Certificates or (ii) a withdrawal or suspension of the rating of
any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 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. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding
the dates on which each such payment of principal is scheduled to be made; by
(ii) 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. January 30, 2020 and each January 15 and July
15 commencing on January 15, 1998, and continuing thereafter during the Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. As defined 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, and provided further that at all times all Engines
shall be of the same make and model.
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 Department or Corporate
Trust Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, with respect to the Owner
Participant, the president or any vice president with direct responsibility
for the transactions contemplated by 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.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series Supplements. The Series Supplement 1997-1-A, the Series
Supplement 1997-1-B and the Series Supplement 1997-1-C, each dated the
Certificate Closing Date, between the Lessee and the Pass Through Trustee.
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.
Special Distribution Date. Has the meaning specified in Article I
to the Series Supplement.
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 S&P and Moody's,
respectively or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest
rating assigned by such rating organization; (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial paper
or other direct obligations of, or obligations guaranteed by, commercial banks
organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least
B/C by Thomson Bankwatch, having maturities no later than 90 days following
the date of such investment; (d) overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers; or
(e) 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 or 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.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association.
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 Date."
Supplemental Rent. (a) 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 SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Amount 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 and (b) all amounts that the Owner Trustee is obligated to pay in
accordance with clause (b) of the last paragraph of Section 2.04 of the
Indenture.
Tax. As defined in Section 8.01(a) of the Participation
Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N583FE), dated as of September 1, 1997, between
the Lessee and the Owner Participant.
Term. The Basic Term of the Lease and 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 the fifth anniversary of the Delivery 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 January 15, 2010 or January 15, 2013,
(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 Delivery Date and (iii) Section 4.02(a)(F)
of the Lease, January 15, 2015.
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. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the
Average Life Date on such Certificate and trading in the public securities
markets either as determined by interpolation between the most recent weekly
average yield to maturity for two series of United States Treasury securities,
trading in public securities markets, (i) one maturing as close as possible
to, but earlier than, the Average Life Date of such Certificate and (ii) the
other maturing as close as possible to, but later than, the Average Life Date
of such Certificate. In each case as published in the most recent H.15(519)
or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Certificate is reported
on the most recent H.15 (519), such weekly average yield to maturity as
published in such H.15(919). "H.15(519)" means the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination of a
Make-Whole Premium will be the third Business Day prior to the applicable
prepayment date and the "most recent H.15(519)" means the H.15(519) published
prior to the close of business on the third Business Day prior to the
applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N583FE), dated as of May 1, 1997, as amended and restated as of
September 1, 1997, between the Owner Participant and the Owner Trustee in its
individual capacity.
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. Morgan Stanley & Co. Incorporated, First Chicago
Capital Markets, Inc., Goldman, Sachs & Co. and J.P. Morgan & Co.
Underwriting Agreement. The Underwriting Agreement dated May 22,
1997 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
Existing 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 to be dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Canada Netherlands
Denmark New Zealand
Finland Norway
France Philippines
Germany Singapore
Iceland Sweden
Ireland Switzerland
Italy United Kingdom
Japan
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N583FE
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. N583FE), dated as of May 1, 1997, as amended and restated as of September
1, 1997 (the "Participation Agreement"), among Federal, as Lessee, BNY Leasing
Corporation, as Owner Participant, State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
otherwise stated, but solely as Owner Trustee, and First Security Bank,
National Association, not in its individual capacity, except as otherwise
stated, but solely as Indenture Trustee, Pass Through Trustee and
Subordination Agent, relating to the Aircraft. This opinion is being
delivered pursuant to Section 4.01(m)(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 McDonnell Douglas MD-11F aircraft (the "Aircraft"),
using the proceeds from the public offering of the Pass Through Certificates.
Three Classes of Pass Through Certificates were issued by three 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 Indenture, as supplemented by the related Indenture and Security
Agreement Supplement.
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. 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 Operative
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 Operative Agreements, other than Federal, has full
power, authority and legal right to enter into such Operative Agreements and
that each such Operative 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 the corporate power and authority to carry on its
business as currently conducted and to enter into and perform its obligations
under the Operative 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 Operative Agreements to which Federal is a party has
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 Operative
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 (a) requires any stockholder approval or
violates the certificate of incorporation or by-laws of Federal or (b)
conflicts with or contravenes the provisions of, or constitutes a default
under, or results 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, requires 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 Operative
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, (a) requires 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 Delivery Date and which 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 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 filings and recordings
referred to in paragraph 7 below, 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) the financial condition of Federal,
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, 1997 and (b) in
Federal's Current Report on Form 8-K dated June 11, 1997, 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 or (B) the ability of Federal to perform
its obligations under the Operative 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) the
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 Operative 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 Operative
Agreements, the governing law with respect to each of the Operative 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.
George W. Hearn
SCHEDULE A
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N583FE
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. N583FE), dated as of May 1, 1997, as amended and restated as of September
1, 1997 (the "Participation Agreement"), among Federal Express, as Lessee, BNY
Leasing Corporation, as Owner Participant, State Street Bank and Trust Company
of Connecticut, National Association, not in its individual capacity but
solely as Owner Trustee, and First Security Bank, National Association, not in
its individual capacity, except as otherwise stated, but solely as Indenture
Trustee, Pass Through Trustee and Subordination Agent, relating to the
Aircraft. This opinion is being delivered pursuant to Section 4.01(m)(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 McDonnell Douglas MD-11F Aircraft (the "Aircraft")
using the proceeds from the public offering of the Pass Through Certificates.
On the Certificate Closing Date, three Classes 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. 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) the 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 Operative Agreement 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 Operative
Agreement, (iii) that the execution, delivery and performance of each of the
Operative Agreement 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, and (v) that the form
of each Operative 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 Operative Agreement 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 Operative Agreement 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 Operative Agreement to which Federal Express is a party 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 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 Operative Agreement.
5. The execution, delivery and performance of the Operative
Agreement (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 State Street Bank and Trust Company of
Connecticut, National Association in its individual or trust capacity in the
State of New York not related to the transactions contemplated by the
Operative Agreement. We have assumed that State Street Bank and Trust Company
of Connecticut, 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 State Street Bank and Trust Company of
Connecticut, 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(g) 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. Except for (i) the filings and recordings referred to in
paragraph 2 above, (ii) the registration of the issuance and sale of the Pass
Through Certificates under the Securities Act and (iii) compliance with the
securities laws of each applicable state, 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.
9. 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.
10. 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, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT A(2)
[Letterhead of Fulbright & Jaworski L.L.P.]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N583FE
Ladies and Gentlemen:
We have acted as special New York counsel for BNY Leasing
Corporation, a New York corporation (the "Company"), in connection with
transactions contemplated by the Participation Agreement dated as of May 1,
1997, as amended and restated as of September 1, 1997 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee; the Company; State
Street Bank and Trust Company of Connecticut, National Association, as Owner
Trustee; First Security Bank, National Association, as Indenture Trustee, Pass
Through Trustee and Subordination Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth or incorporated
by reference in the Participation Agreement. "Company Documents" shall be a
collective reference to the Participation Agreement, the Trust Agreement, the
Tax Indemnity Agreement and the Ancillary Agreement I.
This opinion is furnished to you pursuant to Section 4.01(m)(iii) of
the Participation Agreement.
In rendering this opinion, we have examined the Company 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 of the Company, such certificates of public
officers and officers of the Company, and such other documents, as we have
deemed necessary and appropriate for the purpose of rendering this opinion.
In all such examinations, we have assumed the genuineness of signatures (other
than in respect of the Company) 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 the certificates and telegraphic
and telephonic confirmations given by public officials, we have assumed the
same to have been properly given and accurate. As to certain questions of
fact material to our opinions, we have relied solely upon the accuracy of the
statements, representations and warranties made in the Company Documents, and
we have made no independent investigation or inquiry with respect to such
factual matters.
Based on the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth below, it is our opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of New York and has the corporate power and
authority to enter into and perform its obligations under each of the
Company Documents. We point out however that it is anticipated that at the
close of business on September 30, 1997, the Company will enter into a
merger transaction which will result in its ultimate merger into BNY
Capital Funding LLC, a Delaware limited liability company.
2. The Company has duly authorized, executed and delivered each of
the Company Documents.
3. Each Company Document constitute a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms.
4. Neither the execution and delivery by the Company of the Company
Documents, nor the consummation by the Company of the transactions
contemplated thereby, nor the compliance by the Company with any of the
terms and provisions thereof will (a) require any approval of the
stockholders of the Company, (ii) contravene any law or governmental rule
or regulation of the United States or the State of New York, (iii)
contravene the charter documents or bylaws of the Company, or (iv) to our
knowledge, result in a breach of or constitute any default under, or result
in the creation of any lien upon the Lessor's Estate (other than those
contemplated by the Operative Agreements) under, any indenture, mortgage,
loan agreement, lease or any other agreement or instrument to which the
Company is a party or by which any of its properties are bound.
5. Neither the execution and delivery by the Company of the Company
Documents, nor the consummation by the Company of the transactions thereby,
nor the compliance by the Company with any of the terms and provisions
thereof 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 in respect of, any federal or New York State
governmental or judicial authority.
6. To our knowledge, there are no pending or threatened actions or
proceedings by or before any court or administrative agency or arbitrator
that, either individually or in the aggregate, could materially adversely
affect the ability of the Company to perform its obligations under the
Company Documents.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. Our opinion is paragraph 1 above as to the organization and
existence of the Company is based solely on the certificate of good
standing received from the office of the New York Secretary of State.
B. The foregoing opinions are expressly limited to matters under
and governed by the internal laws of the State of New York and applicable
federal laws of the United States of America. Our opinion in paragraphs 4
and 5 above as to the contravention of, or other requirements in respect
of, certain laws, rules and regulations is based upon a review of those
laws and regulations that, in our experience, are normally applicable to
transactions of the type contemplated by the Company Documents.
C. The foregoing opinions regarding the enforceability of the
Company Documents are subject to the following:
(i) The enforceability of the Company Documents may be limited or
affected by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent-conveyance or other similar laws
(including court decisions) now or hereafter in effect and
affecting the rights and remedies of creditors generally or
providing for the relief of debtors, (b) the refusal or a
particular court to grant equitable remedies, including,
without limiting the generality of the foregoing, specific
performance and injunctive relief and (c) general principles
of equity (regardless of whether such remedies are sought in
a proceeding in equity or at law).
(ii) In rendering the foregoing opinions, we express no opinion as
to the availability of certain equitable remedies, including
specific performance, and further, we express no opinion as to
the enforceability of provisions of any of the Company Documents
purporting to waive or affect rights, claims, defenses or other
benefits bestowed by law, including without limitation the
right to receive notices, to the extent that any of the same
cannot be waived or so affected.
(iii) With respect to our opinion in paragraph 3 above as to the
enforceability of the Trust Agreement against the Company, we
have assumed that relevant Connecticut law is the same as New
York law.
D. We have assumed that the due authorization, execution and
delivery by each of the parties to the Company Documents (other than the
Company) and that each of such parties (other than the Company) has the
full power, authority and legal right to execute, deliver and perform the
Company Documents.
E. With respect to references herein to "to our knowledge", such
references mean the actual, current knowledge that those attorneys of this
Firm who devoted substantive attention to the transaction to which this
opinion relates, which knowledge is based upon (i) due diligence performed
in connection with such transaction, which due diligence did not include
any examination of courts, boards, other tribunals or public records with
respect to any party, or any of their respective properties and (ii)
representations and warranties of the parties set forth in the Company
Documents, or otherwise made to use in certifications and other writings.
The opinions expressed herein are solely for the benefit of, and may
only be relied upon by, the addressees hereof and their successors and
permitted assigns in connection with the Company Documents and the
transactions contemplated thereby. This opinion may not be furnished to or
relied upon by any other person without the prior written consent of this
Firm; provided that the addressees hereof and their successors and assigns may
furnish a copy of this opinion to their counsel in connection with the
transactions contemplated by the Company Documents. The opinions expressed
herein are as of the date hereof and we make no undertakings to amend or
supplement such opinions as facts and circumstances come to our attention or
changes in the law occur which could affect such opinions.
Very truly yours,
Fulbright & Jaworski L.L.P.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
EXHIBIT A(3)
[Letterhead of Ray, Quinney & Nebeker]
[Delivery Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N583FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Participation Agreement (Federal Express Corporation Trust No.
N583FE), dated as of May 1, 1997, as amended and restated as of September 1,
1997 (the "Participation Agreement"), among Federal Express Corporation, as
Lessee and Initial Owner Participant, BNY Leasing Corporation, as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee, Pass Through
Trustee and Subordination Agent. Pursuant to the Participation Agreement, one
McDonnell Douglas MD-11F aircraft bearing U.S. Registration No. N583FE (the
"Aircraft") is being financed. This opinion is furnished pursuant to Section
4.01(m)(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 Indenture;
(c) The Ancillary Agreement I; and
(d) The Certificates.
(each of the documents identified in paragraphs (a) through (d) above are
collectively referred to as the "Indenture Trustee Documents").
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 Indenture 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, and each of First Security and the Indenture
Trustee, as the case may be, has full corporate power, authority and legal
right to execute, deliver and perform each of the Indenture Trustee
Documents to which it is or is to be a party and to authenticate the
Certificates delivered on the Delivery Date.
2. Each of First Security and the Indenture Trustee, as the case may
be, has duly authorized, executed and delivered each Indenture Trustee
Document to which it is a party; each such document constitutes a legal,
valid and binding obligation of the Indenture Trustee (and, to the extent
set forth in the respective Indenture Trustee Document, of First Security)
enforceable against the Indenture Trustee (and, to the extent set forth in
the respective Indenture Trustee Document, against First Security) in
accordance with its terms.
3. The Certificates issued and dated the Delivery Date have been duly
authenticated and delivered by the Indenture Trustee pursuant to the terms
of the Indenture.
4. Neither the authorization, execution and delivery by the
Indenture Trustee or First Security, as the case may be, of the Indenture
Trustee Documents, nor the authentication and delivery by the Indenture
Trustee of the Certificates nor the fulfillment or compliance by the
Indenture Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by the
Indenture 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.
5. The execution, delivery and performance by the Indenture Trustee
or First Security, as the case may be, of each of the Indenture Trustee
Documents and the authentication and delivery of the Certificates by the
Indenture Trustee are not 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.
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 First Security) or the Certificate Holders to the State of Utah
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 First Security) (a) has its principal place
of business in the State of Utah, (b) performs (in its individual capacity
or as Indenture Trustee) any or all of its duties under the Indenture
Trustee Documents in the State of Utah, and (c) engages in any activities
unrelated to the transactions contemplated by the Indenture Trustee
Documents in the State of Utah. 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 First
Security) 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,
directly or indirectly, the gross receipts, net income or value of the
Trust Indenture Estate solely because First Security (a) has its principal
place of business in the State of Utah, (b) performs (in its individual
capacity or as Indenture Trustee) any or all of its duties under the
Indenture Trustee Documents in the State of Utah, and (c) engages in any
activities unrelated to the transactions contemplated by the Indenture
Trustee Documents in the State of Utah. There is no fee, tax or other
governmental charge (except for taxes imposed on fees payable to First
Security) 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 by reason of the creation of the trust
under the Indenture solely because First Security (a) has its principal
place of business in the State of Utah, (b) performs (in its individual
capacity or as Indenture Trustee) any or all of its duties under the
Indenture Trustee Documents in the State of Utah, and (c) engages in any
activities unrelated to the transactions contemplated by the Indenture
Trustee Documents in the State of Utah. 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 State of Utah 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. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security or the Indenture 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 Indenture Trustee, as the case may be, to
perform its obligations under any of the Indenture 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 Indenture Trustee, as the case may be, in connection with
the transactions contemplated by any of the Indenture 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 and the
federal laws of the United States of America governing the banking and trust
powers of First Security. In addition, 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 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 Indenture 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 Indenture 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, 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 Indenture
Trustee, of the Indenture 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. We have assumed that all signatures (other than those of the
Indenture 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.
E. 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.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
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.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee and Initial Owner Participant
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N583FE
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(m)(v) of the
Participation Agreement (Federal Express Corporation Trust No. N583FE), dated
as of May 1, 1997, as amended and restated as of September 1, 1997 (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee"), BNY Leasing Corporation, as Owner Participant (the "Owner
Participant"), State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee ("Owner Trustee"), First Security Bank, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Indenture Trustee ("Indenture Trustee"), Pass Through Trustee and
Subordination Agent, 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 _____________ (the
"FAA Bill of Sale") from the Lessee, as seller, conveying title
to the Airframe to the Owner Trustee, which FAA Bill of Sale
was filed at ____ _.m., C.D.T.;
(b) AC Form 8050-1 Aircraft Registration Application dated
_____________ (the "Aircraft Registration Application") by the
Owner Trustee as applicant, covering the Airframe, which
Aircraft Registration Application was filed at ____ _.m.,
C.D.T.;
(c) Affidavit of the Owner Trustee dated _____________ (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 _____________ (the "Owner
Participant Affidavit") attached thereto, which Owner Trustee
Affidavit with the Owner Participant Affidavit attached was
filed at ____ _.m., C.D.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N583FE) dated as of May 1, 1997, as
amended and restated as of September 1, 1997 (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m., C.D.T.;
(e) executed counterpart of Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N583FE) dated as of May
1, 1997, as amended and restated as of September 1, 1997 (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. N583FE) dated _____________ (the "Trust Indenture
Supplement") by the Owner Trustee, covering the Aircraft,
attached thereto, which Trust Indenture with the Trust
Indenture Supplement attached was filed at ____ _.m., C.D.T.;
and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N583FE) dated as of May 1, 1997, as
amended and restated as of September 1, 1997 (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.
N583FE) dated _____________ (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.D.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease 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 _____________, 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) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48421 and U.S. Registration No. N583FE (the "Airframe") and
three (3) General Electric CF6-80C2-D1F aircraft engines bearing
manufacturer's serial numbers 702-304, 702-911 and 702-360 (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 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 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, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT A(5)
[Letterhead of Bingham, Dana & Gould]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N583FE
Ladies and Gentlemen:
We have acted as counsel to State Street Bank and Trust Company of
Connecticut, National Association, a national banking association in its
individual capacity ("State Street") and its capacity as Owner Trustee (the
"Owner Trustee") under the Trust Agreement (Federal Express Corporation Trust
No. N583FE) dated as of May 1, 1997, as amended and restated as of September
1, 1997 between State Street and BNY Leasing Corporation, as Owner Participant
("Owner Participant") (the "Trust Agreement") in connection with the
transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N583FE) dated as of May 1, 1997, as amended and
restated as of September 1, 1997 (the "Participation Agreement") by and among
Federal Express Corporation (the "Lessee"); the Owner Trustee; the Owner
Participant; and First Security Bank, National Association, in its individual
capacity and as Indenture Trustee (the "Indenture Trustee"), Pass Through
Trustee (the "Pass Through Trustee") and Subordination Agent (the
"Subordination Agent"). Except as otherwise defined herein, all capitalized
terms used herein shall have the respective meanings set forth in, or by
reference to, the Participation Agreement.
The Owner Trustee has requested that we deliver this opinion to you in
accordance with Section 4.01 of 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) 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 of the Operative Agreements to which State
Street or the Owner Trustee, as applicable, is a party (the "Owner Trustee
Documents"), the Certificate of the Comptroller of the Currency relating to
State Street and originals, or copies certified or otherwise identified to our
satisfaction, of such other corporate records, documents, certificates and
other instruments as we have deemed necessary or advisable for the purposes of
rendering this opinion.
We have assumed the genuineness of all signatures (other than those on
behalf of State Street and the Owner Trustee), the conformity to the originals
of all documents reviewed by us as copies, the authenticity and completeness
of all original documents reviewed by us in original or copy form and the
legal competence of each individual executing any document (other than on
behalf of State Street and the Owner 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, the Owner Trustee or the Owner
Participant, as applicable, is subject to the following general qualifications:
(i) as to any agreement to which State Street or the Owner
Trustee, as applicable, is a party, we assume that such agreement is the
legal, valid and binding obligation or each other party thereto;
(ii) except as otherwise set forth in our opinions in
paragraphs 14 and 15 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Owner Participant, may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshaling or other similar laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights);
(iii) no opinion is given herein as to the enforceability of any
particular provision of any of the Owner Trustee Documents relating to
remedies after default or as to the availability of any specific or
equitable relief of any kind. However, we are of the opinion that, subject
to the other limitations and qualifications contained in this opinion, the
remedies provided in the Owner Trustee Documents, taken as a whole, are
adequate for the realization of the principal benefits or security of said
agreements (except for the economic consequences of procedural or other
delay); and
(iv) 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 of your rights to collateral security,
will be subject to a duty to act in a commercially reasonable manner.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the State of Connecticut 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,
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.
We have made no examination of, and no opinion is given herein as to
the Owner Trustee's or Owner Participant's title to or other ownership rights
in, or the existence of any liens, charges or encumbrances on, or adverse
claims against, any of the Indenture Estate. Other than as expressed in
paragraph 5 below, we express no opinion as to the creation, attachment,
perfection or priority of any mortgage, security interest or lien in any of
the Indenture Estate. Other than as expressed in paragraph 5 below, we
express no opinion as to the creation, attachment, perfection or priority of
any mortgage, security interest or lien in any of the Indenture Estate. Nor
do we express any opinion as to the attachment or perfection of any security
interest in any of the Trust Estate excluded from, or in which the attachment
or perfection of a security interest is not governed by Article 9 of the
Uniform Commercial Code of the State of Connecticut (the "UCC"). In addition,
there exist certain limitations, resulting from the operation of Section 9-306
of the UCC, on the perfection of the security interests in proceeds created by
the Operative Agreements.
Article 9 of the UCC requires the filing of continuation statements
within the period of six months prior to the expiration of five years from the
date of original filing of UCC financing statements to maintain effectiveness
of such financing statements and perfection of security interests. Further,
additional financing statements may be required to be filed to maintain the
perfection of a security interest if any grantor thereof changes its name or
location or the location of collateral, or makes certain other changes, as
provided in the UCC.
With your permission and without investigation, with respect to
paragraphs 2, 3 and 4 below in connection with our opinion relating to the
legality, validity and binding effect of the documents there referred to, to
the extent that the laws of the State of Connecticut do not govern such
documents, we have assumed that the laws of the jurisdictions whose laws
govern such documents are not materially different from the internal
substantive laws of the State of Connecticut.
In rendering our opinion in paragraphs 14 and 15 below, we have
assumed that the Owner Participant acquired its interest in the Trust Estate
for fair consideration and in good faith without any intention to hinder,
defraud or delay the Owner Participant's creditors.
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 national banking association duly organized,
validly existing and in good standing with the Comptroller of the Currency
under the laws of the United States of America, is a "citizen of the United
States" within the meaning of Section 40102(a)(15) of Title 49 of the
United States Code, as amended and has full corporate power, authority and
legal right to execute, deliver and perform its obligations under the Trust
Agreement and, as Owner Trustee under the Trust Agreement, to execute,
deliver and perform its obligations under the other Owner Trustee
Agreements and to issue, execute, deliver and perform its obligations under
the Certificates.
2. The Owner Trustee has the power and authority to accept title to
and delivery of the Aircraft, and a representative of the Owner Trustee has
been duly authorized to accept title to and delivery of the Aircraft on
behalf of the Owner Trustee.
3. State Street has duly authorized, executed, and delivered the
Participation Agreement and the Trust Agreement and the Participation
Agreement and the Trust Agreement constitute the legal, valid and binding
obligation of State Street, enforceable against it in its individual
capacity in accordance with the terms thereof.
4. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Agreements and each
such Owner Trustee Agreement constitutes a legal, valid and binding
obligation of the Owner Trustee enforceable against the Owner Trustee 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 assuming due authentication thereof
by the Indenture Trustee, the Pass Through Trustee and the Subordination
Agent, constitutes the legal, valid and binding obligation of the Owner
Trustee enforceable against the Owner Trustee in accordance with its terms
and the terms of the Indenture; and the Certificates are entitled to the
benefits and security afforded by the Indenture in accordance with its
terms and the terms of the Indenture.
5. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and that the Owner Participant has
the requisite corporate power and authority to enter into and perform its
obligations under the Trust Agreement, said Trust Agreement constitutes the
legal, valid and binding obligation of the Owner Participant, enforceable
against the Owner Participant in accordance with the terms thereof.
6. To the extent that 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 Connecticut 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 Connecticut
with respect to the security interest, and the filing of continuation
statements with respect thereto required to be filed at periodic intervals
under the UCC.
7. The Trust Agreement duly creates a legal and valid trust under
Connecticut law; the trust created by the Trust Agreement exists for the
benefit of the Owner Participant as provided therein and creates for the
benefit of the Owner Participant the interest in the Trust Estate which the
Trust Agreement by its terms purports to create, subject however to the
provisions of, and the Liens created by, the Indenture and the Lease.
8. Neither the execution, delivery or performance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, of the Certificates or the Owner Trustee Documents, the consummation by
the Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated thereby nor the
compliance by the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, with any of the terms and provisions thereof
(i) requires any approval of its stockholders, any consent or approval of
or the giving of notice to any trustees or holders of any indebtedness or
obligations of it known to us, or (ii) violates its charter documents or
by-laws, or contravenes or will contravene any provision of, or constitutes
a default under, or results in any breach of, or results in the creation of
any Lien (other than as permitted under the Operative Agreements) upon
property under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, license or other
agreement or instrument, in each case, known to us to which it is a party
or by which it is bound or contravenes any Connecticut or United States
applicable law governing the banking or trust powers of the Owner Trustee,
or any judgment or order in each case, known to us applicable to or binding
on it.
9. To our knowledge, there are no proceedings or actions pending or
threatened against or affecting the Owner Trustee, in its individual
capacity or as Owner Trustee, before any governmental authority which,
individually or in the aggregate, if adversely determined, would materially
and adversely affect the ability of the Owner Trustee, in its individual
capacity or as Owner Trustee, as the case may be, to enter into or to
perform its obligations under the Owner Trustee Documents or the
Certificates.
10. No consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Connecticut or United States governmental authority regulating the
banking or trust powers of the Owner Trustee, in its individual capacity,
is required for the execution and delivery of, or the carrying out by, the
Owner Trustee in its individual capacity or as Owner Trustee, as the case
may be, of any of the transactions contemplated by the Owner Trustee
Documents, other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained, given or taken.
11. There are no fees, taxes or other charges payable by the Owner
Trustee, the Trust Estate or the trust created by the Trust Agreement
imposed by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by State Street, individually or as Owner Trustee, of the Owner
Trust Documents (other than franchise or other taxes based on or measured
by any fees or compensation received by State Street, acting as the Owner
Trustee, for services rendered in connection with the transactions
contemplated by the Operative Agreements) and, assuming that the trust
created by the Trust Agreement will not be taxable as a corporation, but,
rather, will be characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Internal Revenue Code of 1986, as amended, or will be
otherwise ignored for Federal tax purposes, (i) such trust will not be
subject to any fees, taxes or other charges imposed by the State of
Connecticut or any political subdivision thereof based on income, receipts,
value or otherwise, (ii) Holders that are not residents of or otherwise
subject to tax in Connecticut will not be subject to any taxes imposed by
the State of Connecticut or any political subdivision thereof as a result
of purchasing, holding (including receiving payments with respect to) or
selling a Certificate and (iii) assuming the Owner Participant is not a
Connecticut resident or otherwise subject to tax in Connecticut and further
assuming that the assets of the trust created by the Trust Agreement are not
deemed to be located in Connecticut, the Owner Participant will not be
subject to any taxes imposed by the State of Connecticut or any political
subdivision thereof solely as a result of being the beneficial owner of the
trust created by the Trust Agreement.
12. The Owner Trustee has received such title to the Aircraft as has
been conveyed to it 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 Lease; and to our knowledge, there exist no liens or
encumbrances affecting the right, title and interest of the Owner Trustee
in and to the Trust Estate resulting from claims against State Street not
related to the ownership of the Trust Estate or any other transaction
contemplated by the Operative Agreements.
13. All the properties which are part of the Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture) have been pledged and mortgaged
with the Indenture Trustee as part of the 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 liens of the Indenture in favor of the holders from time to time of
the Certificates.
14. Neither a Connecticut court nor a Federal court applying federal
law or Connecticut 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 as otherwise provided therein,
until the Lien of the Indenture on the Indenture Estate has been released
and until payment in full of the principal of, and premium, if any, and
interest on, the Certificates and all other sums due the holders of the
Certificates have been made.
15. Under the laws of the State of Connecticut, as long as the Trust
Agreement has not been terminated in accordance with its terms, creditors
of any person that is an Owner Participant, holders of a lien against the
assets of any such person and representatives of creditors of any such
person, such as trustees, receivers or liquidators (whether or not any
insolvency proceeding has been commenced) (collectively the "Creditors")
may acquire legal, valid and enforceable claims and liens, as to the Trust
Estate, only against the beneficial interest of such person in the Trust
Estate, and do not have, and may not through the enforcement of such
Creditors' rights acquire, any other legal, valid, and enforceable claim or
lien against the Trust Estate.
Very truly yours,
Bingham, Dana & Gould LLP
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
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. N583FE
Reference is made to (i) that certain Participation Agreement (Federal
Express Corporation Trust No. N583FE), dated as of May 1, 1997, as amended and
restated as of September 1, 1997 (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee ("Fed Ex"), BNY Leasing Corporation, as
Owner Participant, State Street Bank and Trust Company of Connecticut,
National Association ("SSB") (not in its individual capacity, except as
otherwise expressly set forth therein, but solely as Owner Trustee), First
Security Bank, National Association ("FSB") (not in its individual capacity,
except as otherwise expressly set forth therein, but solely as Indenture
Trustee, Pass Through Trustee and Subordination Agent); (ii) that certain
Lease Agreement (Federal Express Corporation Trust No. N583FE), dated as of
May 1, 1997, as amended and restated as of September 1, 1997 (the "Lease")
between SSB (not in its individual capacity, but solely as Owner Trustee), as
Lessor and Fed Ex, as Lessee; (iii) that certain Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N583FE), dated as of May 1,
1997, as amended and restated as of September 1, 1997 (the "Trust Indenture")
between SSB (not in its individual capacity), as Owner Trustee and FSB (not in
its individual capacity), as Indenture Trustee; and (iv) that certain Trust
Agreement (Federal Express Corporation Trust No. N583FE), dated as of May 1,
1997 (the "Trust Agreement") between SSB (not in its individual capacity), as
Owner Trustee and BNY 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. N583FE) (the "Engine
Warranty Assignment"), each attached to the Participation Agreement as Exhibit
E and dated as of May 1, 1997. The Consent and the Engine Warranty Assignment
covers three GE CF6-80C2-D1F series engines bearing Engine Manufacturer's
serial numbers 702-304, 702-911 and 702-360, 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 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 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 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
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 (Title 49 of the
United States Code), as amended, 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, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT A(7)
[Letterhead of Ray, Quinney & Nebeker]
[Delivery Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N583FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Pass Through Trust Agreement dated as of May 1, 1997 (the "Pass
Through Trust Agreement"), as supplemented by the Series Supplements dated May
28, 1997 between Federal Express Corporation and First Security, not in its
individual capacity, except as otherwise stated, but solely as Pass Through
Trustee, designated as Series Supplement 1997-1-A, 1997-1-B and 1997-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N583FE), dated as of May 1, 1997, as
amended and restated as of September 1, 1997 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee and Initial Owner Participant,
BNY Leasing Corporation, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as otherwise stated, but solely as Owner Trustee, and First Security,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to
the Participation Agreement, one McDonnell Douglas MD-11F aircraft bearing U.S.
Registration No. N583FE (the "Aircraft") is being financed. This opinion is
furnished pursuant to Section 4.01(m)(viii) 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 Pass Through Trust Agreement;
(b) The Series Supplements;
(c) The Pass Through Certificates;
(d) The Participation Agreement;
(e) The Intercreditor Agreement; and
(f) Each Liquidity Facility.
(each of the documents identified in paragraphs (a) through (e) and (g) are
being collectively referred to as the "Pass Through Trustee Documents" and
each of the documents identified in paragraphs (d) through (g) are being
collectively referred to as the "Subordination Agent Documents").
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 Pass Through Trustee Documents
or the Subordination Agent Documents, as the case may be.
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:
With respect to the opinions set forth in paragraph 8 above, with your
permission we have relied upon, and this opinion is limited by, the
assumptions set forth in the discussion entitled "Certain Utah Taxes" in the
Prospectus Supplement to the Prospectus forming part of Registration Number
No. 333-07691 (the "Registration Statement") for the registration of the Pass
Through Certificates with the Securities and Exchange Commission. We express
no opinion as to the correctness of the foregoing assumptions and we have
conducted no independent investigation in this regard.
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.
2. Each of First Security, the Pass Through Trustee and the
Subordination Agent, 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 Pass Through Trustee Documents and
the Subordination Agent Documents, as the case may be, and to authenticate
the Pass Through Certificates delivered on the Certificate Closing Date.
3. Each of First Security, the Pass Through Trustee and the
Subordination Agent has duly authorized, executed and delivered each Pass
Through Trustee Document or Subordination Agent Document, as the case may
be; each such document constitutes a legal, valid and binding obligation of
the Pass Through Trustee or the Subordination Agent, as the case may be
(and, to the extent set forth in the respective Pass Through Trustee
Document or Subordination Agent Document, of First Security) enforceable
against the Pass Through Trustee or the Subordination Agent, as the case
may be (and, to the extent set forth in the respective Pass Through Trustee
Document or Subordination Agent Document, against First Security) in
accordance with its terms.
4. The Pass Through Certificates issued and dated the Certificate
Closing Date 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.
5. 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 Utah or Federal governmental authority
governing the banking or trust powers of First Security, the Pass Through
Trustee or the Subordination Agent, and no filing, recording, publication
or registration in any public office is required under Utah or Federal law
pertaining to its banking or trust powers for the due execution, delivery
or performance by First Security, individually or as Pass Through Trustee
or Subordination Agent, as the case may be, of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) or the
Subordination Agent Documents, as the case may be, 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 First Security, the Pass Through Trustee or the Subordination
Agent, as the case may be.
6. The execution, delivery and performance by the Pass Through
Trustee or First Security, as the case may be, of each of the Pass Through
Documents and the Subordination Agent or First Security, as the case may
be, of each of the Subordination Agent Documents, and the issuance,
execution, delivery and performance of the Pass Through Certificates by the
Pass Through 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.
7. There are no actions, suits, investigations or proceedings
pending or, to our knowledge, threatened against or affecting First
Security, the Pass Through Trustee or the Subordination Agent 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, the Pass Through Trustee or the Subordination
Agent, as the case may be, to perform its obligations under any of the Pass
Through Trustee Documents or the Subordination Agent Documents, as the case
may be, and there are no pending or, to our knowledge, threatened actions
or proceedings before any court, administrative agency or tribunal involving
First Security, the Pass Through Trustee or the Subordination Agent in
connection with the transactions contemplated by any of the Pass Through
Trustee Documents or the Subordination Agent Documents, as the case may be.
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 Utah 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 Utah will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of Utah 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 Utah 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 Utah.
9. Each of the Certificates to be delivered to and registered in the
name of the Subordination Agent on the date hereof pursuant to the
Participation Agreement and the Intercreditor Agreement will be held by the
Subordination Agent in trust for the Pass Through Trustee under the
applicable Pass Through Trust Agreement.
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 and the
federal laws of the United States of America governing the banking and trust
powers of First Security. In addition, 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 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 Indenture 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 Indenture 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, 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 Indenture
Trustee, of the Indenture 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. We have assumed that all signatures (other than those of the
Indenture 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.
E. 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.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
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.
Very truly yours,
Ray, Quinney & Nebeker
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Two International Place
4th Floor
Boston, Massachusetts 02110
Owner Participant
BNY Leasing Corporation
1290 Avenue of the Americas
New York, New York 10104
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Underwriters
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
First Chicago Capital Markets, Inc.
Corporate Securities
One First National Plaza
Chicago, Illinois 60670
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan & Co.
60 Wall Street
New York, New York 10260
Liquidity Provider
Kredietbank N.V., New York Branch
125 West 55th Street
New York, New York 10019
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e]
EXHIBIT C
[Form of Trust Indenture and Security Agreement - See Exhibit 4.b.1]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d]
EXHIBIT E
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N583FE)
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 No. 6-6327A dated as of
June 28, 1991 (the "GTA") by and between the Engine Manufacturer and
American Airlines, Inc. ("American"), 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; such Engine Warranties
having been assigned to Federal Express Corporation ("Fed Ex" or the
"Assignor") by American on June 11, 1997.
C. Engine means each of the CF6-80C2-D1F series engines installed on the
aircraft at the time of delivery to the Assignor, each bearing Engine
Manufacturer's serial numbers 702-304, 702-911 and 702-360,
respectively.
D. Replacement Engine means each of the CF6-80C2-D1F 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.
N583FE), dated as of May 1, 1997, as amended and restated as of
September 1, 1997 (the "Lease") between State Street Bank and Trust
Company of Connecticut, National Association (not in its individual
capacity, but solely as Owner Trustee), as Lessor ("Lessor" or the
"Assignee") 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. 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. 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 Thirteen (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. 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 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 First
Security Bank, National Association, as Indenture Trustee under the
Trust Indenture and Security Agreement (Federal Express Corporation
Trust No. N583FE), dated as of May 1, 1997, as amended and restated
as of September 1, 1997 (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 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.
4
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, the parties hereto 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
State Street Bank and Trust Company
of Connecticut, National Association
not in its individual capacity,
but solely as Owner Trustee
________________________________
Name: Paul D. Allen
Title: Vice President
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N583FE)
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 Lease Agreement
(Federal Express Corporation Trust No. N583FE), dated as of May 1, 1997, as
amended and restated as of September 1, 1997 and entered into by and between
Fed Ex, as Lessee and State Street Bank and Trust Company of Connecticut,
National Association, as Lessor (as in effect from time to time, the "Lease")
and (ii) the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N583FE), dated as of May 1, 1997, as amended and
restated as of September 1, 1997 (the "Indenture"), between the Lessor and
First Security Bank, National Association, as Indenture Trustee ("Indenture
Trustee"). The Lease covers three GE CF6-80C2-D1F series engines bearing
Engine Manufacturer's serial numbers 702-304, 702-911 and 702-360,
respectively, (the "Engines") as installed on the McDonnell Douglas MD-11F
series aircraft bearing Manufacturer's serial number 48421 (the "Aircraft").
In connection with such Lease, reference is made to the General Terms
Agreement No. 6-6327A dated as of June 28, 1991, between the Engine
Manufacturer and American Airlines, Inc. (the "General Terms Agreement"),
under which the Engine Manufacturer agreed to support certain GE CF6-80C2-D1F
series engines, including the Engines and spare parts therefor to be purchased
by Fed Ex from the Engine Manufacturer, as installed on certain McDonnell
Douglas MD-11F series aircraft, including the Aircraft. Recognizing that (i)
American Airlines, Inc. has assigned all rights to the Engine Warranties in
respect of the Engines to Fed Ex and (ii) 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 Thirteen (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: